Oracle and Salesforce Enter a Strategic Partnership

Salesforce.com and Oracle yesterday announced a nine-year partnership encompassing all three tiers of cloud computing: applications, platform, and infrastructure.

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 Human Capital Management (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.

"Larry and I both agree that salesforce.com and Oracle need to integrate our clouds," said Marc Benioff, chairman and CEO of salesforce.com, in a statement. "Salesforce.com's CRM integrated with Oracle's Fusion HCM and Financial Cloud is the best of both worlds: the simplicity of salesforce.com combined with the power of Oracle."

"We are looking forward to working with salesforce.com to integrate our cloud with theirs," added Larry Ellison, CEO of Oracle, in a statement. "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. That's why Marc and I believe it's important that our two companies work together to make it happen and integrate the salesforce.com and Oracle Clouds."

"With over 1 billion complex transactions delivered every single day, an Oracle Linux and Exadata infrastructure will make salesforce.com a more efficient company, and our customers will benefit," said Parker Harris, co-founder and executive vice president of salesforce.com, in the statement. "Deploying Exadata engineered systems throughout our data centers will allow us to significantly lower overall hardware, floor space, and energy costs, while simultaneously providing our customers with higher performance and better reliability."

Across the analyst community, the reaction has been guarded.

Ray Wang, CEO and principal analyst at Constellation Research, tells CRM magazine that the long-term deal, estimated to be worth about $900 million over nine years, will allow Salesforce.com to take advantage of Oracle's databases, thereby freeing it up to invest more heavily in innovation and further improving its platforms and applications. Wang, though, is hesitant to say the deal will benefit customers of either company.

"From a cost perspective, the deal makes a lot of sense for Salesforce, but many customers are disappointed that the company is going with Oracle for the back end rather than going out on its own," Wang says. "Being tied to Oracle for the back end may cost some [Salesforce.com] customers some of their freedom."

Still, he says the partnership definitely bears watching. "It will be interesting to see if Salesforce does anything with Eloqua," which was acquired by Oracle in December for $871 million.

Nonetheless, the apparent burying of the hatchet between Ellison and Benioff will be welcome news to the industry. "For their mutual customers, the announcement represents a welcome thawing of relations between the two companies," wrote Frank Scavo, an analyst at Constellation Research, in a blog post.

"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," Scavo continued. "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."

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