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Enterprise Cloud Computing is Where Today’s Action is.
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Larry Ellison / Getty Marc Benioff / Bloomberg
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/By Alan Gallindoss /
game that is being played out across the globe between service providers and customers.
It is easy to see why the big software companies are on board but what about the customers? Big companies are often constrained by their own internal IT departments which frequently end up as bottlenecks to progress for all kinds of good and, mostly bad, reasons. So they are always tempted by the idea of out-sourcing the whole thing. The issue for them is simply being able to assure themselves of competitive alternatives to keep the whole thing honest when they need to.
Oracle, Microsoft and Salesforce are now moving as rapidly as they can to offer the best integrated services in these areas.
The deal Oracle announced yesterday with Salesforce, is even more extensive as Salesforce is now going to standardize its own software products on a lot of Oracle database software and hardware, and resell a lot of Oracle cloud applications alongside its own.
Salesforce is certainly a growing company, and some analysts believe it is heading towards to its first $4 billion year. Last year it even picked up Hewlett-Packard as a major customer, second only to the Japanese Government. It has also been adding to its portfolio by buying SAAS (software as a service) companies with other specialties, most recently ExactTarget, for which it reportedly paid US$2.5 billion.
It is easy to see how this re-invigorates Oracle just when they need it most, but what’s in it for Salesforce? It seems that Oracle will integrate Salesforce’s key customer relationship management products with its own human resources and financial software as well. Salesforce will not only standardize on the Oracle products internally, but will resell them alongside Salesforce’s main CRM (customer relationship management) product. But Oracle is still a big player in CRM software on its own, so for sure Oracle and Salesforce will likely still compete in some areas.
The new alliance also appears to put an end to a long-standing personal feud between Ellison and Salesforce CEO Marc Benioff, which had burst into the open two years ago when Ellison actually ordered Benioff off the stage where he was about to speak at an Oracle conference in San Francisco, for reasons unknown to this day.
Coming after the announcement with Microsoft yesterday, this therefore demonstrates the onset of two major instances of detente with competitors for both Oracle and for Ellison himself. Benioff is actually also a former Oracle (and Apple) executive who originally learned a lot of what he knows at Ellison’s side.
It takes big men to bury the hatchet, even if they were not quite so big when the feuds were in full flood. Steve Jobs did it at Apple with acing:normal;line-height:1.4;text-transform:none;white-space:normal;word-spacing:0px”>It takes big men to bury the hatchet, even if they were not quite so big when the feuds were in full flood. Steve Jobs did it at Apple with Bill Gates at Microsoft before him, and now we see again that necessity can bring about some strange bedfellows. Both Oracle and Salesforce should both prosper further with these new arrangements.
Why Cloud Computing is so important ?
So what is this cloud computing and why is it important to the enterprise? First, it is actually nothing new as since the first days that computing began companies have had the choice to do their own in-house computing, or to outsource to external data service centers. What has changed with the internet is both its scale and its scope Today’s remote server farms are simply enormous covering hundreds of acres for each one, deploying thousands of servers at a time, and thereby can in principle offer excellent economize for sharing of hardware services by third parties. Also, since the availability of the high-speed internet, extensive software services can also be bundled relatively easily with such remote hardware in a way that people can get their work done fast and effectively. This can then make it economic and convenient for customers to use the cloud and to quickly stay up to date with the latest versions of the best software around, whether the databases that Oracle or its competitor SAP provide, or the more complex software services built on top of those that people like Salesforce are increasingly delivering such as customer relationship management (CRM).
Such services are full of acronyms and the most important one to know is SAAS – which stands for “software as a service” where, instead of buying software licences, you subscribe on a monthly basis to the appropriate package of services you need. Software companies like this as it can lock in customers for long periods of time. For the same reason enterprise customers are more careful about it, as they might lose control of their own destiny if they become tied too much to one group of software vendors that they cannot find an alternative for later if, for example, that company then holds them up to ransom on price. The best example of this recently is Adobe who have now given up completely sales of Photoshop in favour of subscription only sales. Practically everyone who already uses Photoshop is rightly worried they may be held ransom later by Adobe’s pricing policies without an effective alternative. This alone could conceivably end-up with the un-intended consequence for Adobe of bringing a new player into their game with an alternative product. This is how high the stakes are in this business today, and it is an important economic game that is being played out across the globe between service providers and customers.
It is easy to see why the big software companies are on board but what about the customers? Big companies are often constrained by their own internal IT departments which frequently end up as bottlenecks to progress for all kinds of good and, mostly bad, reasons. So they are always tempted by the idea of out-sourcing the whole thing. The issue for them is simply being able to assure themselves of competitive alternatives to keep the whole thing honest when they need to.
Oracle, Microsoft and Salesforce are now moving as rapidly as they can to offer the best integrated services in these areas and that is the meaning of these announcements.
About Larry Ellison
Larry Ellison, 68, was born in 1944 out of wedlock and was raised by adoptive relatives of his mother. Though Jewish he today professes agnosticism in religious matters. After growing up in a middle class Jewish neighborhood of Chicago and graduating from high school there, he attended classes at the University of Chicago before dropping out to move to California where he found his true métier working for the Ampex Corporation in the world of Hi-Tech. While there he worked on a database project for the CIA which he named “Oracle”. In 1977 he founded his own company which was to grow and flourish and to become today’s Oracle Corporation. With a net worth estimated by Forbes in 2012 to be US$43 billion it lists him as the fifth richest man in the world.
About Marc Benioff
Marc Benioff, 48, was born in 1964 and was raised in a Jewish family in the San Francisco metropolitan area. He graduated from Burlingame High School in 1982 and then studied for, and received in 1986, a Bachelor of Science in Business Administration at the University of Southern California.
Prior to founding salesforce.com, Benioff was at Oracle Corporation for 13 years. At 23, he was named Oracle’s Rookie of the Year and three years later he was promoted to vice president, the company’s youngest person to hold that title. Before joining Oracle, Benioff worked as an assembly language programmer at the Macintosh Division of Apple Computer, where he was inspired by the company and its co-founder, Steve Jobs. He then went out on his own and founded Salesforce.com in 1999 which has since rapidly grown to be a major corporation in its own right.
