|By Denis Pombriant, of Beagle Research
It Seems to be less about Oracle versus Salesforce;
and more about Salesforce versus the Microsoft/Oracle/SAP Trio
Suddenly I seem to be in the middle of a public disagreement courtesy of my friends at eWeek. I am trying not to enjoy it too much because it's the best kind of disagreement you can have. It's like having a beer with friends and trying to determine if the 1986 Red Sox were a better team than the Mets who beat them in the World Series. I won't bother you with my opinion on that one.
At issue is the rivalry between Oracle and Salesforce.com which some say is heating up since the Oracle OpenWorld announcement of an Oracle cloud and social media. Can Salesforce stand the competition people ask? Perhaps, I say. And perhaps we'll find out if Oracle ever goes GA with the products. For those who are new to this lingo, GA stands for "generally available," not "great announcement," Larry!
Trip Chowdry, a Global Equities Research analyst wrote a report on the rivalry. Trip is a smart guy and the report is meticulously researched and written and while the full report is not available, that I know of, you should read Clint Boulton' eWeek article, Oracle Has Salesforce.com in Its Crosshairs: Analyst, for a fuller appreciation.
The article has all the makings of a good piece of speculation by triangulation. According to the report, which I perused, VMWare and Red Hat have platforms that are taking business away from Salesforce, and Oracle will have a better cloud strategy and cloud applications when they come out. You can add to this Amazon and Google have clouds too and Amazon has a mobile device or three and Google has all those free apps. And let's not even talk about social because everybody has social.
But as I pointed out in the article, Salesforce.com has a vision for how it all fits together. You can buy any one or several of the available solutions and craft something for yourself and if you are the type that looked longingly at the Christmas Tree for a new erector set, go for it. I am more interested in the "vision thing," by George.
All of this in Chowdry's analysis is enough to drive Salesforce's stock price to $95 bucks. Too bad the scope of his report wasn't a little broader because Greece, Italy, Portugal and Spain have knocked about 20 points off the price since mid-summer and none of them has a platform though each has an exotic language.
Chowdry points out that at $95 Salesforce would be easily bought by Oracle. Here's an interesting excerpt, "'Sometimes we need to look at the past to anticipate Oracle's future actions,' Chowdry claimed, pointing to Oracle crushing PeopleSoft, Siebel Systems and BEA Systems before buying those companies for a much lower price."
Well I don't know much about BEA but I was there for Siebel and PeopleSoft. Oracle was never competition for Siebel, which was the class of the on-prem traditional CRM suite market and Oracle was a perennial third or fourth place vendor in the analyst reports that I recall but played no role in writing. The dogfight then was between Siebel and SAP. Siebel had real installations and SAP had a lot of shelfware — you can look it up. Then came Oracle or possibly PeopleSoft CRM depending on the study.
What really happened was that Salesforce disrupted Siebel and took away much of its market. Even that didn't mortally wound Siebel but it became impossible for the company to maintain the growth rate that had catapulted it to $2 billion in revenues and made it, I believe, the fastest company to reach $1 billion in revenues in history. Shareholders were impatient and wanted a liquidity event. That's how Oracle was able to swoop in and buy Siebel. Oracle never crushed Siebel, it simply feasted on the road kill.
Much the same can be said of PeopleSoft. The company really did not want to be acquired and fought hard to remain independent. As I recall, Oracle raised its offer more than once for PeopleSoft. But, like Siebel, PeopleSoft was beginning to feel the heat of SaaS computing and didn't have a good answer. Oracle did not crush PeopleSoft.
Companies rarely buy what they already have and Oracle bought Siebel and PeopleSoft because those companies had things that would complement or be superior to anything Oracle had. In the process Oracle became a kind of CA of client-server computing for a while. They maintained systems and collected maintenance revenue.
To me that's one of the leaks in Chowdry's argument. Oracle has not crushed anyone. Oracle might have Salesforce in its crosshairs but that's as it should be. The two companies are competing for space in what is effectively a new market.
I doubt if Oracle would buy Salesforce for two reasons: Salesforce's vision is much different from Oracle's and the products reflect this and I am not sure the regulators in Washington and Europe would allow the combination — it could be seen as monopolistic.
The other leak that I see is more serious. It's fine to compare Oracle and Salesforce but the two are very different in outlook and vision. No report can compare all of the apples in the crate, I suppose. But I think the real comparison is between Oracle, Microsoft and SAP. They are three legacy vendors with pretty much the same approach — they've adopted what's easiest and most salable in cloud computing and they have interesting stories to tell about platforms and development. They also have deep roots in ERP, something that Salesforce has shied away from. Their message is you can change without having to change and they are all very much alike. I suspect this trio will see a lot of each other in sales situations.
The odd one out is Salesforce. They don't have a conventional legacy customer base to convert, and they are sui generis — one of a kind, the archetype. In a buyer's mind I'd expect the decision to be either one of the legacy trinity or Salesforce.
Buyers are going to have to ask themselves if the future will be like the past except for where the data is stored or if the future will be fundamentally different, full of social, mobile and analytic solutions that load from the cloud and are sourced from a community of developers dedicated to a standard architecture. This isn't hard.
Tags: Oracle, Salesforce.com
Author: Denis Pombriant
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||Salesforce has become synonymous with cloud computing, or at least CRM cloud computing. The company generally makes the CRM software selection short list by default, and frankly often becomes the CRM purchase decision for brand buyers that choose not to undergo a full scale CRM software selection project because they (rightly or wrongly) believe Salesforce will win and they can save the time. However, the times are changing. The SaaS CRM vendor landscape is becoming crowded and far more competitive. Salesforce's answer to stay ahead of the competition is Force.com and an impressive ecosystem (most of which is on AppExchange). Oracle CRM on Demand is an impressive product. However, only Salesforce currently gives CRM buyers a one stop shop to procure their CRM solutions, including the many third party products and apps that add big incremental value above the core or traditional CRM system. SugarCRM is another impressive product that manages a deep ecosystem of impressive third party products. Other ecosystems from other CRM vendors are now coming to the forefront. Unless and until Oracle broadens its on-demand CRM suite, either with truly integrated Oracle solutions or third party products I believe it has no chance of overtaking Salesforce.com.