A couple of weeks ago when the war of words between oracle CEO Larry Ellison and Salesforce CEO Marc Benioff went down, many of us characterized the battle as the tired old vendors versus the new upstarts. Commentators got tunnel vision parsing the events as a kind of binary example of the end of one era and the start of the next. of course, as is always the situation, the truth is far more nuanced than that and the recent announcement that oracle is buying CRM vendor RightNow speaks to this.

First some more color on the RightNow acquisition. Fellow cloud commentator Phil Wainewright has classified this as an acquisition of one of the “old guard” of SaaS companies. He points to the fact that RightNow is primarily built around a single-tenant construct and that this nicely melds with Oracle’s own stance that multi-tenancy is some kind of uber-evil and an archaic technology methodology. Regardless of the fact that Oracle’s own version of single-tenancy predates multi-tenancy by a long while, there would appear to be a disconnect between that statement and a paper by Greg Gianforte, CEO of RightNow in which he says;

[multi tenancy’s] resiliency in these tough economic times derives from the extraordinary value proposition of hosted applications for customer service and CRM software.  Multi-tenancy hosted applications are increasingly attractive to middle-market and enterprise corporate buyers, particularly important in this period of a challenged economy for companies and heightened accountability for IT executives.  Compared to conventional environments, a multi-tenancy hosted application environment:
•  Accelerates significantly time-to-benefit from years to a few months or even weeks;
•  Decreases investment dramatically—up to a 50 percent or more savings with customer service and support software; and
•  Relieves the customer burden of steep investment costs related to infrastructure, licensing, deployment and integration complexities, and shifts any headaches to the vendor.

While I absolutely hold that this confusing perspective with regard tenancy is a cause for some concern and creates a disconnect between RightNow and its new corporate overlords, what is really happening here is a reinvention of Oracle into a company that both gets cloud as a delivery mechanism but also delivers applications in a way that speaks to a cloudy world. We’re also seeing Oracle aim its sights down the food chain and think about providing nimble solutions for companies or business units that are to small to consume its traditional offerings.

Which leads us back to the rebuff of Benioff at OpenWorld. At the time it seemed strange given that Salesforce is a major Oracle customer and the significant history between these two vendors and their respective CEOs. This acquisition and the strategy it would seem to indicate clarifies what was going on behind the scenes back then. Oracle is putting a stake in the ground in two different ways with this deal.

Working Down the Food Chain

Oracle’s traditional customers have been big enterprises. RightNow, regardless of the cloudy aspect of the deal, is an offering that plays into a whole new market segment.  What we’re seeing is an admission on the party of oracle that to ensure continues commercial success, they have to embrace a new tranche of customers, those growing enterprises that re smaller than traditional oracle buyers.

In the same way that Salesforce’s acquisition of Assistly sees it head further down the food chain from its usual customers, so to does this acquisition start to indicate just how much Oracle wishes to connect with the “new generation”.

It seems to me that more will need to change than the product mix however, as I pointed out recently, Oracle needs to learn how to leverage blurred lines between media, analyst and the chattering public in order to really engage the marketplace.

Embracing Cloud. Truly

OpenWorld signaled Ellison’s move away from deriding the cloud to embracing it. True he’s embracing a particular flavor of cloud (one which sits atop Oracle technology and shies away from multi tenancy for example) but it’s cloud nonetheless. This acquisition is tacit admission that Oracle’s own Fusion product really doesn’t cut the mustard as a cloud delivered product and that salesforce’s pitch articulating the themes of “true cloud” and “social enterprise” is actually making inroads. Again Wainewright discounts the RightNow deal saying;

The choice of RightNow sends further signals about the kind of cloud vendor Oracle will prefer to acquire. Over the years, RightNow has had more than a few critics of its SaaS model, which has been much closer to Oracle’s notion of hosting customers in clustered ‘pods’ of servers than more purist definitions of multi-tenancy (of which there are many)… As time goes on, I suspect they’ll find it harder and harder to compete against more technologically and economically agile vendors that more effectively leverage true cloud architectures.

This may be the case (although given Gianforte’s comments about multi tenancy I’d not be so sure) but it’s undeniably a step in the right direction for a company once entirely dismissive of cloud.

And Next Up. NetSuite

I’ve said a number of times in the past that NetSuite is a good acquisition target – for a couple of years now I’ve predicted an uber-partnership between them and salesforce but I have to agree with those that say that, given Ellison’s majority shareholding in NetSuite, there would be a pretty comfortable fit between Oracle and NetSuite. Add to this the fact that NetSuite would make a nice fit for RightNow (despite the collateral damage of NetSuite’s own CRM product) and I’m imagining the headlines to come announcing Larry’s takeover of the San Mateo company. And that would be a truly fascinating situation. One where a consistent technology offering, from hardware and infrastructure to middleware and applications, was all under the roof of one company. There’s a bunch of people in SAP’s global headquarters who are mulling over that very possiblity, and the challenegs it would raise, right now.

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

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