Oracle Joins Rivals to Advance Cloud Computing

Ending a bitter feud, the database vendor enters into a cloud-centric deal with Salesforce.com, and announces similar agreements with Microsoft and NetSuite.

Larry Ellison and Marc Benioff, the CEOs of Oracle and Salesforce.com, respectively, apparently ended a long-standing and sometimes bitter public rivalry when they recently agreed to a nine-year deal under which their companies will integrate their technologies.

Announced last month, the agreement calls for Salesforce.com, long a user of Oracle's database, to standardize on Oracle's Linux operating system distribution, Java middleware and Exadata server platform, and use Oracle's Fusion human capital management (HCM) services and cloud-based financial software. Oracle will integrate Salesforce.com's software with those applications.

The key question now: Who gains the most -- the Oracle and Salesforce.com marketing engines, or customers?

According to Ellison, it's the customers. The two companies will work closely to improve security and standardize links and thereby speed deployment, ensure the quality of the customer's integration and reduce downtime, he argued in a conference call with reporters and analysts.

The pre-integration work could cut deployment costs in half, Ellison said.

Gartner analyst Michael Maoz disagreed, saying the integration of Oracle and Salesforce.com products will help only a small percentage of users. He estimated that just 4% to 6% of the joint installed customer base, large users mostly, could benefit. "The vast majority of Salesforce.com customers aren't doing much integration to begin with," he said.

Left unanswered is when the packaged integrated offerings will be available, and what the new working relationship will mean for Oracle's own customer relationship management products. In the past, Ellison has said many Salesforce.com customers have "chucked" Salesforce.com CRM software in favor of Oracle's.

In the conference call, Ellison told reporters that "Salesforce.com and Oracle have some overlapping products, but there are far more opportunities to work together than to compete." His tone was a departure from the days when he said Salesforce.com's platform was difficult for customers to migrate away from and described it as a "roach motel" where "you can check in but you can't check out."

The Salesforce.com deal came the same week Oracle signed similar agreements with Microsoft and NetSuite.

Under the former deal, Oracle technology --including the database, Java and other products -- will play a more prominent role in Microsoft's Azure cloud service. Oracle will also support Microsoft's Hyper-V virtualization software.

Oracle and Microsoft have worked amicably on initiatives in the past, but "in the world of cloud computing that kind of behind-the-scenes collaboration is not enough," Microsoft CEO Steve Ballmer said during a press conference. "People wanted more from us. People wanted more from Oracle."

Oracle also agreed to integrate its own HCM cloud service with NetSuite's cloud-based ERP services.

Michael Fauscette, an analyst at IDC, said that agreement is a "really good thing" for NetSuite customers, in particular, because it gives them an Oracle software option.

Underscoring all the agreements is the recognition that there's a need for more support for and stronger integration of products used in cloud platforms, analysts said.

"[It's] a recognition on Oracle's part that cloud-based software delivery is becoming a marketplace reality, and it needs to be actively engaged if it wants to gain the benefits of that market," said Charles King, an analyst at Pund-IT.

Kanaracus is a reporter for the IDG News Service.

This version of this story was originally published in Computerworld's print edition. It was adapted from two articles that appeared earlier on Computerworld.com: " Ellison and Benioff Bury the Hatchet and Make Nice" and " Oracle and Salesforce Integration May Benefit Small Number."

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This story, "Oracle Joins Rivals to Advance Cloud Computing" was originally published by Computerworld.

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