Oracle cuddles up to Salesforce, Netsuite and Microsoft

It’s a fairly obvious move, Oracle becoming partners and chums with both Salesforce.com and Microsoft, but there could be two different reasons for it, one good, one not so good. Either way, however, service consumers stand a good chance of reaping the benefit of these developments.

Following it up by partnering with Netsuite is a more expected move, and one that suggests Oracle is defining a new role for itself now that it is facing up to a cloud services world.

First of all, for the record if nothing else, here is the guts of the story. Salesforce.com and Oracle last week announced a comprehensive nine-year partnership encompassing all three tiers of cloud computing: Applications, Platform and Infrastructure. A day later, it followed up by partnering with Netsuite for ERP services.

Salesforce plans to standardise on the Oracle Linux operating system, Exadata engineered systems, the Oracle Database, and the Java Middleware Platform. For its part, Oracle plans to integrate salesforce with Oracle’s Fusion HCM and Financial Cloud, and provide the core technology to power the Salesforce applications and platform. Salesforce will also implement Oracle’s Fusion HCM and Financial cloud applications throughout the company.

In a parallel move, Oracle has also signed up for a nine-year partnership with Microsoft that will see Oracle’s core database applications available on Microsoft’s Azure platform.

If there was to be any announcement more likely to demonstrate that partnerships are the only way for IT vendors of all sorts to get close to delivering the services that users require as they move into the cloud then it is hard to guess what it might be. Here are two companies – nay direct competitors – that Oracle has publicly decried in the past as arch-enemies. A prime goal has been to be their nemesis. They, equally, have fancied returning that `favour’.

But the changes being wrought by the cloud has made it possible for them to find rapprochement, a rapprochement built, obviously, on money. It is reasonable to assume that understand that collective capitalism – collaborating and adding what they do to a bigger, more comprehensive `whole’ – is where the revenue will be found. Competing now leads to decline.

And that leads directly to the possible  `not so good’ reason for the partnerships to form: partnership is obviously the way to go or Oracle’s predominantly on-premise applications will slowly and inevitably fade away, so the company is looking to defend an already static revenue stream, where the declining sales of the hardware division in Q4 were not saved by weak performance from the core software side of the business.

It needs a route forward for CRM, where its Siebel offering is under real, and growing, pressure. Not only has CRM in general – and Salesforce in particular – become the poster child for SaaS, but also for CRM. It is under tremendous pressure in the market. This will not be helped by the decision to stop support for version 7.8 at the end of this year, forcing users to upgrade to Version 8.x – and it is already on V8.2.

Upgrades, of course, cost money, and that potential expenditure for users has then to be set against what it might cost to move to SaaS, and Salesforce. For many, this becomes something of a no-brainer, so partnering with Salesforce can be seen as an obvious, if desperate move to maintain influence with its user base by Oracle.

The same problem exists for Oracle’s CPM offering, Hyperion. Here, SaaS service provider, Host Analytics, is specifically targeting Hyperion users with the choice of moving to a compatible SaaS service, or pay for the necessary upgrades.

And when it comes to big data applications, Oracle has a raft of competitors and, while it is still a major player in the database market, the actual database technology is less important than having compatibility with tools such as Hadoop. Any many products have the compatibility available.

It seems likely that Oracle will be repeating this partnership move some more, with Host Analytics a probable target as cover for Hyperion. Given that Oracle boss, Larry Ellison, has a big stake in SaaS ERP leader, Netsuite, it seems highly likely that this too will become a partner, though that might be seen as Oracle acknowledging that its own ERP core applications are suffering – which would mean that Oracle is back to being just a database business.

But getting its database systems available on Microsoft Azure will help spread the view of the company as one not being overwhelmed by cloud developments. To be fair, it will do Microsoft no harm in challenging Amazon’s EC2 offerings in the Infrastructure as a Service (IaaS) marketplace.

Indeed, the potential good way of looking at these partnerships could be taken as showing the company has a real cloud-oriented plan in mind – and a more coherent one than many traditional software vendors have, which is essentially label current products as `cloud enabled’.

The positive potential here is that it shows the company has identified the same target marketplace as IBM with its SmartCloud – building a service aggregation platform business based on the response many business users will have to the name `Oracle’ and its established place as a long-trusted brand.

To do this the company requires not only the core software and datacentre IT resources it already has – like IBM it is a manufacturer of powerful server hardware in the shape of the old Sun Microsystems line – but also a growing range of core business services. This is particularly the case given the positioning of Oracle as a brand.’ It is one of the major players in the provision of core business management tools for some of the largest corporations around. It is a real soup-to-nuts business management player, and so it is one of the few that can use its brand value to offer a soup-to-nuts cloud delivered set of business services.

At this level, CRM is an obvious candidate. So the Salesforce partnership makes sense. Following up with Netsuite and ERP further demonstrates that the company may have twigged its potential and a service aggregator brand for the future. The real test will be if more partnerships with potential comptitiors are added, such as one with the likes of Host Analytics. There will need to be such next steps, and they will probably be as surprising as Salesforce and Microsoft. If such developments do not transpire, however,it will appear that the `not so good’ interpretation of events lies at the heart of these partnerships.