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Oracle is getting into bed with its rivals

"Co-opetition".

Oracle CEO. Photograph: Getty Images

Oracle's integration partnerships with salesforce.com and NetSuite will have some observers scratching their heads. And rightly so. I believe it was our American friends who came up with the word "co-opetition", to describe that slightly perilous state in which competitors agree to work with one another. But never has that word been more apt than in the case of a partnership announced as went to press: Oracle and salesforce.com are getting into bed together in a comprehensive nine-year partnership. Unlikely? You’d better believe it. Not only that, but Oracle announced another integration deal with yet another competitor: NetSuite. What gives?

Let’s recap. Salesforce.com founder and CEO Marc Benioff used to work for Oracle CEO Larry Ellison. Ellison even put in some money to his new venture and sat on salesforce.com’s board. Benioff once proudly told me that he is the only person who has ever sacked Larry Ellison, after he stripped him of his board seat when it became clear salesforce.com would compete with Oracle.

Over the years relations between Benioff and Ellison seem – on the face of it at least – to have gone from bad to worse. During an Oracle OpenWorld conference in 2010 Ellison sniped at salesforce.com, saying, "Salesforce has a weak security model - everyone's data co-mingles on the same platform and if that goes down, everyone goes down. It is not fault tolerant, it's not virtual and it's not elastic."

In October 2001 at another Oracle conference, Marc Benioff was unceremoniously dumped off the speakers’ roster. He said at the time, "Oracle just cancelled my keynote tomorrow. But the show must go on! Everyone is welcome to join me at Ame Restaurant tomorrow to hear about the social enterprise. Sorry Larry, the cloud can't be stopped."

So to say it’s surprising that the two companies announced a nine-year partnership as went to press is an understatement. Salesforce.com plans to standardise on the Oracle Linux operating system, Exadata engineered systems, the Oracle Database, and Java Middleware Platform. Oracle plans to integrate salesforce.com with Oracle’s Fusion HCM and Financial Cloud, and provide the core technology to power salesforce.com's applications and platform. Salesforce.com will also implement Oracle’s Fusion HCM and Financial cloud applications throughout the company.

As Quocirca principal analyst Clive Longbottom told me, "The biggest is issue may well be in having two egos – Benioff and Ellison – in the same place."

"Oracle has struggled to provide a working and compelling on-demand hosted or cloud service in its CRM (or any other) offers.  By tying in to Salesforce, it gets access to an existing customer base, but more to the point gets an offer to make to its own customers," Longbottom said. “Salesforce is at a point of product penetration where its cost of sale must be increasing - the tie-up gives it access to Oracle customers who may be willing to move to Salesforce if it doesn't upset Oracle.

"Salesforce also gets access to new hardware at what I would expect would be pretty decent pricing.  At some stage, the Salesforce platform will need upgrading, and this must be keeping Benioff awake at nights as to the cost and disruption.  With access to the Sun hardware portfolio, the problems can be made less," Longbottom added.

However he concluded: "Nine years is a long time - I doubt the agreement will run that long."

Barely a day went by before Oracle announced another integration deal, this time with NetSuite, the pair forming an alliance to offer integrated HCM and ERP cloud services to mid-size customers.

Under the alliance, Oracle's human resources software will be integrated with NetSuite's services for enterprise resource planning (ERP). The alliance will also see Deloitte work with both the firms to develop specialists in tools and implementation services to help customers adopt the SaaS technologies faster.

Oracle president Mark Hurd said driving the development and retention of the right talent, and getting strategic data around HR practices can help mid-size companies transform their business operations.

"NetSuite and Oracle are now working together to provide access to Oracle's leading enterprise-level cloud-based HR & Talent Management solutions that are integrated with NetSuite's Cloud ERP suite applications," Hurd said. "With Deloitte implementing these integrated solutions, mid-size companies can quickly gain access to an incredible new level of HR management that can help impact their bottom line."

NetSuite CEO Zach Nelson said: "Customers will benefit from the commonality of the products' underlying Oracle-based architecture and the enormous investment in R&D and customer service that both companies bring to the table."

It’s clear that having initially been sceptical of cloud computing, Ellison and Oracle are taking cloud very seriously indeed. So seriously, in fact, that it sees working with erstwhile competitors as critical to building its own ecosystem. It really does feel like a new dawn in the enterprise applications space.