Oracle Buys RightNow In Cloud Play

Oracle plans to acquire RightNow for about $1.5 billion, trying to tap into two huge priorities for IT organizations: Cloud computing, and better customer service.

RightNow provides customer management software using a cloud-based, software as a service model. RightNow's pitch is that it helps companies manage how their customer service teams interact across multiple channels--through call centers, over the Web, and in social networks.

RightNow's board has approved the deal, and Oracle expects to close it by late this year or early 2012, subject to RightNow stockholder approval and regulatory approvals.

[ Oracle is active on many fronts. Read Oracle Social Network To Challenge Salesforce Chatter. ]

Oracle already has a huge investment in customer relationship management software. The company just launched its new suite of enterprise software, Fusion, which introduced a SaaS-based option for CRM. It also added an on-demand PeopleSoft offering that is essentially hosted software, with conventional licensing of the software but with per-user, per-month pricing for the infrastructure.

It shows that Oracle, one of the tech industry's most acquisitive companies, isn't too concerned about overlapping products when it comes to buying into hot markets.

Cloud computing and customer relationship management are both red hot technology categories at the moment. Cloud computing showed up as the No. 2 technology priority for IT managers, in a survey by the Society for Information Management. It was No. 5 last year.

Customer relationship management is rising even faster. It's the No. 5 technology priority in this year's SIM survey, up from 13th on the list just two years ago.

Thomas Kurian, executive VP of Oracle Development, described Oracle's strategy this way in a statement: "Oracle is moving aggressively to offer customers a full range of Cloud Solutions including sales force automation, human resources, talent management, social networking, databases, and Java as part of the Oracle Public Cloud. RightNow's leading customer service cloud is a very important addition to Oracle's Public Cloud."

RightNow's cloud-based SaaS model means that companies don't have to manage the software inside their own data centers, and instead they pay a subscription to use the service, which runs on RightNow's servers.

RightNow filed for an IPO in May of 2004 after 25 consecutive quarters of revenue growth, reaching $12.9 million for the quarter ended March 31, 2004, up from $7.8 million a year earlier. That quarter also was marked by a modest profit of $80,000, the company's first quarter in the black.

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