The Village View

Wednesday, April 12, 2006

Oracle acquires Portal

Business software maker Oracle Corp. (ORCL) on Wednesday said it would buy Portal Software Inc. (PRSF.PK) for $220 million in cash, gaining billing programs that it could sell to communications companies.

This deal has been expected for a few months now and we spent some time thinking about the implications of such a move last year.

Portal is an SAP partner and indeed there is a joint product offering to provide telco billing functionality. Portal covers the billing creation, mediation and rating functionality that SAP doesn't have in the core product. Other partners provide these functionality as well, but this is the only joint offering that I'm aware of.

Telco billing systems are quite critical to service providers. After moving towards flat-rate billing, there is a longer term trend toward higher complexity in billing (e.g., per product, function or event billing). Whereas, transaction level billing was previously based on usage, it is increasingly dependent on products consumed. Think about what billing functionality you need as a fixed line or wireless carrier if you want to offer broadband, video clips, ringtones, movies on demand, IPTV etc. in addition to flat rate domestic billing and long distance and roaming. Furthermore, billing software will become increasingly relevant outside of telco. Business users will migrate to the consumption of software services and service providers will require functionality to rate and bill these services. Also, non-traditional applications (e.g., road toll collection) for billing software are being considered.

With this acquisition, Oracle is able to offer a pretty complete billing solution to telco service providers. In addition, Siebel and Portal have a joint offering. Siebel has a strong presence in Telecom CRM market. An acquisition increases the Oracle CRM/billing advantage. SAP will likely need to concentrate on working more closely with other partners as its unclear what Oracle will do with the joint offering. (They may sunset it as it doesn't behoove them necessarily to have a product which expands SAP's functionality in telco).