May 1st, 2009
Oracle about to step up its SaaS efforts?
Update: Oracle is reportedly getting more aggressive about software as a service with plans to expand its on-demand lineup.
The Wall Street Journal and Reuters report that Oracle has been briefing analysts about its SaaS strategy. And apparently these plans go beyond simply buying NetSuite, which is majority owned by Ellison, or gobbling up Salesforce.com.
The Journal’s Ben Worthen writes:
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. Oracle is developing online software to handle marketing and product management as well as a product targeted at the insurance industry, the document shows.
Update: There are a few questions about the Journal report. Sources indicate that Oracle isn’t planning any big strategy shift and it’s even questionable whether there are 7 new SaaS products planned.
Also see Dennis Howlett: Oracle’s cloudy announcements
To date, Oracle’s on-demand software efforts have mostly revolved around Siebel. But in recent quarters Oracle appears to have become more serious about SaaS and has continually added features to Siebel CRM On Demand (below). Indeed, the Salesforce.com mentions on Oracle conference calls have skyrocketed. Oracle execs now pan Salesforce.com as much as they do SAP these days.
The move runs counter to Ellison’s previous contention that there’s no money in SaaS. That’s largely true relative to Oracle’s overall business but the database giant is clearly dabbling in SaaS.
Also see: Enterprise vendors: in pursuit of reality
However, the SaaS deployments are getting larger by the day. Once SaaS players are starting to land big deployments Oracle has to start paying attention. For instance, SuccessFactors landed a 300,000 user deployment at a large retailer that is most likely Wal-Mart, according to two sources familiar with the matter. If SaaS is good enough for a massive retailer it’s probably good enough for Oracle too.
Why does Oracle need to make its SaaS move now?
For starters, there’s a big move by CFOs to cut IT costs and that means turning capital expenditures (large ERP implementations) into operating expenses (SaaS). Meanwhile, customers are pushing back on maintenance hikes (see SAP’s retreat). Then there’s good old fashioned competition—Workday, which landed a big wad of VC funding, Salesforce.com, NetSuite and a bevy of others are all threats to Oracle, which has to be getting bored buying struggling companies like Sun and BEA. And the final kicker for Oracle: SAP is still dawdling with its BusinessByDesign SaaS effort and to date is basically still a pilot. Oracle could leapfrog SAP as engineers overthink BusinessByDesign features.
More reading:
- Salesforce.com: Pondering the next 10 years
- Workday lands $75 million in venture funding
- NetSuite aims to connect to Salesforce.com’s cloud
- SuccessFactors lands big deployment, new cloud computing VP
- Phil Wainewright on SaaS
- Paul Greenberg on CRM
- Dennis Howlett on the enterprise software game
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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