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Benioff and Ellison Bury Hatchet, Discuss New Partnership
Benioff and Ellison Bury Hatchet, Discuss New Partnership
By Jennifer LeClaire / NewsFactor Network Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
It seems that Oracle and Salesforce.com have officially buried the hatchet. Oracle CEO Larry Ellison and Salesforce CEO Marc Benioff head two of the most powerful companies in the Relevant Products/Services market, making the Relevant Products/Services that enterprises around the world use for their customer databases and customer relationship management. The two company chiefs have been arch rivals for years, but together held a news conference on Thursday to outline the details of their surprising new partnership.

In responding to a question from Wells Fargo Securities analyst Jason Maynard about how the companies' relationship will change, Benioff called the opportunities "endless." Ellison admitted that the companies have some overlapping products, so there is a cooperation, co-opetition issue, but he sees far more opportunities to work together than to compete.

"On the entire infrastructure part of the stack, I think we will work with Salesforce.com, again, to constantly improve Relevant Products/Services," Ellison said. "Security is a very big issue now for Relevant Products/Services applications.

"Everyone wants to be certain that their data is secure. Everyone wants to make sure that they've got 24/7 access to their data. And, I think by working with a company like Salesforce.com, we gain all sorts of insights as to what is required of us to continuously improve that infrastructure so we can deliver that."

The Amazon Impact

Mark Veverka from USA Today asked how Oracle's relationship with Salesforce and other relationships the company has just announced (including a partnership with Microsoft) would affect the competition with Amazon Web Services. Ellison's short answer: He looks forward to a continued good relationship with Amazon.

Benioff also said Amazon is an important Salesforce.com customer.

"You may know our Heroku environment runs natively on the Amazon infrastructure," Benioff said. "And, in addition to that, Amazon is a very important partner of Salesforce.com in that we've architected our application programming interfaces to work seamlessly between Amazon's full range of services and our services so that customers can use Salesforce's applications and platform seamlessly with Amazon's Infrastructure-as-a-Service."

Anticipated Cost Savings

But when it comes to sharing customers, Ellison made it clear to Heather Bellini, a Goldman Sachs analyst, that Benioff has never asked him to drum up leads for Salesforce.com. He reiterated that the companies would work together on the infrastructure layer to make it more reliable, secure and cost effective.

"To actually quantify how much of the savings will be when the integrations are out-of-the-box is a bit difficult," Ellison said. "But let me say, when every customer has to do their own project to wire up a Salesforce CRM application to, let's say, an Oracle HCM application...." When that has to be done "over and over again," he explained, the costs mount rapidly.

"That's an astronomical [cost], not only a dollar expenditure, but the quality of those integrations will not be as good, and reliability of those integrations and the security of those implementations won't be as good, as our product-sized integrations. I think the savings in time and dollars and downtime [will be] enormous."

"I'll just venture a guess," Ellison said, "it will certainly more than cut those costs in half."

Changing the Competition

Raimo Lenschow, a Barclays analyst, asked how the relationship is changing the competition with hybrid point-solution clouds, as well as vendors like SAP in the legacy apps business.

"We are entering the next step of our industry," Benioff said. "I think Larry has articulated that, as usual, very well. He has articulated these market transitions, I think, with more clairvoyance than anyone else I know over the last 30 years. And this next transition is that we are moving into a world of phenomenal services that are available instantly to customers of all sizes.

"And these services are available today through a wide range of capabilities, whether it's traditional computers, though I think that's happening less and less, and these services are emerging into phones and tablets." Next, Benioff said, will be wearable computing devices, and the challenge will be providing software and services to leverage those as well.

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