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You are here: Home / Business Briefing / Oracle Buys Opower for $532 Million
Oracle Buys Utility-Focused Cloud Firm Opower for $532 Million
Oracle Buys Utility-Focused Cloud Firm Opower for $532 Million
By Shirley Siluk / CRM Daily Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
By acquiring Opower in a $532 million deal announced today, Oracle aims to become the largest provider of cloud services to the utilities sector, which has been under great pressure in recent years to become smarter and more data driven.

Based in Arlington, Virginia, the utility-focused cloud services company Opower -- founded in 2007 -- isn't even 10 years old yet. But its big data offerings have been quickly adopted by more than 100 large power companies as they've raced to enter the digital business era.

That rapid growth made Opower an attractive acquisition target for Oracle, which itself has a large business division targeting the utilities sector. By adding Opower to its existing energy industry portfolio, Oracle said it will become "the largest provider of mission-critical cloud services" to a sector valued at $2.3 trillion.

Two Companies Find 'a Natural Fit'

"This transaction accelerates our mission to build a clean energy future," Opower CEO and co-founder Dan Yates said today in a letter to his company's customers. "We believe the fit between our front-end customer engagement tools and Oracle’s back-end operational systems is a natural one."

Oracle Utilities provides a suite of cloud-based services and applications that enable electric, gas and water utilities to automate operations and ensure compliance in the tightly regulated industry. Opower, on the other hand, offers a platform designed to help utilities manage a variety of interactions with their customers, from delivering personalized messages encouraging energy reduction during peak usage hours to providing alerts and detailed insights about billing.

"The $2.3 trillion utility industry is in transition, driven by customer expectations, new technology and energy-saving regulations," Opower said in an FAQ about the Oracle acquisition. "Utilities are looking for data-driven solutions that engage customers while promoting energy efficiency. Together, Oracle and Opower will provide end-to-end solutions that increase utility customer engagement and satisfaction while improving operational and energy efficiency program results."

Targeting 'Entire Utility Value Chain'

Expected to close later this year, the acquisition has already won unanimous approval by Opower's board of directors. Until the deal is finalized, both companies will continue to operate independently.

Since 2010, Opower has grown rapidly from annual revenues of $11 million to estimated earnings of $161 million in 2016, much of that is recurring revenues from its cloud services subscribers. The company's combined customer base includes such large utilities as PG&E, Exelon and National Grid and covers some 60 million end-user customers. From that customer base, Opower manages, analyzes and stores large volumes of data, including information from more than 600 billion meter readings.

By adding its services to Oracle's existing utility offerings -- which cover analytics, metering, grid/network operations and consulting services -- Opower said the combined company will be able to offer cloud-based services that span "the entire utility value chain, from meter to grid to end-customers."

"Oracle's industry organizations maintain unique domain knowledge, specialized expertise and focused product investments, which currently includes more than 22,000 Oracle employees and over $700 million in annual R&D spend," Rodger Smith, senior vice president and general manager for the Oracle Utilities Global Business Unit, said today in a letter to Oracle customers and partners. "This model has proven highly successful across several industries, and we look forward to bringing these same benefits to the customers of Opower."

Image Credit: Opower At-a-Glance screenshot (pictured above) via Opower.

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