Oracle's Taleo Acquisition a Major Move into Cloud Services

 
 
By Chris Preimesberger  |  Posted 2012-02-09
 
 
 

Oracle's Feb. 9 acquisition of enterprise talent management provider Taleo Corp. for $1.9 billion is a clear indicator of the all-purpose IT giant's commitment to becoming a major-league player in the enterprise cloud services business.

For $46 per share, Oracle is now the proud owner of the world's second-busiest software as a service (SaaS) solution provider. Only Salesforce.com records and stores more daily transactions than Taleo, which has a bit more than 5,000 customers and focuses on small and midsized businesses and large enterprises.

Salesforce recently topped the 100,000-customer level€”with about 30 million users€”and has done as many as 120 million transactions in a day.

Dublin, Calif.-based Taleo is fast becoming the human resources department's best friend. Its cloud serves more than 20 million users and processes as many as 68 million transactions a day. The company's customer base is growing by 37 percent annually for packaged services that range from performance management and learning management to compensation and succession planning.

Oracle and Taleo will team up to offer a full-service cloud service for organizations to manage their HR operations and employee careers. Oracle's ready-to-go public cloud infrastructure and market gravitas melded with the Taleo know-how will push ahead the development of the HR cloud services model in large measure.

In short, the new Taleo brand now will have more resources to enable employees and managers to manage careers throughout their life cycles and enable organizations to retain talent, Taleo Chairman and CEO Michael Gregoire said.

Taleo uses Dell Boomi's AtomSphere to integrate data for customers of Taleo Business Edition, the company's Talent Management suite for SMBs, and Taleo Learn, its employee development and training software solution.

Taleo will certainly not be the last cloud-service innovator to be acquired by Oracle; that much is certain. Oracle, which became the fourth Tier 1 all-purpose IT products and services provider two years ago with the takeover of Sun Microsystems€”IBM, Hewlett-Packard and Dell are the others€”is moving in among the cloud infrastructure-and-services-providing first teamers. This deal is proof of that intention.

Taleo will become the biggest fish in Oracle's growing cloud services pond. The company recently acquired RightNow ($1.5 billion) for customer service management, has launched its own Oracle Social Network for collaboration, and has a number of specialized Oracle Fusion applications already available for immediate cloud-distributed deployment.

Four Years in Preparation

Oracle has been building for more than four years to start acquiring top-notch cloud service providers like Taleo. It has all the requisite pieces in place to run Taleo inside its Public Cloud infrastructure. These include the Solaris 11 operating system, which the company is calling the first specifically engineered OS for cloud systems (2011); the Exadata database server (launched with then-partner HP in 2008); the Exalogic server for cloud-services deployment and application development (2010); a whole fleet of new APIs for interoperability (2010); a new file system tuned specifically for cloud deployments (2011); and a new Cloudera-powered Big Data appliance (2012).

"These acquisitions indicate the increasing enterprise acceptance of the software as a service model, with HCM following in the footsteps of customer relationship management (CRM) as the next SaaS battleground," cloud analyst Tim Jennings of Ovum said in an email to eWEEK.

"It also emphasizes the urgency that the major enterprise application vendors attach to establishing a strong position in cloud-based software. Both Oracle and SAP have existing on-premise HCM solutions, but both have been prepared to pay out large sums on cloud-based equivalents, rather than simply transitioning their existing solutions to the cloud," Jennings wrote.

Taleo employs 1,164 people. The company, incorporated in 1999, was formerly known as Recruitsoft, Inc. and changed its name to Taleo Corporation in March 2004.

Taleo's market cap is $1.89 billion. The stock was trading at $45.65€”up $6.68, or 17 percent, on the Feb. 9 news.

Chris Preimesberger is eWEEK's Editor in Chief of Features and Analysis. Twitter: editingwhiz

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