By Siobhan Kennedy
As expected, Hewlett-Packard Co’s new CEO Carly Fiorina took the stage alongside Oracle chief Larry Ellison yesterday to announce a wide-ranging series of agreements under which HP will use and co-sell Oracle’s sales software in return for Oracle agreeing to shift some of its development work, and at least 50% of its internal systems, to HP’s hardware platforms.
Under the deal, the two companies said they would also link their sales forces over the internet to enable them to share leads and push joint solutions of Oracle’s CRM software on HP hardware. HP also said it plans to expand its CRM consulting division to deploy Oracle software on HP boxes, and Oracle will use HP boxes as the basis of its Business OnLine application hosting offering. Up until now, Oracle had named Sun Microsystems Inc as its only hardware partner.
Speaking during a press conference, Fiorina said the agreement would enable both companies to take advantage of the fastest growing segment of the software market, customer relationship management, or CRM, which she said was growing three times faster than the rest of the software industry today. She said the deal marked a change in HP’s attitude, away from the Switzerland approach where the company was happy to partner with lots of different vendors, to today, where she said it was making a clear choice. We looked at other offerings, some that were strong in client/server, but we wanted one where the software is sold as a service, on a pay as you go basis, and Oracle is stronger there than anyone else, Fiorina said.
While Oracle and HP have worked together for a long time – the two signed a deal back in August to embed HP’s e-speak e-commerce brokerage services technology within Oracle 8i – the fact that Oracle has committed to develop its products on HP platforms and plans to use the hardware to run its own internal CRM and email systems is a major coup for HP, especially given Oracle’s reliance on rival Sun’s products until now.
While Ellison denied the decision to go with HP would have any effect on its relationship with Sun, Fiorina was billing the partnership quite differently. We really see this as a joint effort to provide an integrated solution, she said. Without Oracle on board has meant that, until now, HP has lagged behind in terms of benchmarks. We were always in catch up mode, she said, the development was primarily on Sun, now it’s equal…Oracle’s software will be primed for HP platforms.
One reason for the tie up with HP could be both companies’ mutual desire to host software applications and rent them to customers over the internet, although that wasn’t cited as part of yesterday’s agreement. Oracle did say it would use HP’s servers for its Business OnLine venture, but there was no talk of HP hosting Oracle’s CRM applications, at least not yet. As part of its e-services strategy, announced in May, HP said it intended to offer software on a hosted basis so that a tie up with Oracle in that department would be a logical fit for the two companies. Rival Sun vows not to host applications itself, choosing only to offer the hardware and additional software needed to sell hosted programs.
Neither company would say what revenue they expect to generate as a result of the joint venture and Ellison was equally cagey about the specific hardware that Oracle would be replacing internally to make way for HP’s systems. We’re always replacing servers, he said, adding that Oracle is currently consolidating its 260 email servers in 119 countries to just two HP boxes. A spokesperson for Oracle was not available to comment as we went to press, but the company assured us that more details would be available tomorrow.
Not surprisingly, Ellison was keener to talk about the possibilities for joint sales, and steer clear of Sun questions. From now on, whenever an Oracle salesperson gets a customer CRM lead, it will be automatically passed over to HP, Ellison said, via an integrated internet sales system. HP and Oracle will go after the market together, he said, this is a massive change in the way we sell. He added: Oracle is going to market with HP hardware and Oracle’s CRM solution, not with Sun, only with HP.
Certainly, the deal will be a blow to the number one CRM vendor, and Oracle’s arch rival, Siebel Systems Inc. The two have been waging a bitter marketing war over the past few months with each claiming its product is the only web-enabled CRM application and Siebel asserting that it never comes up against Oracle when pitching for new business. While analysts agree that Siebel is still on top, Oracle hopes the partnership with HP will enable it to close that gap by giving its CRM product much better sales visibility.
Interestingly, when questioned specifically about choosing Oracle over Siebel Fiorina said HP had chosen Oracle because after evaluation of competitive products, it offered the best web-based solution. But a spokesperson for Siebel told ComputerWire that no such evaluation had ever taken place (see separate story).
