Don't let it get away!
Keep track of the stocks that matter to you.
Help yourself with the Fool's FREE and easy new watchlist service today.
Will Oracle's (NYSE: ORCL ) latest cloud bid allow it to finally disrupt the CRM sector and propel the company to greater top-line numbers?
Last week, Oracle agreed to buy enterprise B2C cloud-marketing software company Responsys (UNKNOWN: MKTG.DL ) for about $1.5 billion in cash, or $27 per share. This represents Oracle's second major acquisition of a web marketing company this year, as part of Oracle's continued expansion of CRM, which it now calls Customer Experience Management, to the cloud.
Oracle's ability to dominate the sector depends on whether Oracle will harness momentum to fill out its CRM offerings, or allow a high-energy cloud company to languish in a slow integration machine with the company's other offerings, as some suggest happened with Oracle's massive takeovers of PeopleSoft, RightNow, and Sun Microsystems (the last of which was mired in lawsuits and layoffs).
Oracle continues to buy-up cloud innovators, which it must now merge with Responsys. In February 2013, Oracle bought Eloqua and its B2B web marketing this spring and added it to what Oracle calls its "Oracle Marketing Cloud" which also includes Oracle Social Marketing and Oracle's Compendium content marketing. Oracle's Marketing Cloud and Customer Experience Cloud offerings are designed to be an all-in-one for enterprises.
How Oracle can move enterprise CRM to the cloud
Oracle is trying to increase its market share in the customer experience realm. Responsys has a loyal customer base of companies such as LEGO, LinkedIn, Nordstrom, Southwest Airlines, and United Healthcare. Oracle sees the acquisitions of Eloqua and Responsys as giving it authority in cloud-based CRM and marketing, which it already has in software. Oracle's own sales of CRM software and cloud licenses remained the same in the year-over-year second quarter ended in December, but rose in constant currency.
Oracle still has room to expand in the sector, as the overall CRM marketplace grew 12.5% in 2012, with global CRM software sales of $18 billion, according to Gartner's CRM report in April 2013. Oracle ranked third with 11% of the CRM market, not far behind Salesforce.com (NYSE: CRM ) which led the CRM sector at 14%. Salesforce overtook SAP, which came in second with a 12.9% share. As the SaaS vendors such as Salesforce have been trusted in the cloud, Oracle has the opportunity to dominate both spaces.
Oracle is already known for its back-end CRM. On Dec. 19, the company noted that it won Temkin Group's 2013 Customer Experience Excellence Award for its efforts "focused on improving its customer experience in sustainable ways." This year, Forrester cited Oracle's integration of WebCenter and Commerce Platforms when it named Oracle Commerce a leader in B2B commerce suites.
Oracle has been hailed a leader in CRM software for many years, but it is aiming for the cloud. The company's acquisitions of RightNow and Eloqua were lauded as steps in this direction, but Oracle is still known as a software company. With the intersection of CRM and Responsys' customer-facing cloud interfaces for enterprises, Oracle may be filling a niche that its brand name will not be able to stop. This is what Oracle has been waiting for.
This integration would be meaningful enterprises such as telecoms and banks must interact with their customers through new online platforms as well as call centers. Unlike the customers of web-heavy companies like Amazon and Salesforce, consumers expect large retailers and banks to have customer service databases that seamlessly sync in order to offer extensive phone support. Consumers expect seamless customer experiences through both online and traditional phone support channels. Customers want to be able to quickly reach a live person on the phone who can see changes made to the account 10 minutes ago.
In a time when customer demands for seamless integration of online portals and call centers has never been greater, Oracle may be poised to once again lead the pack. Keep looking for Oracle to market its back-end enterprise middleware to cloud marketing customers.
Oracle must leverage energy, not just synergies
The flaw in Oracle's acquisition strategy has always been that it is a mega ocean liner that is hard to turn. It gobbles up smaller speedboats and sometimes loses the smaller company's momentum, vision, and customer base. In the case of Responsys, this is a strong possibility.
As for Oracle's purchase of Eloqua: On April 1, two months after the acquisition, Eloqua noted that the company's slogan (in a blog with the same title) is, "Culture Eats Strategy for Breakfast." This is not Oracle's slogan. Eloqua was compelled to write this post-merger blog about how its culture will remain strong as part of the Eloqua's continued efforts to convince its customers that the merger was working. Now Eloqua is yesterday's cloud news.
For both Eloqua and Responsys, their proactive, personalized approaches to tailor campaigns for customers large and small may be dwarfed by the Oracle machine.
Oracle promised in its Responsys merger FAQ that it expects to "leverage synergies" between the companies. This can only mean layoffs for where Oracle has duplicate systems and personnel. Rather than leveraging synergies, Oracle should be worried about whether it can leverage Responsys energy to propel itself to the forefront of the CRM cloud.
If Oracle can harness this momentum and package itself as the overall winner in leader experience -- allowing businesses to attract, retain, and manage customer interactions across the relationship lifecycle -- it is poised to dominate.
All social-media investors should know this company
Opportunities to get wealthy from a single investment don't come around often, but they do exist, and our chief technology officer believes he's found one. In this free report, Jeremy Phillips shares the single company that he believes could transform not only your portfolio, but your entire life. To learn the identity of this stock for free and see why Jeremy is putting more than $100,000 of his own money into it, all you have to do is click here now.