Salesforce has been increasingly looking into PostgreSQL, an open source database, and hiring people who could provide some alternative to Oracle. The rationale is clear: Salesforce needs to diversify away from Oracle's databases and potentially rearchitect for the future.
In a research note, JMP Securities analyst Patrick Walravens floated two tidbits about Salesforce, which acquired ExactTarget for $2.5 billion on Tuesday. Walravens noted:
We did come across two interesting comments in our Oracle due diligence that relate to salesforce.com: 1) Oracle may have closed a nine figure deal with salesforce.com during F4Q, and 2) that former Oracle EVP of North America Keith Block may be considering joining salesforce.com once his non-compete expires later this month.
The most interesting nugget from Walravens revolves around the nine-figure Oracle deal. At the moment, no one is confirming this deal, but rest assured that Oracle execs will yap about it during an earnings call if true. Oracle's fourth quarter just ended.
Let's connect a few speculative dots:
- In recent weeks, Salesforce's move to hire Tom Lane, a leading contributor to the PostgreSQL, has raised a bit of a ruckus. The idea is that Salesforce was going to diversify from Oracle. Whether Salesforce migrates much to PostgreSQL remains to be seen. But Salesforce needs to find a second supplier just to keep Oracle on its toes.
- At the moment, Salesforce's business runs on Oracle, which will tell you that fact every 5 minutes or so. Oracle happens to be a fierce competitor. The Salesforce and Oracle relationship on infrastructure is a bit odd since in most cases the two are trying to kill each other. Now, Oracle-Salesforce relationship isn't as odd as Apple being Samsung's biggest customer, but it's up there.
- The Lane-PostgreSQL stories happened to appear in late May just as Oracle's quarter was closing. Perhaps that news gave Salesforce a bit of leverage in negotiations.
- In any case, it's a bit notable when Salesforce is paying nine figures to a rival.
- The biggest unknown here is the length of any Salesforce database deal with Oracle. A 10-year deal says a lot more about the relationship than a three-year contract. Contract terms, which are likely to never be known, would also provide a hint on how fast Salesforce can minimize Oracle.
Longer term, there may be an architecture issue, noted Cowen & Co. analyst Peter Goldmacher. In the future, Salesforce will be about big data and mining it. Can a traditional database handle that level of analytics? Probably not without help from NoSQL infrastructure and Hadoop.
"Salesforce absolutely 100% must get off Oracle and cost is the least of the issues," said Goldmacher. "Oracle (or any RDBMS) is far too rigid if Salesforce is really going to take advantage of the enormous amount of data it has. It's not just the standard reporting/analytics they have to partner for, but it's also the missed opportunities/flexibility to leverage all that data in so many ways. Workday is built on a NoSQL infrastructure and it's a huge competitive advantage."
Salesforce has already acquired a lot of NoSQL infrastructure via its various purchases. To wit:
- Buddy Media built its platform on the MongoDB and spoke at New York NoSQL meetups.
- Heroku relies on PostgreSQL.
- Exact Target doesn't detail its databases, but noted in SEC filings that Hadoop and Microsoft SQL Server are in its infrastructure.
How Salesforce sorts out its various database tools remains to be seen. For now, Salesforce has a bevy of databases, but still relies too much on Oracle. For all of Marc Benioff's big sales pitch, it's possible that Oracle has the company over the licensing barrel to some degree.