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Oracle and Salesforce.com's love-fest: The ripple effects

Chris Kanaracus | July 1, 2013
The companies' partnership has implications for Database 12c, rival vendors like Workday and both Oracle and Salesforce.com customers.

Oracle's string of high-profile cloud-computing partnership announcements with Microsoft, Salesforce.com and NetSuite dominated tech news headlines this week.

While certain aspects of them weren't as "startling" as Oracle CEO Larry Ellison had promised they would be, its deal with Salesforce.com definitely lived up to the hype and could have some lasting ramifications. Here's a look at the potential fallout.

A test for Oracle 12c
The partnership announced this week by Oracle and Salesforce.com, under which Salesforce.com willcommit to Oracle's database and other technology for 12 years, stands to provide a major initial test case for the cloud computing-friendly capabilities built into Oracle's newly released Database 12c.

The release's most-hyped feature, "pluggable databases," allows many individual databases to reside inside a single instance. It represents Oracle's take on multitenancy, the architectural approach SaaS (software as a service) vendors such as Salesforce.com have used to serve many customers more efficiently.

But Salesforce.com has used multitenancy at the application tier; Ellison claims Oracle 12c's method is superior and more secure.

While Salesforce.com CEO Marc Benioff didn't explicitly call out the pluggable database feature during a joint conference call with Ellison on Thursday, he expressed confidence that Oracle's technology can carry Salesforce.com through "the next one or two decades" and said the company expected to cut its database server costs in half.

As Ellison noted on the call, Salesforce.com is the industry's largest pure cloud vendor. Assuming Salesforce.com makes a successful migration to 12c, expect Oracle to spare no effort in telling the industry about it in hopes of proving 12c's readiness for mega-scale deployments.

What will Workday do?
Under the deal, Salesforce.com's CRM software will be integrated with Oracle Fusion HCM (human capital management) and cloud-based financial products, and Salesforce.com will implement those two Oracle applications "throughout the company." This has resulted in speculation about Salesforce.com's ongoing relationship with cloud HCM and financial vendor Workday, which has been close.

Workday should contemplate drastic steps in response, according to one observer.

"Now that SFDC and Oracle are no longer enemies, we aren't convinced that WDAY should still consider CRM a friend," Cowen and Company analyst Peter Goldmacher said in a research note. "It shouldn't come as much of a surprise if Oracle and SFDC elevate the partnership beyond formalized product integration in the coming quarters. Workday needs to control its own destiny."

To that end, "we think Workday has to reconsider creating its own CRM product," along with LinkedIn, Goldmacher added. A next-generation CRM application from those companies could make Salesforce.com "a legacy system in world record time," he wrote.

Concern for customers?
Oracle and Salesforce.com's plan to integrate their software applications will be good for customers, since packaged and supported integrations will be lower-cost than expensive custom development projects, according to Ellison.

 

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