Opinion

The True Meaning of the New Salesforce.com/Oracle Alliance: Pragmatism Overtakes Polemics

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Last month’s announcement of a “major” strategic alliance between Salesforce.com and Oracle attracted plenty of industry attention; but it holds more meaning for enterprise decision makers about how a new pragmatism is overtaking the polemics of the past in dealing with the realities of moving to the cloud in a hybrid environment.

Despite their history of sniping at one another, Mark Benioff and Larry Ellison not only share a common Oracle DNA but a love for a form of showmanship, which enables and encourages them to resort to bold statements that make for great soundbites that don’t necessarily match the realities of their businesses.

For instance, Benioff was happy to announce the launch of a new generation of database solutions along with the landing page, database.com, a few years ago to challenge Oracle’s position in the market even while Salesforce.com continued to be one of Oracle’s biggest customers.

At the same time, Larry Ellison enjoyed calling Salesforce.com’s architecture a “roach motel”, and ridiculed the overall Software-as-a-Service (SaaS) idea even as he was in the midst of acquiring various SaaS companies and getting ready to take credit for originating the cloud idea.

Benioff has taken pride in serving as the pied piper of the cloud movement, while Ellison is happy being its database arms dealer and imperial leader of the evil empire.

After years of poking holes in Oracle’s legacy systems and software, Marc Benioff admitted in last month’s joint announcement that Salesforce.com has become so reliant on Oracle’s database systems it can’t afford to change “‘ponies midstream” by moving to a new database architecture. So, despite all its public pronouncements regarding the virtues of a new generation of database solutions, including its own, Salesforce.com finds itself in the same position as many of its enterprise customers — so invested in old-world systems that it can’t take full advantage of today’s cloud innovations.

The message to other enterprise decision makers is that they may also have to accept living in a hybrid world for a long time to come unless they are willing to take more risks than Salesforce.com was ready to take on.

Ever the pragmatist, Benioff has decided to turn this encumbrance into an advantage. In the same way Salesforce.com turned a series of service failures into a new service feature that promoted its transparency, Trust.salesforce.com, it is now using its Oracle database dependency as an opportunity to better understand the barriers to adopting its cloud CRM that other major enterprises are experiencing in their legacy environments. This will make Salesforce.com more empathetic to its enterprise customers’ needs, which will translate into new product innovations and partner programs.

For his part, Ellison is admitting he doesn’t offer the only CRM solution or even the best alternative for all his customers. Instead, he’s happy to have them take advantage of his database capabilities via Salesforce.com and other leading SaaS vendors that can serve as a channel to market for Oracle.

Again, the lesson for enterprise decision makers is that cloud/SaaS CRM solutions are now a very viable alternative to traditional, on-premises systems but still require robust database capabilities to power them.

The key message in this announcement for enterprise decision makers is that moving to the cloud is not an either/or proposition. In reality, most enterprises will continue to rely on a hybrid environment of old systems and software augmented by new cloud services and SaaS applications.

Nearly every new CIO survey is finding a rapid rise in interest among enterprise decision makers in cloud/SaaS alternatives, along with lingering concerns about integration and interoperability to their legacy systems and software. The most recent example is the 2013 Future of Cloud Computing Survey conducted by North Bridge Venture Partners, in conjunction with GigaOM Research and 57 collaborating organizations including THINKstrategies and SandHill, which found more than three-quarters (76 percent) of survey respondents expect hybrid clouds to be the core of their cloud strategies for the next five years.

It is no wonder Oracle and Salesforce.com promoted the long-term nature of their “new” alliance in last month’s announcement. The length of the agreement should send another message to enterprise decision makers that the idea of the “cloud” is not just another overhyped, passing fad. It is a fundamental shift in the way software and system functionality is acquired and utilized.

[Disclosure: I’ve done work with both Salesforce.com and Oracle.]

Jeff Kaplan is the managing director of THINKstrategies, founder of the Cloud Computing Showplace and host of the Cloud Innovators Summit conference series, including the Cloud Channel Summit, November 4 at the Computer History Museum in Mountain View, CA. He can be reached at jkaplan@thinkstrategies.com

Comments

By Greg Kall

I think you are missing the bigger point: this alliance represents a “throwing in the towel” on the CRM front, and will presage same for ERP and other domains, short of rational DB. Short ORCL.

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