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Oracle to Acquire Skywire

Horizontal behemoth Oracle steals a march on its competitors in the insurance vertical by acquiring growing document management vendor soon after acquiring leading new-technology policy administration player AdminServer.

Oracle (Redwood Shores, Calif.) announced June 23, 2008 that it had entered into an agreement to acquire Frisco, Texas-based document management solutions vendor Skywire Software. The announcement comes on the heels of Oracle's mid-May announcement of its plan to acquire policy administration vendor AdminServer (Chester, Pa.). The Skywire acquisition is expected to close in the second half of 2008.

Analyst opinion has been divided as to whether Oracle's last major acquisition was likely to trigger a new spate of vendor M&A in the insurance space, but Oracle's stated motives seem calculated to provoke just that. An Oracle source describes the Skywire acquisition as a catalyst to "accelerate the formation of the most complete software suite for the insurance enterprise, to include Oracle's database and middleware for technical infrastructure, Oracle applications to support general business and insurance-specific functionality, plus Skywire Software and AdminServer to further support insurance policy lifecycle management."

Oracle's acquisition of this second significant vendor in the insurance vertical signals a major strategic push in the industry, according to Matthew Josefowicz, director of New York-based Novarica's insurance practice. "If the acquisition of AdminServer was Oracle's planting the flag on the shore of the insurer software business, the subsequent acquisition of Skywire Software is a declaration of Manifest Destiny," he comments. "Oracle is clearly making a big play in the insurer application software space across multiple product categories. No doubt there are meetings being held in Redmond, Armonk and Walldorf to digest this news today."

Anxiety is likely to be higher in Walldorf, in San Francisco-based Celent analyst Donald Light's view. "The deal won't have as much impact on Microsoft because its sticking to its guns to not buy outside software vendors," he comments. "IBM has mostly relied on partners instead of acquisitions for core processing and earlier made an acquisition similar to that of Skywire with [content management vendor] FileNet." Light adds, however, that FileNet is a horizontally oriented vendor, while Skywire is mostly dedicated to the insurance vertical. Also, he adds, IBM has not acquired a policy administration vendor such as AdminServer.

As regards the Walldorf, Germany-based player, says Light, "if SAP wants to build out core process applications for insurance companies, as opposed to back-office applications, it has to decide whether it is going to stick with its homegrown products or acquire outside independent insurance software vendors."

Of the Oracle/Skywire deal, Light adds that, "Oracle is signaling that it wants to use its already strong share of insurers' database, financial, and HR infrastructures as the springboard towards becoming a one-stop shop for insurers' core processing IT application needs."

Oracle did not respond to a request for further comment.

Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio

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