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February 9, 2012

Oracle intensifies cloud push with Taleo buy

Follows acquisition of RightNow; retaliates against SAP and moves

By Vinod

Oracle has continued its aggressive moves into cloud computing by announcing its intention to acquire talent management firm Taleo for $1.9bn.

Taleo’s products will slot into Oracle’s burgeoning cloud portfolio. Oracle says bringing Taleo on board will help businesses to, "manage their Human Resource operations and employee careers." This includes enable companies to improve their staff retention rates.

As well as cloud computing the announcement also picks on another hot tech topic: social media. "The combination… will improve the employee experience through faster on boarding and better collaboration with team members via social media."

Cloud has played a big part in Oracle’s strategy over the last 18 months or so, following the introduction of Exalogic Elastic Cloud at Oracle OpenWorld in September 2010. In October 2011 the company announced the acquisition of could-based CRM player RightNow. At the time the move was seen as firing a shot at rival

Tim Jennings, chief analyst at Ovum, said Oracle’s acquisition of Taleo follows similar recent moves from its rivals.

"Oracle’s announcement of intent to acquire Taleo is the latest in an aggressive and competitive wave of market consolidation in the cloud-based Human Capital Management (HCM) space, which has seen SAP acquire SuccessFactors, and acquire Rypple," he said.

"These acquisitions indicate the increasing enterprise acceptance of the SaaS model, with HCM following in the footsteps of CRM as the next SaaS battleground," he added.

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It is also interesting that both Oracle and SAP have bought their way into the cloud HCM market, despite already having on-premise platforms.

"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 said.

This move also comes just six months after Oracle CEO Larry Ellison said the company would take a step back from acquisitions because of a perceived lack of value in the market. "We are able to grow through acquisitions when they are attractively priced and they make sense, and they are by and large not attractively priced now and don’t make sense, so we’re not doing them," he said in August 2011.

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