2012 - The IT Perspective: Mostly cloudy

By Graeme Burton
21 Dec 2012 View Comments
Oracle's Larry Ellison

It is at major technology inflection points, when technology changes or moves on, that present both risks and opportunities in any industry: opportunities for rivals or upstarts to establish themselves, while established giants face big risks trying to respond and adapt to shifting customer buying patterns.

Further reading

In 2012, established enterprise software vendors such as SAP and Oracle sought to protect their positions in cloud computing by spending big on relative start-up vendors, while a number of cloud computing start-ups came of age.

Oracle, in particular, has snapped up a series of cloud service providers over the past 15 months. The most significant of these include RightNow Technologies, a provider of software-as-a-service (SaaS) call-centre automation, sales force automation (SFA) and customer relationship management (CRM) services, for $1.5bn in October 2011.

That purchase was intended to complement Oracle's Siebel Systems-based CRM offerings at the high-end with RightNow's presence among small and medium-sized businesses - bolstering Oracle's competitive position against Salesforce.com.

In February 2012, Oracle followed that up with the $1.9bn (£1.17bn) purchase of Taleo, a specialist in talent management software-as-a-service with some $300m (£184.3m) in annual sales.

Finally, in early June 2012, Oracle put its disparate efforts in cloud computing together to present a more coherent cloud strategy to customers, repackaging more than 100 different cloud-based services - some of which had actually been going for years - under the Oracle Cloud umbrella.

From publicly disparaging the concept, Oracle founder Larry Ellison had wholeheartedly embraced cloud computing, noting that few companies had successfully "cross the chasm" from one technology to the next, but that Oracle would be an exception.

In December, Oracle's cloud computing revenues in the quarter to the end of November were $240m (£147.4m) - just a shade under $1bn annualised - and Ellison claimed that the company is "almost shutting out" human resources SaaS-based rival Workday in Europe.

"We're at the stage where we're winning the majority of deals and competes against Workday," claimed Ellison. "We're beating them in North America, and we're almost shutting them out in Europe."

SuccessFactors for SAP
SAP, meanwhile, has been equally busy. Its big push in cloud is based on its $3.4bn (£2.1bn) purchase of SuccessFactors in December last year. SuccessFactors provides cloud-based human capital management software-as-a-service.

It followed that up in May 2012 with a $4.3bn (£2.64bn) acquisition of Ariba, an e-procurement software vendor from the 1990s that ten years later had become a 'commerce cloud' services vendor.

[Please turn to page two]

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