TechPulse 360

Safra Catz, President, Oracle (credit: wicho)

The strategy of tailoring business software to the needs of a particular industry isn’t entirely new. Nor is Oracle’s plan to use it as a weapon against SAP.

But with the market for “vertical” applications expected to soon eclipse the

traditional ERP market in size, it is more important.

At a meeting with analysts last week, Oracle boasted its efforts would allow it to catch its rival. “They see us in their rear view mirror,” said President Safra Catz of the world’s largest business applications vendor, SAP. “Objects in the mirror are bigger than they seem.”

Oracle used the analysts event to say it would enter more industries than the two new ones it announced during last week’s OpenWorld conference: insurance and health sciences. It did not offer details.

But Catz said there is $62 billion in expected spending on industry-specific applications by 2011 and that these purchases pull in sales of other Oracle products, such as its database and middleware.

To jump start its efforts, Oracle has been a big acquirer of software companies with industry-vertical products. More recently it set new structure around this expansion, forming business units by handle industries and integrating new products with its core ERP offerings. In almost four years, Oracle has acquired 50 companies and now serves 320,000 customers (a figure recently updated from 300,000).

So what’s next? If prices keep falling, Oracle will consider more acquisitions by “buying companies on the cheap, if they are available,” said CEO Larry Ellison.