Oracle and's love-fest: The ripple effects

The companies' partnership has implications for Database 12c, rival vendors like Workday and both Oracle and customers

Oracle's string of high-profile cloud-computing partnership announcements with Microsoft, and NetSuite dominated tech news headlines this week.

While certain aspects of them weren't as "startling" as Oracle CEO Larry Ellison had promised they would be, its deal with definitely lived up to the hype and could have some lasting ramifications. Here's a look at the potential fallout.

A test for Oracle 12c

The partnership announced this week by Oracle and, under which will commit to Oracle's database and other technology for 12 years, stands to provide a major initial test case for the cloud computing-friendly capabilities built into Oracle's newly released Database 12c.

The release's most-hyped feature, "pluggable databases," allows many individual databases to reside inside a single instance. It represents Oracle's take on multitenancy, the architectural approach SaaS (software as a service) vendors such as have used to serve many customers more efficiently.

But has used multitenancy at the application tier; Ellison claims Oracle 12c's method is superior and more secure.

While CEO Marc Benioff didn't explicitly call out the pluggable database feature during a joint conference call with Ellison on Thursday, he expressed confidence that Oracle's technology can carry through "the next one or two decades" and said the company expected to cut its database server costs in half.

As Ellison noted on the call, is the industry's largest pure cloud vendor. Assuming makes a successful migration to 12c, expect Oracle to spare no effort in telling the industry about it in hopes of proving 12c's readiness for mega-scale deployments.

What will Workday do?

Under the deal,'s CRM software will be integrated with Oracle Fusion HCM (human capital management) and cloud-based financial products, and will implement those two Oracle applications "throughout the company." This has resulted in speculation about's ongoing relationship with cloud HCM and financial vendor Workday, which has been close.

Workday should contemplate drastic steps in response, according to one observer.

"Now that SFDC and Oracle are no longer enemies, we aren't convinced that WDAY should still consider CRM a friend," Cowen and Company analyst Peter Goldmacher said in a research note. "It shouldn't come as much of a surprise if Oracle and SFDC elevate the partnership beyond formalized product integration in the coming quarters. Workday needs to control its own destiny."

To that end, "we think Workday has to reconsider creating its own CRM product," along with LinkedIn, Goldmacher added. A next-generation CRM application from those companies could make "a legacy system in world record time," he wrote.

Concern for customers?

Oracle and's plan to integrate their software applications will be good for customers, since packaged and supported integrations will be lower-cost than expensive custom development projects, according to Ellison.

" is a big company now," Ellison said on the call. "Customers expect us to work together professionally toward the benefit of those customers."

But for whatever good comes of that, other damage has been done, according to analyst Ray Wang , CEO of Constellation Research. "Most customers we have spoken to feel betrayed by Marc," Wang said. "They bought into the religion of the past. This was a mantra of in your face, no software, no legacy IT and trailblazing the future."

The expansive deal announced this week "took that coolness away," even though always ran Oracle's database, Wang added.

But one customer of both and Oracle expressed positivity toward the companies' new relationship.

"It's a super-big win for us," said Dave Hansen, CEO of security vendor SafeNet, which uses CRM and Oracle for financials. "is by far the leader" in CRM and is probably never going to move deeply into financials, where Oracle is especially strong, Hansen added.

SafeNet has been working to integrate with its on-premises Oracle system but "we want to do more," he said.

Therefore, a standard integration between CRM and Oracle financials "would be a really powerful thing," Hansen added. "That's where I think this [partnership] is going to be really good."

NetSuite By Design?

NetSuite has long used Oracle technology and Ellison remains an investor in the company, but it and Oracle have still remained somewhat at arms-length until this week, when the companies announced a partnership based on integrating NetSuite's cloud ERP software with Oracle's cloud HCM application. Deloitte is also involved, planning to work with Oracle and NetSuite on a consulting practice for related SaaS implementations.

NetSuite has sought to position its software as ideal for "two-tier" ERP deployments, where NetSuite is used in a new company subsidiary and tied back into an existing core ERP system, whether from Oracle, SAP or another vendor. SAP has taken a similar approach to marketing its own Business ByDesign cloud ERP software.

Oracle mentioned the two-tier ERP concept only in passing in its announcement this week. But it wouldn't be surprising to see NetSuite and Oracle place more focus on jointly marketing such deals over time.

Larry's new foil

One thing is for sure about Ellison: He likes a good fight. But with the hatchet buried between himself and Benioff, Ellison is without a ready foil for his ample reservoir of competitive jabs, jibes and jokes.

Moving forward, expect Ellison to ramp up the trash talk on rivals such as SAP and IBM.

SAP, for one, seems ready to take off the gloves, and not just against Oracle. "This partnership ends any vestige of Salesforce's claims of independence from [Oracle]," SAP spokesman James Dever said via email. "All the past squabbling about false clouds and keynotes now appears as sincere as a professional wrestling match. The kid was just rebelling against his parents to appear cool."

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is

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