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Oracle On Salesforce.com's Service Disruption

Salesforce.com went down worldwide for about 40 minutes Tuesday, marking the company's first notable service disruption in months. There's never a good time for a service disruption, but this one seems particularly ill-timed, given Oracle's sudden bloodthirsty gaze on Salesforce.com's customer base.
Salesforce.com went down worldwide for about 40 minutes Tuesday, marking the company's first notable service disruption in months. There's never a good time for a service disruption, but this one seems particularly ill-timed, given Oracle's sudden bloodthirsty gaze on Salesforce.com's customer base.One of the first indications of this came last month, when CEO Larry Ellison told financial analysts in a conference call that Oracle's latest quarter was "conspicuous" for a "series of competitive wins versus Salesforce.com." This is the same CEO who in the past has breezily called SaaS a flawed business model (even with the company's CRM On Demand product and Ellison's own investments in Salesforce and NetSuite).

But Oracle does want a piece of the CRM SaaS action, as proved by a ramp-up in new wins last year. Revenue for Oracle CRM On Demand increased in every geographic region, ranging from a 55% increase in North America to 560% in Asia, said Anthony Lye, senior VP of the division, in a sit-down interview on Thursday. His team is looking for any Oracle database and/or application customers that are using Salesforce.com -- and trying to win them over.

How? Well, one way will be trying to convince them that Oracle's approach to SaaS results in more reliability for users. Lye pointed to the Salesforce disruption, and explained why if such a disruption where to happen in Oracle's data centers, it would only impact some customers, rather than all of them.

Salesforce reported that a failed network device brought down the service for all of its users shortly after noon on Tuesday, and failover efforts didn't immediately work.

Lye said that within the past few years, Oracle has developed application and database "pods" of both multitenant and single-tenant CRM On Demand systems in its data centers, so that if one pod fails, other customers aren't impacted. Similar-minded customers (say, those who want their maintenance done on a Tuesday instead of a Saturday due to high traffic periods) are grouped together on pods. That's a very simplified description, but you get the idea.

The result, Lye said, is you'll never see a worldwide outage that affects every CRM On Demand customer. And customers that want hosted CRM but don't want to share with others can have their own, exclusive pod.

With the multi-/single-tenant approach, "what Larry [Ellison] has created is sort of a Hertz business, where we have a whole fleet of vehicles," explained Lye. "Some are buses, some are hyper-performance vehicles, and some offer fuel economy. What Marc [Benioff] has is a big mainframe."

Without a physical tour and deep-down technological explanation from both, it's hard to do an apples-to-apples comparison between Oracle and Salesforce's SaaS infrastructures ... and definitively declare Lye's description as fact rather than, say, competitive posturing.

But my sense is Oracle is going to be looking at any way it can to weaken Salesforce's position of strength in the CRM SaaS market. SaaS may not be a highly profitable business model for software companies, but Ellison & team clearly want a piece of it.