Posts Tagged ‘Oracle’

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News Analysis: Oracle Buys RightNow For $1.43B

Published on October 24, 2011 by R "Ray" Wang

The Acquisition Machine Heads To The Public Cloud

Users gathered at the Customer Summit 2011 at the Broadmoor Hotel woke up to the shocking announcement that Oracle (NASDAQ: ORCL) announced a $1.43B acquisition of leading SMB CRM vendor RightNow Technologies (NASDAQ: RNOW) today.  According to Thomas Kurian, “Oracle is moving aggressively to offer customers a full range of Cloud Solutions including sales force automation, human resources, talent management, social networking, databases and Java as part of the Oracle Public Cloud,” said Thomas Kurian, Executive Vice President, Oracle Development. “RightNow’s leading customer service cloud is a very important addition to Oracle’s Public Cloud.”

A quick analysis of the acquisition reveals:

  • Oracle sees RightNow as an anchor in its public cloud strategy. RightNow signals the first of many acquisitions foundational to a market place strategy.  CRM plays a pivotal role.  Bozeman, Montana based RightNow brings over 2000 customers, and 10 billion transactions per year in volume.  In fact, Kurian’s press statement hints at other areas that include anything from infrastructure to apps.

    Point of View (POV):     Oracle’s success in the public cloud will require more than just a multi-instance virtualized cloud offering.  The lack of true multi-tenancy will prove to be a detriment to both customers and Oracle.  Oracle will need to deliver a multi-tenant version of Fusion Middleware to provide customers with the full range of deployment option choices from on-premise, hosted, multi-instance, and multi-tenant.  However, investors and customers should view the public cloud as more than an offering or technology play. In fact, this is Oracle’s new merger and acquisition vehicle.
  • Oracle pokes at Salesforce.com on the customer service side. While Salesforce.com would most likely not acquire RightNow, Oracle brings on a key customer service competitor to Salesforce.com and aligns it with the Oracle sales and marketing machine. Meanwhile, Oracle gains an emerging web experience and social experience product line to complement a robust contact center and solid customer experience suite.

    Point of View (POV):     With most of RightNow’s customers coming from the customer support side of the house, Salesforce.com will feel the heat in the market place.  Despite the Assistly acquisition, Salesforce.com still has a lot of work to move the Service Cloud offering to par with competitors.  Quite frankly, this is a direct attack by Larry Ellison to Marc Benioff in this space.
  • Oracle plans a long term customer experience play. Oracle’s previous acquisitions of FatWire, Endecca, ATG, and Sigma Dynamics signal a potential play to get serious about customer experience management.  Oracle will need to re-purpose assets to the core CRM team to share in the innovation.

    Point of View (POV):     Social business, online experience optimization, and gamification represent huge holes in Oracle’s product portfolio.  RightNow brings tremendous amounts of thought leadership to the table should Oracle retain the product teams.  More importantly, the SMB focus will help Oracle bring in a new customer base.

The Bottom Line For Buyers:  Proceed With Caution

RightNow customers should shore up existing contracts and extend maintenance and subscription pricing as far out as possible.  As with most acquisitions, expect Oracle to raise rates to fund the acquisition.  Customers and prospects should seek additional guarantees in product road map commitments and service level commitments.

The Bottom Line For Vendors: This Acquisition Makes Little Sense At First.

Vendors and competitors will most likely wonder why Oracle started this process with RightNow.  As with the PeopleSoft and Siebel acquisitions in the past, competitors were caught off guard.  Expect companies such as eGain, Moxie, Mzinga, Taleo, SuccessFactors, Zuora, Xactly, and others to be targets on the buy list.  Had Oracle or another vendor rolled-up the SaaS vendors during the 2008 downturn, they would have only expended less than $1B for all the players smaller than Salesforce.com.  Instead, cloud has now emerged as threat to legacy vendors such as Oracle.  After waiting on the side lines for the right moment, Oracle now enters the ring and will do what it does best – acquire and assimilate innovation.  In the long-term, Oracle will directly compete with Dell, Salesforce.com, and VMWare for the SMB market place via cloud.

Your POV.

Does this announcement surprise you?  Are you a RightNow customer?  Will you be ready to make the leap with Oracle?  What has your experience with Oracle been post acquisition?  Add your comments to the blog or reach me via email: R (at) ConstellationRG (dot) com or R (at) SoftwareInsider (dot) com.

How can we assist?

Buyers, do you need help with your apps strategy and vendor management strategy?  Trying to figure out how to infuse innovation into your tech strategy? Ready to put the expertise of over 1000 software contract negotiations to work?  Give us a call!

Please let us know if you need help with your next gen apps strategy efforts. Here’s how we can help:

  • Providing contract negotiations and software licensing support
  • Evaluating SaaS/Cloud options
  • Assessing apps strategies (e.g. single instance, two-tier ERP, upgrade, custom dev, packaged deployments”
  • Designing innovation into end to end processes and systems
  • Comparing SaaS/Cloud integration strategies
  • Assisting with legacy ERP migration
  • Engaging in an SCRM strategy
  • Planning upgrades and migration
  • Performing vendor selection

Related Resources

20111024 IDG News Service – Chris Kanaracus “Oracle buys RighNow for about US $1.5B”

20111024 Wall Street Journal – Matt Jarzemsky “Oracle Buy Cloud-Based Right Now”

20111024 GigaOm – Barb Darrow “Why Oracle paid $1.5B for Right Now”

Related Research

Reprints

Reprints can be purchased through Constellation Research, Inc. To request official reprints in PDF format, please contact sales (at) ConstellationRG (dot) com.

Disclosure

Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, stay tuned for the full client list on the Constellation Research website.

Copyright © 2011 R Wang and Insider Associates, LLC All rights reserved.

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Monday’s Musings: A Working Vendor Landscape For Social Business

Published on August 15, 2011 by R "Ray" Wang

Confusion Persists In The Social Business Market

As with any new disruptive technology, the social business solution landscape faces a dynamic, confusing, and converging market. As vendors seek to grab mind share and market share, customers and prospects remain confused as to what are the right business problems to address with social business. However, rampant confusion among users hampers efforts to solve business issues. Three key factors accelerate this level of confusion:

  1. Early adopter market. Constantly changing conditions force customers to alter original plans as executive sponsorship fluctuates from intense to pensive and back to intense in short cycles. Projects remain secretive for competitive advantage reasons. Consequently, prospects lack strong case studies to build off of despite peer groups, adoption networks. Prospects seek metrics that matter and relevant use cases.
  2. Consumerization of IT. With increased social media penetration, success in consumer grade products highlight the potential for enterprise adoption. However, most enterprise class products remain one to two generations behind in achieving similar capabilities. As business users gravitate towards simple, scalable, and sexy attributes; IT departments seek to rein in shadow IT efforts with safety, security, and sustainability requirements.
  3. Marketing mayhem. Fast paced markets always generate hype in marketing messages. Hence, legacy collaboration, community platform, CRM, unified communications, integration platform, and office productivity vendors seek to reposition themselves and address the emerging and trendy social business use cases customers seek.

Social Business Vendors Converge Towards Business Value Sweet Spot

The vendor landscape for social business market represents a diverse and broad collection of solutions.  Vendors approach the market from multiple heritage points, technologies, and markets.  Four key criteria cut across two axes (see Figure 1):

  1. External facing vs internal facing.  External facing includes customers, partners, and suppliers.  Internal facing include employees and trusted networks within the corporate firewall.
  2. Platforms and infrastructure vs purpose built solutions.  Platforms and infrastructure referred to core technology solutions.  Purpose built solutions address specific applications.

Figure 1. Social Business Vendors Converge Towards Business Value Sweet Spot (Working Draft)

More…

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Tuesday’s Tip: Dealing With Pesky Software Licensing Audits

Published on April 19, 2011 by R "Ray" Wang

Organizations Report Increase In Software Licensing Audits

Across the board, the largest complaints about software vendors and their business practices have come from increasingly aggressive software auditing practices.  Once thought to be a small possibility, the software vendors now wield this big stick to drive up sales and of course ensure compliance.  Given the 32 percentage gain since Q1 2008 in the percentage of respondents faced with a software audits, procurement managers, CIOs, and CEOs have paid attention (see Figure 1).   Even the recent Gartner report from star analyst Jane Disbrow et al. shows that 61% of their customers have been audited by at least one software vendor.

Figure 1.  Software Vendors Ramp Up Software Audits

Software Licensing Audits Masquerade As Sales Tactics In Disguise

Is this shocking?  Should customers be concerned?    Given the relatively strong compliance rates in the high 80′s, customers should be livid that vendors are willing to jeopardize a relationship to shake down for cash (see Figure 2.).  Here are some key reasons for the audit:

  • Check for compliance
  • Identify installed base competitors
  • Drive incremental license sales
  • Prospect for up-sell/cross-sell

After speaking with 13 major software vendors, most admitted that software audit served two purposes.  The first – keep customers in compliance.  The second – shaking the bushes for new deals during the recession.

Figure 2.  Most Organizations Were In Compliance Post Software Audit

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Research Summary: Best Practices – The Case For Two-Tier ERP

Published on March 1, 2011 by R "Ray" Wang

Forward And Commentary

Legacy optimization remains a key component for funding future innovation.  Two-tier ERP emerges as one strategy to optimize existing systems while adding innovation.  The report capitalizes on the recent Software Insider survey of 235 companies looking at future strategies.

A. Introduction

Organizations continue to face an onslaught of business requirements that their existing ERP systems can no longer address.  Stuck in the past century, these ERP systems are expensive to run, difficult to upgrade, and impossible to modify for today’s fast changing requirements.  Two-tier ERP has emerged as a strategy to enable legacy optimization while reinvigorating the organization’s existing ERP systems.

B. Research Findings

Two-tier ERP refers to a business and technology strategy that enables organizations to keep existing ERP systems at the corporate level while empowering divisions or business units to innovate with a second ERP system.  Consequently, two-tier ERP deployments continue to gain favor.  Why? Organizations must optimize legacy systems while delivering on business value.  In fact, in a recent Constellation Research survey, 48% of respondents indicated that they are considering at two-tier ERP strategy (see Figure 1).  These results reflect a 27-point increase from 2009.

Figure 1.  Two-Tier ERP Growing In Popularity As A Key Strategy

While today’s two-tier strategies mostly involve on-premises solutions, cloud based solutions will gain favor over the next 18 to 24 months because of their rapid deployment capabilities, constant innovation qualities, and subscription pricing.  Organizations challenged by diverse lines of business, multiple localization requirements, or needs to phase in legacy system modernization will find a two-tier ERP strategy one that can reduce costs and provide better business value than a one-size-fits-all solution.  Whether SaaS, on-premises, or hybrid, a two-tier ERP strategy will reduce costs, meet new business requirements, and provide better business value. More…

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Monday’s Musings: Reflections On Obama And The False Hope For A Tech Halo

Published on February 21, 2011 by R "Ray" Wang

President Obama’s Visit Reflects The Importance Of Silicon Valley To The US Economy
By now everyone’s seen and re-seen the photo showing the tech-centric dinner at John Doerr’s house in Woodside, CA on February 17th, 2011 (see Figure 1).  With a guest list that included most of the “Captains of the Tech Industry” it would have been great to be a fly on the wall that night to hear what was the secret to innovation and how we could improve education.  On many levels, the dinner and the publicity surrounding the visit did emphasize:

  • The President’s desire to rub off the tech halo. For the White House, here was a chance to highlight an area of the economy that has managed to survive the global meltdown by out innovating the competition.  President Obama’s State of the Union talked about how a tech led job creation would be a key component of recovery.  The valley served as a great backdrop to show where this was already happening.
  • How lobbying does pay off for the Valley. For tech leaders in the valley, here was a chance to bend the President’s ear on a number of policies and reap the benefits of all the money spent lobbying.  In fact, among the 10 guests, MAPlight.org showed $735,000 given to the President’s party among the overall $913,000 contributed to all political candidates.  I would expect more official economic delegations and trade missions to come from the renewed focus on tech.  Many tech firms pondering the need for strong government affairs teams regained religion.
  • The state of Steve Jobs’ health. Good news!  Steve seemed healthy enough to dine with the President. After all the trash talk in the papers, a picture proved enough to quiet the critics.  Yes, that wasn’t a stunt double like Kim Jong Il!  In fact, the picture quelled all rumors.

Figure 1. President Obama’s Tech Centric Dinner Photo Op

Credits: White House Press Office.  Attendees include: Carol Bartz, President and CEO, Yahoo!; John Chambers, CEO and Chairman, Cisco Systems; Dick Costolo, CEO, Twitter; John Doerr, Partner, Kleiner Perkins Caufield & Byers; Larry Ellison, Co-Founder and CEO, Oracle; Reed Hastings, CEO, NetFlix; John Hennessy, President, Stanford University; Steve Jobs, Chairman and CEO, Apple; Art Levinson, Chairman and former CEO, Genentech; Eric Schmidt, Chairman and CEO, Google; Steve Westly, Managing Partner and Founder, The Westly Group; Mark Zuckerberg, Founder, President, and CEO, Facebook

Success In The Valley Stems From The Hard Work And Investment From…<GASP> Other Countries

One can only imagine the reasons punted around that night on why Silicon Valley is successful in delivering on concept to cash.  It’s true – the valley enjoys many of the assets that bring out innovation and helps the US lead with high tech jobs.  We have a top notch workforce.  We have several great universities.  We have a history of entrepreneurship.  We have access to funding and capital.  Many would think these elements were endemic to Silicon Valley.  Unfortunately, that’s not true.

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Press Release: Strategic HCM Expert Amy Wilson Joins Constellation Research, Inc.

Published on January 24, 2011 by R "Ray" Wang

Cupertino, CA – January 24, 2011
9:00 AM (GMT -8:00) Pacific Standard Time

Constellation Research Inc, an emerging and disruptive technologies research and advisory firm, announces the addition of Amy Wilson as a VP & Principal Analyst in the research team.   Amy will focus on emerging and disruptive business models and technologies in the human capital management (HCM) arena.

Wilson is a software industry visionary with over 15 years of experience focused on the intersection of people, business, and technology.  Most recently, Amy drove product strategy for Oracle’s next generation Strategic HCM Fusion applications.  At PeopleSoft, Amy served roles in development and product strategy from financials to HCM during the shift from PeopleSoft 8.0 to PeopleSoft 9.0.  End user client work at Arthur Andersen and PeopleSoft brings a pragmatic buy-side point of view to disruptive business models and technologies.

Active in the HR blogging community, Amy shares her insight and opinions on the industry-leading group blog TalentedApps she co-founded in 2007.  TalentedApps has been recognized as a Top 25 Talent Management Blog by Fistful of Talent, an Alltop Best of the Best blog, and has been frequently highlighted in online aggregators such as HR Tech Central, HR Carnival, and Leadership Development Carnival.  In addition, Amy has appeared in leading publications such as Human Resource Executive Online and Workforce Management. She now blogs under the moniker Shiny & Useful on her site wilsoninsight.com.

Amy’s an experienced keynote speaker, presenting at notable industry conferences including The Conference Board, TED, Human Capital Institute, and Bersin IMPACT.  Wilson has drawn large crowds at PeopleSoft Connect, Oracle OpenWorld, and the Oracle HR User Group.  Amy’s audiences appreciate her creative and enthusiastic style as well as her ability to provoke a new way of thinking.

Wilson will expand Constellation’s coverage to include:

  • Next gen HR leadership
  • Strategic HCM
  • Social recruiting
  • Talent management
  • Social collaboration
  • Project based solutions
  • Legacy optimization of HR systems

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Research Report: Constellation’s Research Outlook For 2011

Published on January 4, 2011 by R "Ray" Wang

Organizations Seek Measurable Results In Disruptive Tech, Next Gen Business, And Legacy Optimization Projects For 2011

Credits: Hugh MacLeod

Enterprise leaders seek pragmatic, creative, and disruptive solutions that achieve both profitability and market differentiation.  Cutting through the hype and buzz of the latest consumer tech innovations and disruptive technologies, Constellation Research expects business value to reemerge as the common operating principle that resonates among leading marketing, technology, operations, human resource, and finance executives.  As a result, Constellation expects organizations to face three main challenges: (see Figure 1.):

  • Navigating disruptive technologies. Innovative leaders must quickly assess which disruptive technologies show promise for their organizations.  The link back to business strategy will drive what to adopt, when to adopt, why to adopt, and how to adopt.  Expect leading organizations to reinvest in research budgets and internal processes that inform, disseminate, and prepare their organizations for an increasing pace in technology adoption.
  • Designing next generation business models. Disruptive technologies on their own will not provide the market leading advantages required for success. Leaders must identify where these technologies can create differentiation through new business models, grow new profit pools via new experiences, and deliver market efficiencies that save money and time.  Organizations will also have to learn how to fail fast, and move on to the next set of emerging ideas.
  • Funding innovation through legacy optimization. Leaders can expect budgets to remain from flat to incremental growth in 2011. As a result, much of the disruptive technology and next generation business models must be funded through optimizing existing investments. Leaders not only must reduce the cost of existing investments, but also, leverage existing infrastructure to achieve the greatest amount of business value.

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