Oracle, NetSuite Partner To Storm Cloud

Oracle and NetSuite announced a strategic alliance on Wednesday whereby Oracle will contribute the human capital management (HCM) applications and NetSuite will deliver its ERP suite as part of an integrated cloud offering sold by both companies and supported by Deloitte as a systems integration partner.

The alliance is not surprising given that Oracle CEO Larry Ellison personally owns a controlling stake in NetSuite. It also makes perfect sense in that NetSuite lacked strong HCM apps, while Oracle is hell bent on rapidly growing its cloud computing footprint. The partnership and product-level integrations to come will give Oracle a first crack at selling cloud-based HCM apps into NetSuite's existing and future customer base.

Earlier this week Oracle announced strategic partnerships with Microsoft and Salesforce.com, looking past longtime rivalries in order to promote deployment of Oracle software in the cloud -- even if it happens to be on Microsoft Azure or the Force.com platform.

Oracle's cloud-based HCM offerings include Global HR and Talent Management applications. During a conference call on the partnership, Oracle president Mark Hurd explained that HCM is a market that is ripe for growth because it has been historically underserved.

[ Want more on Oracle's mega partnerships? Read Oracle Goes All In On Microsoft's Cloud. ]

"HR systems are no longer offline nice-to-haves because when you can get a complete view of HCM -- including workforce management, recruiting, performance, compensation, etc. -- you get a more holistic view of the company," Hurd said.

Developing that complete view, tight integration between HCM and ERP is required because most of the performance measures reside within ERP, added Zach Nelson, CEO of NetSuite. "What you'll see happen as the products become more interoperable over time is that more and more of the functionality of the two applications will become less and less visibly separate," he said.

There's very little separation, indeed, in the financial and HCM apps offered by Oracle and NetSuite rival Workday, as its core cloud-based applications were developed together from scratch. SAP also competes with Workday, but it has had more than a year to integrate its SuccessFactors HCM apps with the financial and ERP components of the cloud-based SAP Business ByDesign suite. SAP has also spun out a separate pairing for SAP Finance OnDemand and SuccessFactors HCM to compete with Workday.

Deloitte has deep experience with cloud-app deployment and integration services and it will back the Oracle-NetSuite pairing with global consulting and implementation support.

Wells Fargo equity analyst Jason Maynard was bullish about the Oracle-NetSuite alliance in a research note, but he added that gains for these partners will not necessarily curb Workday's rapid growth.

"We think 'zero sum game' thinking in this space is dangerous," Maynard wrote. "The mega trend in business software is the once-in-every-15-years replacement cycle going on now. This has been caused by the growth in cloud computing, social, mobility and big data."