Oracle is bidding almost £250m ($495m) product lifecycle management software Agile Software.
PLM tools help an organisation track the development of its products and document and support that process.
"It's increasingly hard for a company to differentiate itself from the competition," said Jon Chorley, vice president of supply chain execution and PLM strategy at Oracle. "There's really not much left. There's really only innovation. How you develop new products will be critical."
Subject to regulatory and shareholder approval, Oracle hopes to close the acquisition of Agile in July. Agile will then become part of Oracle's applications business and the company plans to more tightly integrate the PLM software with its other business software.
Oracle will look to integrate its Siebel customer relationship management software with Agile so that customer feedback on products can be fed into the product, as well as linking demand management data from its enterprise resource planning applications to the PLM software.
Oracle will no longer sell its existing PLM software, although it will continue to support customers who are already using it, Chorley said. Agile will become the vendor's de facto PLM offering and Oracle at some point may encourage Oracle PLM customers to transfer to Agile.
Oracle PLM, which to date has only attracted a small number of customers, lacks some key functionality including the ability to integrate with computer-aided design (CAD) software, whereas Agile has links into a wide variety of CAD vendors' products.
Oracle intends to support Agile's links into third-party applications, notably those of Oracle's prime applications competitor SAP. Several hundred of Agile's 1,250-plus customers also use SAP's software, according to Jay Fulcher, president and CEO of Agile. By contrast, he estimates that 98 percent of Agile customers are also Oracle customers and more than 40 percent of those are running Oracle applications.
Although Agile's competitors vary by the markets they play in, "SAP is far and away our primary competitor across industries," Fulcher said. The company has tended to run into CAD players like Dassault Systèmes SA in the aerospace and auto industries. Dassault bought PLM software vendor MatrixOne in 2006 for $408 million.