One of the important transformations the IT industry is experiencing right now (in addition to other buzzwordy trends such as Consumerization of IT and adding Social Network features to boring workplace systems) is the push to move enterprise systems to Software as a Service or more commonly known as “The Cloud”.
What does this mean to the average person? Your workplaces’ IT departments are moving the systems that you love/hate to use to do your daily job from some server room/datacenter that your company owns/leases (and maintains the hardware, software, network, etc for) to a datacenter owned & maintained by the software vendor that sold you the system in the first place. Big savings for your IT department, more money for the software vendor. Next time you log in to Blackboard, note that the domain is “blackboard.com” and not “washington.edu”. Why? Because it is cheaper for Foster to offer students Blackboard in “The Blackboard Cloud” than hosted in-premise.
Oracle is one of these older-school software vendors (as are SAP and Microsoft) that have been really good at amassing a suite of on-premise Enterprise software (ERP, CRM, etc) for the last several years. But as the Cloud trend gains momentum, they need to expand their portfolio to offer Cloud in addition to on-premise services to remain relevant in the market. So they announced the acquisition of Taleo on February 9th for $1.9 billion.
Taleo is a smaller software vendor that provides all HR functions that a company needs - as a Cloud service. It is the perfect acquisition for Oracle because it aligns with the strategy outlined in the paragraph above. Oracle has lots of cash and it’s faster to acquire fresh blood and ideas than doing their own R&D. This stops market erosion into Oracle’s own HR product suite from an up-and-coming startup. And, they also play catch-up with rival SAP who did a similar move by acquiring the talent management company SuccessFactors.
There are not too many details about what happens to current Taleo employees or its culture since the news are so recent. But we must take a hint from how Oracle has grown over the last few years. For more than a decade most of this growth has been via acquisitions. While this may mean that the transition logistics-wise will be smooth becaused they are seasoned at doing this, we have to wonder whether Oracle culture is so rigid that the only way to change it is by forcing people with new ideas to move into its corporate campus. And then, you come across pictures like this one which hint that the only innovation comes in the form of exciting new types of IP-related lawsuits the company dreams up.