Oracle buys Art Technology Group for $1 billion

Oracle announced Tuesday that it plans to buy e-commerce vendor Art Technology Group for about $US1 billion. The deal is expected to be completed early next year.

ATG's technology will be "highly complementary" to Oracle's existing lineup of CRM (customer relationship management) ERP (enterprise resource planning) and other software, according to a statement.

The growing convergence between traditional and Internet commerce calls for a unified technology platform that ties together all channels, Oracle said.

Moreover, e-commerce is increasingly about creating a personalized experience for customers. ATG's platform features the Adaptive Scenario Engine, described on its website as "segmentation and content targeting software that provides the personalization technology and core functionality needed to deliver a personalized customer experience at every stage of the buying process."

ATG competes with companies like GSI Commerce and Digital River. Oracle's move to buy the Cambridge, Massachusetts, company follows rival IBM's purchase of another prominent e-commerce vendor, Sterling Commerce, earlier this year.

However, Sterling Commerce is focused more on business-to-business sales. A large part of ATG's customer base is focused on business-to-consumer transactions, according to a recent Gartner report.

Oracle selected ATG for the quality of its products, as well as the fact that the companies share many large enterprise customers, according to a FAQ presentation on the deal.

ATG employees "have significant domain expertise" and are expected to become Oracle employees once the deal closes, according to a letter from ATG CEO Bob Burke to customers.

It was not immediately clear Tuesday how ATG's technologies will coexist with Oracle's own e-commerce products, such as Siebel E-Commerce 8.1.1.

Oracle is currently evaluating ATG's product road map and will update customers at a later time, according to a statement.

While ATG had been considered an acquisition target, the emergence of Oracle as the buyer came as a bit of a surprise, said 451 Group analyst China Martens via e-mail.

The move is "definitely about expanding Oracle’s presence at the many customers it and ATG share," Martens added. "We also see it as another move against IBM, given that ATG always put IBM WebSphere Commerce as its prime competitor."

"We also get the sense that bringing together ATG with Oracle’s recent push around marketing automation, thanks in part to the purchase of Market2Lead, could be a way to better combine and match up information about web site visitors’ buying patterns (from ATG) with the information MA creates around marketing campaigns," she said.

While ATG benefits Oracle, the reverse is true as well, according to Forrester Research analyst Brian Walker. "Oracle has had a significant hole in terms of e-commerce capability needed by their ERP, CRM, and supply chain clients," he wrote in a blog post. "ATG has lacked enterprise order management and CRM capabilities required by their more sophisticated clients."

Although the vendors share many customers, integration of their products will be "tricky and possibly slow" due to Oracle's existing product set as well as cultural differences in the companies, Brown said. "Oracle has had an IT orientation, selling into the technology teams and seeking to drive value to the CIO. ATG has had a largely business orientation, seeking to drive the goals and objectives of the channel leaders and CMO."

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's e-mail address is Chris_Kanaracus@idg.com

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