Oracle is to take a controlling stake in Indian banking software player i-flex Solutions.
The current i-flex management team will continue to run the company but Oracle [ORCL] president Charles Phillips will join the board and the Mumbai, India-based company will carry on trading on the Bombay Stock Exchange and the National Stock Exchange of India.
This approach will be due in part to Oracle not owning 100% of i-flex. However this should not prevent Oracle from reaping the benefits of i-flex’s reputation in the banking vertical. That said, it would come as no surprise if Oracle were to buy the outstanding stock and fully incorporate the company in due course. The existence of a semi-independent entity does not fit with its all-inclusive Fusion project objectives.
As far as products are concerned, the stated aim is to align product development, sales, marketing, and services activities with Oracle. i-flex has been optimizing its applications for Oracle’s technology platform since 1997.
The deal also brings Oracle into close proximity with IBM once again because i-flex is an IBM global partner and its software runs on IBM software and hardware. Although Oracle is fiercely competitive with IBM as far as database and middleware technology is concerned, it has a partner relationship with the company in the applications space because when Oracle acquired the PeopleSoft/JD Edwards combo it effectively became IBM’s largest ISV.
Oracle maintains its relationship with IBM improved once the PeopleSoft acquisition went through but there are questions about how the partnership will progress in the long term given Oracle’s Fusion middleware and applications strategy. Mr Phillips said the i-flex products will continue to run on the IBM platform.
The deal will put increased pressure on SAP, which has also identified the fragmented banking vertical as an important area of new opportunity but has not boosted its chances through strategic acquisitions in the area. In contrast, Oracle has now made acquisition-led inroads into two key verticals, banking and retail, where SAP also has ambitions.
