Salesforce's Oracle database dependence: Can it open source its way out?

Salesforce's Oracle database dependence: Can it open source its way out?

Summary: Salesforce is acquiring a laundry list of databases: NoSQL, PostgreSQL and Oracle. Oracle, however, is rumored to have landed a nine figure deal from Salesforce. Ouch.

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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.

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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.

Also: PostgreSQL: Enterprise traction, challenges ahead | EnterpriseDB's Tom Kincaid - why did SalesForce.com hire PostgreSQL expert?

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:

  1. Buddy Media built its platform on the MongoDB and spoke at New York NoSQL meetups.
  2. Heroku relies on PostgreSQL.
  3. 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.

Topics: Software, Data Management, Enterprise Software, Open Source, Oracle, Salesforce.com

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4 comments
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  • Doesn't Larry own a stake in Salesforce too?

    I would doubt if all this was anything more than a negotiation tactic by Salesforce. Re-architecting the entire solution would cost way beyond what Oracle is asking for.
    mm71
  • Is it unusual for corporations to use competitors products?

    Do Oracle employees eat their own dog food and run Oracle Enterprise Linux and/or Solaris x86 (or x86_64) desktops with the OpenOffice productivity suite? Or do they run Apple's OS X-based Macs with the iWork productivity suite? 'Cuz Microsoft is an enterprise competitor of Oracle's (in the server OS, database management system and business intelligence markets) and purchasing Microsoft Windows and Office licenses for the enterprise would support a competitor. No?

    How is a relational database management system any different? Ignoring Salesforce's recent introduction of it's Heroku PaaS service that runs on PostgreSQL?
    Rabid Howler Monkey
  • There's a Salesforce's competitor already using PostgreSQL w/great results

    Take a look on MINDQUBE.COM, these guys have built a great Cloud+P/SaaS platform 100%. It's BYOD & Remote Working oriented and 100% usable from any PC/Laptop or Android/iOS device with just a standard browser.
    This paltform solved us our need for a flexible CRM and on-line quotations. They "built"it in a few hours from an iPad, but the great thing was they don't stop on CRM needs, they also offer other busines apps like Customer Service, POS, Procurement, WMS, Logistics Ops, etc. all of them 100% personalizable the times you wish and with a free API to connect with other systems. The amazing thing is that you can build your own apps from a smart phone at no extra cost. Suscription is less than $30/month per user and include ALL the staff from mobile access and report/pdf generator to workflow and business logic management. It seems will change the way how sw development industry is known.
    Ivan Chiappe
    ventas@...
  • PostgreSQL up to the mark

    This article posits that it mat not be possible for Salesforce to achieve anywhere the level of scalability and robustness in PostgreSQL as a replacement for many of their Oracle databases.
    It has become common for various sectors of the proprietary tech industry, and technology media pundits to make assumptions about Free/Open Source Software (FOSS) as not being up to par in comparison with their proprietary counterparts, and/or having an equivalent level of professional, competent support for the long term. In fact, the reality is generally quite the opposite, with many proprietary software firms regularly dropping software development and support in many cases on very short notice and without plausable explanation for their dependant clients. This type action has usually been determined at later date to be financiall motivated in regard high end profits.

    Postgresql has unequivocally proven itself in several very high end demanding database projects requirements, to the degree that companies like IBM and RedHat have made become involved in it's development either directly or thriugh EnterpriseDB.
    wanderson