Salesforce.com plans to standardize on the Oracle Linux operating system, Exadata engineered systems, the Oracle Database, and Java Middleware Platform. Oracle plans to integrate salesforce.com with Oracle’s Fusion HCM and Financial Cloud, and provide the core technology to power salesforce.com's applications and platform. Salesforce.com will also implement Oracle’s Fusion HCM and Financial cloud applications throughout the company.
Technology names aside, this is very big news for any customer or potential customer considering the cloud as a future deployment option. The announcement also raises many questions.
Turning the clock back a few hours, Phil Wainewright said of the Oracle/Microsoft alliance:
Yesterday’s announcement, therefore, is all about maintaining control as enterprise workloads move cloudwards. Oracle knows that its own managed private cloud offering only suits a restricted, loyal core of the market; its broader strategy is to keep as many workloads as possible on its own database platform.
This latest announcement reinforces that strategy, adding some of the halo effect of being cloud savvy that Salesforce.com has enjoyed for several years.
There will be little immediate market impact because the announcement talks of futures rather than the present. However, it is thought that once the HCM and financials implementations are complete, Salesforce.com will represent one of the largest deployments among Oracle's user base. That of itself will be a powerful reference and potential validation for Oracle's cloud credibility which, to date, has been difficult to assess.
Workday and SAP under the gun?
More to the point - what impact does this have on Workday? Frank Scavo says:
If there is a competitive target in this announcement, it has to be Workday. SFDC will implement Oracle’s HCM and will integrate its Sales Cloud with Oracle’s HCM and also with its Fusion Financials product. This puts Workday in an awkward spot in that Workday leverages Force.com for its platform-as-a-service capabilities. It will be interesting to see how Workday reacts to this détente between Oracle and Salesforce.com.
Here's your answer. In a call with Aneel Bhusri, co-CEO Workday, he said that he didn't anticipate any impact. Hardly a surprise but then in calls with others, we see no signs that Workday is losing out to existing PeopleSoft shops that are looking to replace with a cloud solution. It will become a talking point in future investor calls at which time we will know more.
One thing's for sure, we will need to see large named customers to continue feeling comfortable about Workday's momentum in both HCM and financials applications.
Scavo describes Workday as the 'odd man out.' He adds:
While the use of Oracle Fusion within SFDC doesn’t mean much to SFDC customers, it does give bragging rights to Larry Ellison against Workday. Interestingly, NetSuite's CEO Zach Nelson was recently taking pot-shots ...at Workday ... At the time, I took it as a sign of Workday's competition with NetSuite in financial applications. Now I see it as part of a wider competitive alignment. Both Zach Nelson and Marc Benioff [CEO Salesforce.com] are Oracle alumni and both have close ties to Larry Ellison. The three now seem to be joining in solidarity against Workday and validating that Workday is a threat to all three.
I partially disagree. Workday claims that it never sees NetSuite in deals, or rather where it does then one of them is in the wrong deal. As a sidenote, we anticipate there will be a further announcement this week concerning NetSuite. Oracle and Salesforce.com still have SAP as mainstream competition with Salesforce.com enjoying more success against SAP than Oracle. This alliance may yet provide Oracle with a better route into SAP shops. In order to achieve that, Oracle will have to make Fusion implementations simpler and faster than they are at present. They will also need to make partners' lives easier. This from Amy Richardson:
Partner access to Fusion Apps HCM environments continue to be a challenge. Is this likely to improve in the short term? #OPN
— AmyRichardson (@Villagepig) June 25, 2013
However, from what we see, SAP is consolidating its dominant HCM position with SuccessFactors.
Where I agree with Scavo is on his point about this being good for customers:
Customers are not well-served by vendors sniping at each other, and the verbal tiffs between Benioff and Ellison over the past few years, frankly, have become annoying. Hundreds of customers have interfaced Oracle Applications with Salesforce.com's cloud apps. But until now they have done so without the explicit support of Oracle. Customers will be pleased if the two companies can cooperate in providing standard integration. Hopefully, both parties will start acting like adults and doing what is in their joint customers' best interest.
Reinforcing his words - what's good for customers should be celebrated.
The joint announcement was surprisingly short and provided little detail. The language from Salesforce.com's Benioff was unusually restrained. There was no scheduled conference call which, given the potential some of us see, seems odd. It is possible that there is very little to see beyond 'bragging rights.' It could be that this is the first step in Oracle's much rumored view of Salesforce.com as a potential acquisition target. If nothing else, it is an implicit admission that Oracle CRM is not up to Salesforce.com's snuff in the marketplace. It finally puts to bed persistent long run rumors that Salesforce.com plan to come off Oracle database.
Endnote: my colleague Stuart Lauchlan will pick up on the database element of this story tomorrow.
Disclosure: at the time of writing, SAP, Oracle, Workday and Salesforce.com are premier partners.
Image credit: © Stuart Miles - Fotolia.com