Differentiation by platform – the Oracle and Salesforce approaches

SUMMARY:

Salesforce and Oracle are emerging as leading competitive platform plays. Here is an outline of what it means.

platform warsEnterprise software runs in cycles that can be broadly characterized and form the basis of vendor competition. For instance, in the last 20 years, we’ve been through a cycle of bringing ERP, HCM, and SCM to virtually all businesses to support significant business innovations like just in time inventory management.

In the front office, there have been cycles oriented on CRM, consolidated into single systems, cloud computing whose arc is still extending, social media’s adoption, mobility, analytics and more. Many, but not all of these cycles have emerged and played out over a few short years while others, like cloud computing, continue to expand and morph.

Over the last year, we’ve witnessed the emergence of a new trend forming in which platform is the next engine of enterprise software. Yes, there are other trends but they are subsidiary to the platform which is the main event. The primary sticking point is that we still define platform overly broadly, a situation for which there is no right answer.

At the beginning of this year, Salesforce held an analyst summit in San Francisco. It was primarily dedicated to topics around Salesforce’s platform though it was not positioned as such. That’s not unusual in the early phases of a market cycle when it’s hard to figure out what’s most important and what’s background noise.

For Salesforce, it appeared that they have all of the needed componentry to position themselves as a platform vendor but that the messaging is still a work in progress. As with any product, being able to articulate the features and benefits is critical but mostly in the early part of a market move. Early on, it’s enough to make those statements and let the customer figure out the best use of a disruptive innovation. That seems to be what’s going on right now.

A week later, Oracle held a similar event in which it briefed us on the many facets of its platform yet also failed to put that stake squarely in the ground. There are differences between each vendor’s approaches to the platform, but many are relatively superficial, catering more to customer bases than to specific technology approaches.

To oversimplify, Salesforce positions platform as a well contained appliance that users consume. Oracle needs to expose many more elements because its customers have a great need to access platform components at different levels. Salesforce has the advantage of dealing with net new implementations, all of which are built on its platform at a high level of abstraction from the core elements. Its customers deploy apps built on its stack including infrastructure but also extending deep into development territory. The apps have a high degree of complementarity and can readily work together as evidenced by the AppExchange, its ecosystem of complementary app vendors.

On the other hand, Oracle’s customers are likely to have legacy systems that they can’t simply replace in a heartbeat. Consequently, Oracle provides different levels of platform services beginning with naked infrastructure technology and progressing to development tools and finally on to subscription applications.

Oracle positions the move to the cloud as a long process for its high-end customers whose current investments in technology and data centers will take time to run out. So their first steps might just as easily be to move a small handful of apps to cloud infrastructure as to develop net new cloud functionality. But, Salesforce, while projecting a simpler environment still needs to touch all of the bases for things like infrastructure, security, integration, response time and a lot more. It all boils down to different horses for different courses.

Despite these differences, the competition now is over what a real platform can do to help an enterprise to make money. Like it or not this means modern infrastructure, development and deployment tools that are accurate and fast, and an ecosystem of compatible providers. Fourth, there’s a need for training users in the new technology that aims at making them consumers rather than technologists. The so-called LoCode or NoCode approach.

If you don’t see an information utility forming, you might not see much need for the training aspect. But in every rollout of a successful disruptive innovation that becomes part of modern living including electricity, telephone, cable, the Internet, and social media, users have become consumers either because vendors have made their products foolproof or because users have come up a learning curve—often a bit of both. In either circumstance creating the consumer has been the key to diffusion.

My take

There’s little doubt that we’re in an era of building out the information utility. We are increasingly reliant on information not only from our businesses but information culled from numerous sources and sorted into useful, actionable knowledge. This is as disruptive as any earlier technology introductions. I’d argue it is more complicated because today’s disruption is often required to sit on top of earlier ones. Hence, it makes sense that success in this disruptive phase will require a solid grounding in what came before.

This is a case of few clear choices but only clear solutions for what’s directly in front of us. Moving existing apps to a data center in the cloud makes sense for many businesses, and it reduces the load on the end user in many cases but sprinting ahead to a new world in the cloud has many advantages too. The most obvious advantage is that deploying a common core and having that available to all consumers dramatically lowers the cost of technology acquisition and use while serving to force standardization of common processes. Exposing cloud applications through APIs that are delivered on the platform then allows customers the freedom to do as they wish. Hello customizations, goodbye supporting a gazillion versions of the software.

The spectrum of choices in this scenario, regardless of vendor, revolves around an Oracle model of many pieces/parts on one end and an everything is taken care of for you model a la Salesforce. There is demand for both and a grey area in the middle which guarantees us that platform wars, reminiscent of Edison vs. Westinghouse, will be with us a for a long time.

Endnote: this is very much a work in progress with much more to come in terms of fleshing out both positioning and messaging.

Image credit - via David Crane

Disclosure - Oracle and Salesforce are premier partners at time of writing

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