In a coming together of rivals, Salesforce.com and Oracle have signed a nine-year agreement under which the companies will integrate their technologies and Salesforce.com will make a significant investment in Oracle products for its cloud computing platform.
Salesforce.com, long a user of Oracle’s database, will standardize on Oracle’s Linux OS distribution, Java middleware and Exadata server platform, as well as continue to use Oracle’s database, according to the joint announcement on Tuesday.
Oracle will integrate Salesforce.com’s software with its Fusion HCM (human capital management) and cloud-based financial software, and Salesforce.com will also implement those two applications “throughout the company,” according to the announcement, which Oracle CEO Larry Ellison foreshadowed during Oracle’s earnings call last week.
“Larry and I both agree that salesforce.com and Oracle need to integrate our clouds,” Salesforce.com CEO Marc Benioff said in a statement. Tying Salesforce.com’s CRM (customer relationship management) software with Oracle’s applications represents “the best of both worlds,” he added.
“When customers choose cloud applications they expect rapid low-cost implementations; they also expect application integrations to work right out of the box—even when the applications are from different vendors,” Ellison said in another statement. “That’s why Marc and I believe it’s important that our two companies work together to make it happen.”
The pleasant tone of Ellison and Benioff’s prepared remarks belies the long-standing public rivalry between the two software executives, in which they have repeatedly lobbed verbal volleys at one another despite Salesforce.com’s use of Oracle technology and Ellison’s status as an early investor in Salesforce.com.
During the OpenWorld conference in 2011, Ellison called Salesforce.com the “roach motel” of cloud platforms, pointing to its use of the proprietary APEX programming language and alleging that it is difficult for customers to move to other services. “You can check in but you can’t check out” of Salesforce.com, Ellison said at the time.
Meanwhile, Salesforce.com has apparently locked itself deeper into Oracle’s stack for the foreseeable future.
It wasn’t immediately clear how much money Salesforce.com is committing to the deal, but the broad outline of the agreement revealed Tuesday suggests it is significant. It also seems to dim Salesforce.com’s interest in exploring the use of other database technologies besides Oracle’s, as some evidence has shown to be the case.
While not mentioned in Tuesday’s announcement, Salesforce.com is apparently going to use Oracle’s 12c database, which is expected to be released imminently. This could result in a significant architectural shift for Salesforce.com in the area of multitenancy, a concept applied by cloud vendors in the interest of serving many customers more efficiently.
Salesforce.com has used an approach where customers share a single instance of its application, with their data kept separate. But 12c pushes multitenancy into the database tier through a feature calledpluggable databases. Ellison has called Oracle’s approach superior and more secure than application-level multitenancy.
From a product standpoint, Tuesday’s announcement could also be seen as the final casting off of Salesforce.com’s image as a scrappy upstart making inroads against incumbent on-premises software vendors.
Nearing $4 billion in revenue, Salesforce.com hasn’t been able to call itself a startup for some time. But the specific product integrations with Oracle announced Tuesday would seem to position Oracle and Salesforce.com together against the likes of Workday, a rapidly-growing provider of cloud-based HCM and financial applications.
Of course, Oracle has a cloud-based CRM application of its own and will no doubt continue to compete with Salesforce.com in that line of business and others.
The Salesforce.com deal comes one day after Oracle announced a partnership with Microsoft that will see Oracle technology, including the Java programming language, play a more prominent role in Microsoft’s Azure cloud service.
On balance, Oracle’s moves reflect a master plan of Ellison’s making, according to Constellation Research analysts Ray Wang and Holger Mueller .
“Over the past decade, Oracle has emerged as the laggard in the cloud market,” they wrote in a joint blog post Tuesday. “VC’s had advised their startups not to build on Oracle to avoid the cost overhead and legacy database technology. Yet Larry Ellison remains the rare master of Sun Tzu’s Art of War strategies. In this latest effort, he shows his determination to serve as the arms dealer for cloud infrastructure.”