The numerous (almost identical) posts about Oracle's Human Capital Management (HCM) battle plans should not be misunderstood. While most commenters have rightly focused upon the discounting strategies Oracle is putting into place, this is not the real story. It is about competition with Workday. And it won't work.
Oracle's public facing marketing tactics are well known. They take various flavours, but if you understand how Oracle usually goes to market then you can pretty much work out the rest. They may be opaque. obfuscating and sometimes downright truth benders but it's relatively easy to read them on this topic. Why? Because they're predictable and go by similar playbooks in competitive situations. In this case, I am aware that Oracle is on an internal tear to 'kill Workday.'
Just like with Salesforce.com before it, Oracle has gone through the denial phase of failing to recognise the threats from enterprise startups built by former Oracle executives. Some of those initially got the blessing of Larry Ellison, CEO Oracle, often accompanied by generous seed funding. Larry's mentoring meetings with Marc Benioff, CEO Salesforce.com are the stuff of legend.
So, never believe the BS you hear when Oracle is ridiculing a competitor. As my colleague Alex Williams has said: 'When Oracle says something is black, they usually mean it is white." Then as the companies in question started to take off and then IPO, Larry made money but still didn't perceive the startup as a real threat.
But in the last few years, it has become obvious that (in the case of Salesforce.com) the threat to its Siebel business is real and so it starts to retaliate. Last year's spat between Benioff and Ellison during Oracle Open World is a good example. This year, the playbook is a little different.
Workday is positioned to chew off big lumps of Oracle's HCM business. So far it has taken a reasonable amount of business but nothing Oracle can't handle. What has changed is that at this year's Dreamforce, we have the tantalising prospect of Aneel Bhusri, co-CEO Workday on stage with Benioff (and possibly John Wookey ex-Oracle and SAP) to talk about their deepening relationship.
In past conversations with Bhusri, he has frequently alluded to the close ties that exist between Salesforce.com and Workday. Whatever they will announce (I am not privy to that information - yet), you can absolutely bet that it will represent a compelling and different story to traditional HCM, whether that's of the on-premise or cloud variety. Here's what I recently said:
Which brings us to the playbook. The document was initially available in the public domain but then was pulled once it got media attention. Feed the market with information that is (sort of) useful but hide the real purpose. Then hang everyone out to speculate by pulling the document in question. It's classic Oracle so don't think there is anything odd going on. Note: I have a copy and if anyone wants it then feel free to contact me (dahowlett@gmail.com)
Here's where it starts to get tricky though it is possible to figure out what happens next.
Let's start with customers. By releasing detailed information about pricing for partner-led deals, Oracle is signalling that it knows how to pull its ecosystem of partners along rather than have them possibly defect. That's somewhat moot because established practices inside the large SIs are not going away any time soon.
There's a catch for customers. In a number of scenarios, customers must have Oracle EBS HCM or Fusion HCM in order to benefit from the full discounting deal. In other words this plays both ways. If customers want talent management (aka Taleo) they'll almost certainly need to pony up for Fusion at some point. From the customer standpoint, you cannot ignore this possibility since Oracle much prefers you to bundle up software so that your long term maintenance bills are enhanced based upon whatever terms Oracle chooses to impose.
Now for the competitive position. Oracle has a problem with Workday. While the company is ostensibly led by former Oracle executives, they are in fact PeopleSoft folk. There is not an ounce of love lost between them.
In fact, Workday has been on record several times to assure the market it is not an acquisition target - Oracle's favourite way to crush opposition - and has taken steps to ensure it cannot happen. This is good news from the customer standpoint because Workday is demonstrating its intention to be in the game for the long haul. Workday execs know how Oracle operates but Oracle has a tough time in fully understanding Workday's strategy. This is because Workday is a master at surprises of the good kind.
Leading with price is Oracle's way of saying to Workday, 'Whatever you do, we can still crush you by pricing you out of contention.' That can work as a short term strategy and I would not be in the least bit surprised to hear Oracle banging that drum, along with having billboard buses cruising around with 'Oracle is no.1' messaging during Dreamforce. But it is flawed because aggressive pricing directly hits margins. That's why Oracle will need to bundle and why you have to be careful.
OK - so what more? Whether Oracle pulls some stunts at Dreamforce is not known. If it doesn't then that's one part of the story that falls apart. However, it is hard to see how Oracle could resist the temptation when Salesforce.com is poised to seal off four streets adjacent to the Moscone at Howard PLUS the Civic Centre. Oracle only manages three streets. It's an ego thing for both companies. Is there more?
The bigger test in my opinion comes at HR Tech in Chicago. I so much want to be there but sadly have travel conflicts. There is a panel that promises to be dynamite. Moderator Naomi Bloom, who is a BIG fan of Workday (as am I) has Steve Mirands (Oracle), John Wookey (Salesforce.com), Sanjay Poonen (SAP) and Stan Swete (Workday) along with Mike Capone (ADP) and Adam Rogers (Ultimate.) These folk are all heavy hitters with a ton of experience on cloud topics. They're also class acts not given to the BS we see from general enterprise marketing. If Naomi does her job well, then we should see more about how the competitive landscape is panning out and where the strengths and weaknesses really lay.
In addition, HRTech also features Mark Hurd, president Oracle keynoting. This is something of a coup for the conference. You can expect that he will hammer home the advantages of the Fusion/Taleo combination.
Whatever your take, the HCM market just started to heat up big time. More later.
