Oracle will expand its supply chain management (SCM) application offerings with the acquisition of Demantra, a provider of demand planning software. Demantra offers analytics- and collaboration-based products for demand management, sales and operations planning and trade promotion planning and optimization. Oracle says Demantra's products complement its own and will further enable customer companies to move from a push-driven supply chain to a demand-driven supply chain. The benefit for customers, as Oracle sees it, is that customers will be getting access to demand and supply chain capabilities combined with its enterprise resource planning (ERP) applications and technology infrastructure.
Ventana Research sees this acquisition confirming two of our observations about the market. The first is that while Oracle recognizes the need for vertical specialization in its product offerings - in this case, consumer packaged goods - it lacks the ability to execute timely improvements to its own SCM products and those it acquired from the PeopleSoft/JD Edwards acquisition. The losers here, of course, are current users of the various systems who want a straight upgrade path but instead must follow a wandering leader.
The second observation is that the SCM software market will continue to consolidate. Stand-alone companies like Demantra have been less profitable than they needed to be and lacked large enough customer bases to support long-term software development. The continuing consolidation trend will be important in the coming decade because major shifts that will occur in software architecture will create a need to rewrite all of these applications. We expect the consolidation eventually will leave i2 Technologies, Infor/SSA, Oracle and SAP as the major SCM players.
Ventana Research recommends that organizations wait on any further purchases or upgrades of Demantra applications until Oracle announces whether it will plug this acquired technology into Fusion or will maintain and improve it in standalone form.
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2006 Ventana Research