We don’t have details yet — or even official confirmation — but The Wall Street Journal is reporting [registration required] that Oracle is planning to dramatically expand its portfolio of on-demand offerings, often referred to as software-as-a-service (SaaS). A decade after online-only pioneer Salesforce.com and others began to make inroads into on-demand business software, the shift — assuming the reports turn out to be accurate — will mark a significant turning point for the technology industry, and for CRM in particular.
Here’s the opening of yesterday’s WSJ report:
Oracle Corp. is developing a set of online software offerings, an expansion of the company’s use of a business model it has often resisted.
The software giant is working on seven new online products, including offerings to help business run sales campaigns, keep track of employees and job applicants, according to people briefed on the plans and a company document reviewed by The Wall Street Journal.
The “company document” may be the smoking gun.
Calling software-as-a-service “a business model [Oracle] has often resisted” is more than an understatement, of course — it’s like referring to the New York Yankees as “a team that Red Sox fans have often disliked.”
More after the jump…
(CNET News also has a post covering most of this information, by the way.)
Oracle already has an on-demand CRM offering — now creatively named Oracle CRM On Demand — borne out of integration efforts that followed its acquisition of Siebel Systems, and rumors have swirled for years that Big Red and Salesforce.com have engaged in acquisition talks. (The latest edition of Oracle CRM On Demand clearly had Salesforce.com in its sights.)
In addition to his roles as Oracle’s cofounder and chief executive officer, Larry Ellison was also an early investor in Salesforce.com, and a continuing (if now nonvoting) majority stockholder in another SaaS vendor, NetSuite. But he has often publicly voiced doubts about the profitiability of the SaaS model.
While the WSJ report takes note of that –
Oracle…has been slow to invest in online software in the past because it tends to be less profitable than traditional software. Larry Ellison, Oracle’s chief executive, has often dismissed software as a service. The companies pushing the model “haven’t figured out how to make any money,” he said during a gathering with analysts in September.
– the Reuters report from last night seems to view the situation from the “SaaS glass half full” perspective:
Oracle Chief Executive Larry Ellison is a strong proponent of SaaS. Last year, he said that Oracle’s small SaaS division had turned its first profit. Ellison is also the founder and majority owner of NetSuite Inc, a company that sells accounting programs to small and mid-sized businesses. He has told investors that Oracle’s SaaS unit is one of its fastest-growing businesses.
The Reuters story does add a bit of specificity to the rumors, attributing to “a person familiar with the strategy…who was not authorized to publicly discuss the plan” that
Oracle is developing Internet-based programs to help businesses manage human resources functions including employee recruitment. The company is also expanding its line of customer relationship management software….
The notion that the new push might involve HR applications will likely come as no small irony to Dave Duffield and his team over at Workday — one of a handful of companies Reuters names as playing in the space. (The other three were Kenexa, SuccessFactors, and Taleo.) Duffield, one of the founders of PeopleSoft ahead of its acrimonious takeover by Oracle in 2005, has said that on-demand HR efforts were one of the pursuits PeopleSoft might have excelled at had it remained independent, and one he felt Oracle was never going to be good at. (Reports at the time suggested Workday was rife with ex-PeopleSoft personnel, including “former PeopleSoft chief architect John Malatesta, who was reportedly working on the platform as far back as 2000, and Ken Morris who is making use of experience he gained from his involvement in a similar project at PeopleSoft.”)
I wonder if the timing of this reported “leak” from Oracle about its plans might have anything to do with this week’s news that Workday had received $75 million in new venture-capital funding. That Forbes article includes a factoid that SAP and Oracle probably paid very special attention to: Duffield’s Workday cofounder Aneel Bhusri (also ex-PeopleSoft) notes that a quarter of the firm’s recent customer wins are replacing older software from SAP. (Surely some of the remaining 75 percent of customer wins were replacing old PeopleSoft/Oracle implementations — but there’s no indication of precisely how many.)
There may also be some connection to Oracle’s recent purchase of project management specialist Primavera, and the parallels that are often drawn between project-based solutions and the architecture of on-demand HR efforts.
More on this as it develops.
Oh, and one last thing: Reuters also notes that
Oracle has briefed some industry analysts on its plans to expand its SaaS offerings, though it is not clear when the products will be released.
So, of course, if any of our regular Rogues’ Gallery of analysts would like to give a holler and (on or off the record) share anything they might have been briefed on, you know where to find us.