Informatica Next On Oracle's Shopping List?

(MoneyWatch)  Informatica, which makes technology intended to help companies manage and deduplicate data held in various technology systems, would be a logical next acquisition target for Oracle, as would a number of other niche vendors in the same space, like Initiate Systems and Siperian. Informatica, however, would be the most logical target because of its reputation as a neutral party that doesn't try to push applications, and its experience working with large customers.

Indeed, a hook-up between Oracle and Informatica was rumored as recently as last spring, and is even more likely today given the technology mess Oracle is inheriting both within Sun's organization and as a result of having to combine so many products across a variety of application types. Oracle hopes to squeeze a significant amount of costs out of the combined organization and create new selling opportunities once it has completed its acquisition of Sun, mainly by identifying common customers and rationalizing customer data, reducing the number of internal systems, and streamlining sales organizations. All of that is trickier to do than it sounds, and is exactly what technology of the kind sold by Informatica can be used to help accomplish. Michael Destein, marketing director with Informatica, told me over breakfast today that his company sees the Sun acquisition by Oracle as "an opportunity."

Not only is Oracle itself faced with the gargantuan task of merging its complex internal systems with those of Sun, but will have to reassure Sun customers that their technology investments won't get flushed down the toilet if, for instance, it decides to stop supporting MySQL or some other Sun product. As many customers learned from Oracle's acquisition of PeopleSoft and Seibel, CEO Larry Ellison's team feels no compunction about "sunsetting" products sold by target companies if it's in their best interests, leaving those customers to struggle with managing data stuck in legacy applications. Destein told me data management technology helps customers "deal with data and remain able to access data so they're not beholden to a vendor for a particular application or database into the future." Oracle could go a long way towards reassuring Sun customers if it could brandish Informatica as a safety net of sorts.

I ran this idea by Brenon Daly, an analyst with the451 Group, who told me in an email that "most people underestimate how dysfunctional Sun is." In past year, company has done two major reorganizations, "at a cost of some three-quarters of a billion dollars -- and it is still adrift," he added. Thus, Daly thinks, while the idea makes sense in principle, Oracle will have its hands full with Sun and may not have the stomach for another large acquisition.

Informatica generated $456 million in sales in 2008, up 14 percent over the previous year (after registering 3 consecutive years of better-than-20 percent growth). Its current market cap is just over $1.2 billion, Even if it paid a premium , the purchase price would be tiny compared to what Oracle is paying for Sun.

And I'm not convinced Oracle would be done shopping, even if did acquire Informatica. As Ashlee Vance wrote in the New York Times today, "Corporate customers increasingly want... a one-stop shop for hardware, software and services." The one big thing now missing from Oracle's arsenal is a strong services arm -- like IBM's. Indeed, Big Blue has fared better than many technology companies during the economic downturn thanks to the services business it has developed, especially since picking up PriceWaterhouseCoopers' consulting practice; it's not farfetched to imagine Oracle making a play for a large consulting organization like Accenture or Perot Systems.