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  • February 9, 2012

The Enterprise’s $5.3 Billion Endorsement of the Cloud

If there was any remaining debate on whether cloud computing is here to stay, it was squashed today.

Earlier Oracle announced it would buy Taleo, which makes talent management software in the cloud, for $1.9 billion. To put that in perspective, Oracle is spending 136 times Taleo’s earnings before tax, interest, depreciation and amortization.

There’s been a flurry of similar acquisitions among large enterprise players in the past three months. It kicked off when SAP announced that it would purchase cloud-based employee performance management provider SuccessFactors for $3.4 billion in December. Not one to wait around, Salesforce.com said it would buy the cloud-based HR service Rypple a mere two weeks later.

SAP and Oracle’s combined purchases amount to a $5.3 billion endorsement of the cloud. Oracle executives may not have mentioned the cloud in their last earnings call, but it was clearly on their minds.

Clearly, large enterprises envision a world where human capital is managed within software untethered to huge corporate data centers. The success of Taleo and SuccessFactors prove out the model.

But these latest moves aren’t just an endorsement of HR in the cloud. They are tacit approval of cloud computing itself.

The pace of change today is more rapid than ever – and it’s only going to get faster. The executives and boards of large businesses are expected to move with the mobility and agility of a startup. They need to make quick decisions, and reverse on a dime if need be. They expect the services they use to move with them.

Increasingly they expect the disparate services they employ to run their operations – from measuring the performance of talent to measuring revenue performance – to work in concert with each other. (It’s why we created a marketplace where B2B sales and marketing apps could talk to each other.)

As big name brands continue to jockey for position, the cloud is becoming the rule, rather than the exception, for any business that wants to sell to the enterprise – whether you sell to HR departments, marketing departments, IT departments, the list goes on and on.

You can think of Oracle and SAP’s $5.3 billion combined purchase as a down payment on the future of business.

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