Onyx Rejects HostilityOnyx Rejects Hostility
CRM provider fends off takeover attempt.
March 9, 2006
In unsettled times for the applications market, Onyx Software has defended itself against a hostile takeover attempt by CDC Corp. The recent acquisitions by Oracle, SSA and Golden Gate Capital (of Infor) have increased the attractiveness of enterprise resource planning (ERP) and customer relationship management (CRM) software companies. But acquiring software companies to gain customers and maintenance revenue streams is not as easy as it looks. CDC’s offer fell short, and so Onyx’s board of directors and major shareholders rejected it. CDC already owns Pivotal Software, another CRM vendor, so its effort to acquire Onyx should concern companies using Pivotal. Ventana Research believes that this failed hostile move provides further validation of Onyx’s position as a rapidly growing CRM provider that is a credible choice for companies considering these applications.
In early January, Onyx Software Corp. defeated a hostile takeover attempt by CDC Corp. A special committee of the Onyx board of directors voted against the move, which would have made Onyx part of a larger holding of software companies that includes Pivotal Software, Ross Systems and others. Poorly planned and unsuccessful moves such as CDC’s are disruptive to the companies involved and often have negative impacts on their operations during the period. Luckily, in the case of Onyx this appears not to have happened. The company has been showing significant momentum in its financials, products and customer successes over the last year under new management, which was given a vote of confidence with the rejection of the offer. This incident should leave Onyx more committed to its independence and the opportunity in the market arising from Siebel’s acquisition by Oracle.
CDC is a holding company in the business of consolidating application companies, much like Oracle, SSA and others do. CDC now is in the process of acquiring a supply chain company, JRG Software. This aggregation model is an approach that provides financial benefits to CDC but limited value to customers of the companies acquired. In fact, companies using Pivotal’s software should be concerned about the future of the product line. Acquiring duplicate assets always produces significant impact on the future of the software product line for customers.
Onyx, meanwhile, continues to gain commitment to its products from companies such as AIG Edison, Hermes, Hunter Douglas and others. Its aggressive offers to migrate customers from Oracle, Siebel, PeopleSoft and other customer management tools have upped the financial impetus to switch. Ventana Research sees integrated customer relationship management (CRM) software as a critical need for businesses that want to streamline customer operations and interactions. Onyx continues to invest in the CRM space and the next generation of solutions, bringing improvements to process management and analytics; these can be seen in Onyx Customer Management and Onyx Process Manager, both available today.
The demand for customer-focused solutions is continuing to drive changes in the technology provider market. Onyx stepped forward in 2005 to provide a solid CRM suite that is process-centric, helping to streamline activities around customers, and that integrates analytics for identifying the value of customer relationships. In contrast, CDC’s Pivotal CRM division appears not to be investing for growth and expansion of the Pivotal product line, instead acquiring duplicate assets. With CDC placing Pivotal and other ERP and supply chain software under a common management team despite the different websites and brands, there is only so much the company can do to grow market share and new customer relationships. Elsewhere, as Siebel is being merged with Oracle and PeopleSoft, it is not clear in what direction this Oracle-owned CRM offering will be heading; this situation creates additional growth opportunities for Onyx, RightNow, SAP and salesforce.com.
Onyx has been growing over the last 18 months, filling out its product portfolio and meeting customers’ needs. The rejection of CDC should be taken as an indication on the depth of Onyx’s commitment to its customers and products and the market. The functional impact of the hostile acquisition attempt is slight, and Onyx’s response actually elevates its place in the market. CDC’s failure to communicate a coherent strategy, along with its ownership of CRM competitor Pivotal, raises questions about its own products. Organizations considering CDC Pivotal Software should be concerned about the product’s future. Ventana Research recommends that those looking for a CRM solution that integrates process management and analytics – including organizations currently using Pivotal – consider Onyx.
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© 2006 Ventana Research
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