Oracle's master stroke: Boxing, locking Salesforce in

Oracle's master stroke: Boxing, locking Salesforce in

Summary: Oracle got everything it wanted including a marketing pitch via its cloud partnership with Salesforce. Meanwhile, Salesforce has some serious strategic items to worry about.

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Oracle CEO Larry Ellison loves ads in airports touting industry wins and big customers. Rest assured that Oracle already has its best airport ad already written following the Salesforce cloud partnership. The punch line: Salesforce runs on Oracle apps.

benioffandellison-wrestlers
If you listen closely you can almost hear Ellison holding Benioff's head over the toilet and threatening to flush as the two negotiate a nine-figure software deal

 

In a stunner, Oracle and Salesforce rolled out a nine-year partnership focused on applications, platform and infrastructure. To wit:

  • Salesforce will use Oracle's Linux OS;
  • Exadata engineered systems;
  • Oracle's database;
  • The Java middleware platform;
  • Salesforce will integrate its services with Oracle's Fusion HCM and Financial Cloud;
  • And the real kicker is that Salesforce will implement Oracle's Fusion HCM and Financial cloud apps throughout the company and trump Workday.

Marc Benioff, Salesforce CEO, called the partnership "the best of both worlds." Ellison said it's important Salesforce and Oracle work together well. Parker Harris, executive vice president of Salesforce, said deploying Exadata engineered systems will cut costs and make the company more efficient.

orclcrm062513
Oracle is a wee bit happy about putting Salesforce on its red stack.

 

Earlier: Oracle-Salesforce partner: 10 (mostly shocked) reactions |  Is Salesforce building on Oracle's next-gen database? | Salesforce's Oracle database dependence: Can it open source its way out?

If you listen closely you can almost hear Ellison holding Benioff's head over the toilet and threatening to flush as the two were negotiating a nine-figure software deal. Oracle got everything it wanted including a marketing pitch.

Meanwhile, Salesforce has some serious strategic items to worry about. Consider:

  • How can Salesforce say that Oracle's apps aren't up to snuff when it runs on them?
  • Salesforce is now officially locked into Oracle information and has the maintenance, license and hardware concerns just like other large enterprises.
  • Salesforce won't be able to position Oracle as a non-cloud play.
  • Workday, a key Salesforce partner, is now alienated.
  • It's unclear whether standardizing on Oracle's stack makes any sense for nine years when Salesforce increasingly will have to mine big data insights.

Peter Goldmacher, an analyst at Cowen & Co., summed the give and take on the deal:

We get Salesforce standardizing on Oracle Server Technology and Exadata; they are a committed Oracle infrastructure customer, and buying the entire stack makes sense. While we continue to believe salesforce.com must upgrade its core technology to more contemporary data management programs to optimize its longer-term opportunity, that option just got set back nine years. The integration story likely formalizes a relationship that has been in place de facto for years as CRM customers continue to integrate data from a variety of sources, especially as enterprise penetration continues. We view this as an admission on Oracle's part that its Salesforce cloud offering can't compete (not news to Wall Street) and that if you can't beat 'em, join 'em...

While we are sure Salesforce will try to position itself as a close partner with both Oracle and Workday, the decision to move towards Oracle, as today's press release indicates, won't be well received at Workday. It could also negatively impact Salesforce's positioning in the field vis-a-vis Oracle as CRM poster child for bad software is now one of its biggest and most important apps providers.

Deutsche Bank analyst Nandan Amladi was a bit more positive. Amladi said Salesforce gives Oracle on major reference customer on multiple fronts, but may also enable Benioff & Co. to land more customers. Amladi said:

A tighter integration with Oracle’s HCM and Financial Cloud products simplifies adoption of Salesforce.com’s products by Oracle’s customers, leading to quicker implementation times and incrementally faster path to revenue recognition.

Amladi may have a point, but in the early going Oracle looks like it got the best of the Salesforce partnership.

Topics: Software, Cloud, Oracle, Salesforce.com

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12 comments
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  • Smarter guy won

    Benioff always made it a point to try to belittle Ellison but Ellison showed him he's older smarter and holds the cards. Never underestimate the ego of Ellison to find a way to make you eat your words.
    new gawker
  • Goodbye Salesforce

    ... we hardly knew ye...
    aureolin
  • Hostile Take over the cheap way

    This proves that Salesforce.com is not genuine technology depending on its #1 competitor for almost everything. Oracle is basically taking over Salesforce.com the cheap way.....

    Now is the time for the other vendors to play hard and make a ton of money such as Salesboom.com and Sugar
    CRMdesign
    • Reverse take over...

      It certainly does open the door to competition but this is hardly a take over on the cheap. Its a reverse take over. Oracle actually gets paid by Salesforce to take it over. LMAO!!
      ryork272
  • This ranks up there with Netflix

    Benioff just pulled a Netflix... changing direction for no particular reason. The difference is Netflix's self induced kick in the nuts was reverseable. At least Netflix didn't pour gasoline on itself and light the match. Salesforce signed up for a 9 year death march. However, my guess is that Larry will light the match well before the 9 years is up.
    ryork272
  • Salesforce just lost its Cloud chops

    Strange call to lock your company into Oracle's mainframe 1970s technology while the industry is shifting to big data, cloud, and predictive analytics - none of which Oracle has. By your own admission, its a mainframe. All that to get an invite to Uncle Larry's boat? Workday should come out with SFA now.. mojo factor gone. Another clunk enterprise company now
    BoringMe2Death
    • Oracle's mainframe 1970s technology???

      Really? Do you actually understand Oracle's technology and architecture? No big data, no cloud? Are you kidding? You do need an Oracle 101 reset!
      Eleutherios
    • Suuuuuure

      Here, let me invest in you the 1 minute it took me to find the info in the "internetz":

      http://www.oracle.com/us/technologies/big-data/index.html

      You're welcome!
      rkimoto
  • This must be why...

    ...my company is moving away from SalesForce.
    PollyProteus
    • Really?

      To what? Lol. Msft? SugarCRM?
      jessiethe3rd
  • pretty weak analysis

    Nice color, but goofy logic... Not that I know whether this is good for SF.com or not, the analysis here is ignorant. Chief Editor, eh?

    How can Salesforce say that Oracle's apps aren't up to snuff when it runs on them?

    SF.com offers a better and clearly dominant SFA/CRM than Oracle. Nothing about this changes that if you understand what SF.com offers vs what Oracle offers.

    Salesforce is now officially locked into Oracle information and has the maintenance, license and hardware concerns just like other large enterprises.

    I don't think it's a secret that SF.com always used Oracle DB technology. So what if there are some additional internal apps.

    Salesforce won't be able to position Oracle as a non-cloud play.

    Sure they can. Any cloud-based (or SaaS) solution uses non-cloud software technologies in their solution architecture. This is just a stupid comment.

    Workday, a key Salesforce partner, is now alienated.

    Is that material?

    It's unclear whether standardizing on Oracle's stack makes any sense for nine years when Salesforce increasingly will have to mine big data insights.

    Oracle doesn't have any big data solutions? The agreement somehow precludes using Hadoop or anything as a supplement to the stack?

    Really a silly set of points.
    ollie man
  • Salesforce and Oracle forgetting the small customers !

    Another indication that Salesforce is really an Enterprise App and not really ideal for the smaller to mid size business.

    Checkout www.g2crowd.com for independent CRM comparisons and reviews.

    Ian Moyse
    Workbooks
    ianm32@...