Oracle Moves Toward Vertical Insurance Apps With Skywire Buy

Oracle is expanding its footprint in its sixth vertical applications market as it gets set to acquire Skywire Software, an insurance application provider. It's already supplying vertical applications for retail, financial services, utilities, communications, and taxation markets.

Technology Business Research analyst Stuart Williams said the move into insurance reflects "a major shift in Oracle's go-to-market strategy." It's beginning to focus on specific industries and vertical applications instead of general purpose ERP, customer relationship, and sales-force automation packages, he said in a statement.

Oracle can leverage both its database position and existing ERP applications to produce industry-specific functionality in Oracle Billing or Siebel Claims or Siebel CRM. In addition, it also possesses the Insure3 policy life-cycle management application from its acquisition of a majority share of iFlex in 2006.

Skywire's applications help manage the life cycle of insurance policies, including policy creation, rating, agent management, and information exchange needed to obtain data to formulate and validate the policies. The deal is expected to close in the second half. Skywire has 1,450 customers.

A month ago, Oracle announced it was acquiring AdminServer, a company supplying an insurance policy administration application used by the top 20 global insurers. Oracle said it would start offering AdminServer applications as its own once the deal closes by the end of the first half. Oracle said many AdminServer customers already were Oracle database and middleware customers.

"Insurance is a strategic industry for Oracle, with growth focused on integrated packaged applications," said Oracle President Charles Phillips in a statement announcing the acquisition Monday.

In acquiring the Frisco, Texas-based Skywire, Oracle is getting an insurance application provider that in January achieved "SOA specialty partnership" status with IBM, meaning its applications worked with IBM's middleware and approach to service-oriented architecture.

FBR Research, an equities research firm, said Monday that Oracle's application acquisition strategy will allow it to meet or beat expectations set for its fiscal year results, due to be reported soon. "We believe Oracle benefited from seasonal trends that enabled both the database and applications businesses to put together solid results," with license revenue growing 15% year over year, said the FBR report.

If Oracle is increasingly concentrating on vertical applications, it may mark a new phase in its ongoing competition with SAP to become the world's largest applications vendor.