It’s ‘Two’ for Oracle. Redwood City, California-based Oracle Corp. has made its second acquisition by signing a $1.9 billion acquisition deal with Taleo Corp.
Oracle’s Acquisition Deal with Taleo
On Thursday, Oracle, the technology giant signed a deal to buy Taleo, a maker of online human resources software, for $1.9 billion. The acquisition is Oracle’s second major purchase of a cloud-related services company, as reported by an industrial magazine. It emphasizes the shift taking place in the enterprise software industry as more businesses turn to the Web to run their operations.
Well, this definite move comes as a war heats up for control over the fast-growing cloud computing market. Holders of Taleo will get $46 a share, Oracle, the second-largest software company, said today in a statement to a business magazine. That’s 18 percent higher than Taleo’s closing share price yesterday.
It is the latest big investment in cloud computing by Oracle, the world's No. 2 maker of business management software after Germany's SAP. Paul D. Hamerman, a Forrester analyst told a news agency that this acquisition deal is anticipated to be a major move for Oracle.
When it comes to selling traditional software that customers install on their computer systems, Oracle is behind SAP and its billionaire CEO Larry Ellison has been more aggressive in adding cloud-based software offerings over the past few years.
Taleo gives Oracle tools that help companies manage human resources, recruit employees and set compensation. The acquisition deal between Oracle and Taleo may provide a counterweight to SAP’s planned acquisition of talent- management company SuccessFactors Inc. for $3.4 billion. Taleo and SuccessFactors are focusing their energies on the fast growing business of delivering software over the Web, rather than installing programs on customers’ computers.
Cloud Computing Software
Oracle is making use of the acquisitions to build its cloud business. But one wonders why would this acquisition be so useful to Oracle. Well, this acquisition enables Oracle to help blunt the impact of a possible slowdown in software sales growth. Cloud software is meant to appeal to customers seeking to save money by letting them access computing power over the Web.
Cloud computing usually refers to providing software, storage, computing power and other services to customers from remote data centers over the web. The demand for cloud-based software has been constantly rising rapidly because the approach allows companies to use new programs faster and at lower costs than traditional products that are installed at a customer's own data center.
Taleo makes software that businesses use to recruit and track job applicants, conduct training and carry out other human-resources functions. Unlike the majority of Oracle's software, which customers install on computer servers they own and operate, Taleo's products are delivered online and accessed via a Web browser.
It is early days for Oracle and SAP when it comes to cloud computing. Industry leaders believe that many corporate technology buyers are skeptical that home-developed cloud products from Oracle and SAP might hold up against proven products from industry pioneers.