Oracle Must Rationalize RightNow to Battle

Oracle's acquisition of RightNow Technologies is a bid to more directly challenge But the software giant must carefully integrate the assets first.

If anyone doubted that Oracle (NASDAQ:ORCL) is interested in playing in's (NASDAQ:SFDC) carefully cultivated cloud computing wheelhouse, the software giant's $1.43 billion acquisition offer for customer service software maker RightNow Technologies should allay those doubts.

Oracle has plenty of this so-called CRM software, including Oracle CRM and Siebel on Demand applications.

RightNow, whose software helps massage customer interactions online, is the company's first purchase of a provider of wholly Web-based applications, or software-as-a-service (SaaS) CRM. Should Oracle consummate the purchase in late 2011 or early 2012 as it expects, it will have a comprehensive suite of SaaS CRM programs to offer enterprises.

These applications, along with the company's stack of database and middleware software will be supported on the back end by Oracle's Exalogic "cloud in a box" system, which allows customers to implement self-contained cloud environments with hardware from its Sun subsidiary. If ever there were a strategy that could be deemed "end to end" without ringing false, it appears to be Oracle's recent announcements concerning cloud computing.

Of course, that's how it plays out on the whiteboard in the boardrooms of Oracle.

First, the companies' cultures must be rationalized, however. Oracle is in Redwood Shores, Calif., and its CEO Larry Ellison is a formidable sailor of yachts. RightNow hails from Bozeman, Mont., which is well known for fly-fishing.

Oracle also has a big integration challenge on its hands. Forrester Research analyst Kate Leggett wrote in a research note that Oracle has many overlapping and competing assets for CRM and customer service, from CRM and Siebel On Demand, to Inquira for knowledge management and InstantService from ATG.

"Oracle must position RightNow as a unique offering in its current solution portfolio and must clearly message and steer customers to the right solution for their particular business need (for example, if I am a customer needing knowledge management, do I buy InQuira from Oracle or RightNow from Oracle? What about a chat solution? Do I buy InstantService from ATG/Oracle or from RightNow or the Oracle product?)," Leggett wrote Oct. 25.

That means sussing out architectural and code-base differences, never a fun task. Just ask the folks at Research in Motion, which is trying to transition from the Java-based BlackBerry OS to the QNX platform. Yet Oracle has been down this road before with PeopleSoft, Siebel and Hyperion. It knows the integration rigors perhaps better than any Fortune 500 high-tech company.

Then it has to turn around and offer RightNow CRM (or whatever it will be called) to customers who may or may not be contemplating SaaS-based CRM from Oracle rival

Oracle's bid for RightNow comes a month after Ellison and CEO Marc Benioff, joyously jousted over each company's strategic positioning of cloud computing during the Oracle OpenWorld conference. Well, it would have been a joust, except that Benioff was booted from his speaker slot at Oracle's show and decamped to a nearby hotel to tout his company's wares.

So how did the always-game-for-brinksmanship Benioff take Ellison's latest lobbed grenade? "Its (sic) the end of software. Cloud, mobile, and social are our future. Its (sic) a social revolution!" Benioff said on Twitter Oct. 24 after the deal was revealed. A spokesperson told eWEEK that is close to an official statement as would come on the bid.

The gist of Benioff's comment can be described as his mantra for the 21st century, more than a decade after he launched to kick at the toes of Microsoft, SAP and legacy CRM providers dealing in software downloaded directly to server computers and PCs.

Indeed, Benioff made cloud, mobile and social his three-legged stool at the Web 2.0 Summit Oct. 17.

At the event, he praised Facebook for providing unique opportunities for CRM lead generation and even enterprise collaboration. He also offered rare praise for Oracle. He noted, "I think that they are actually a strong company because of all of the acquisitions they've made, and they have a very good strategy."

Benioff was likely referring to purchases such as ATG, Inquira and Endeca-not RightNow. However, if his tweet is to be believed, he is more than game for the competition.

It will not be easy. While Oracle is a massive battleship with loads of cash and enterprise cachet, the company finds itself turning itself quickly around to attack in the cloud. Can it be nimble and quick enough to fend off its feisty rival and grab a leadership position in CRM?

That's the million-dollar question for a multibillion-dollar market opportunity in the enterprise cloud, which Gartner said is expected to balloon to more than $21 billion over the next few years.