Tracking Trajectories
A Comparative History of Oracle and Salesforce
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If you know anything about the world of tech, you know the intertwined and ever evolving history of Oracle and Salesforce.
Despite their successes, over the years both Oracle and Salesforce have fallen under the tech spotlight for both their business choices and the larger-than-life personalities of their founders and board members.
As a result, there is a general aura of curiosity that surrounds these industry giants – and the individuals who have propelled their growth.
How did they establish the reputations they’re so well known for? When, where, and how did they hone in on their target user audience? What do those audiences mean for their respective business strategies in the coming years?
We decided to call upon our sources for answers.
With an internal community of ex-Oracle and ex-Salesforce professionals at our immediate disposal, we saw a unique opportunity to look past the written history of these companies.
The insight of our credentialed interviewees helped us better understand the culture, development, current standing, and future trajectories of Oracle and Salesforce alike.
Now, we get to pass that insight along to you. First, let us set the scene.
Back to the Beginning
We know one thing with absolute certainty
In their own ways and on their own timelines, Oracle and Salesforce have carved their names into the pantheon of influential software companies. But, like all success stories of note, they each had to start somewhere. For a pre Oracle Larry Ellison, that meant California.
In the late 1970s, the bright computer programmer with experience in research and development stumbled across an article detailing a new data management theory that showed potential to drastically reduce digital processing requirements. The relational database model described in the report piqued his interest, and soon Ellison had two of his closest colleagues joining him to develop a new platform around the model itself.
In 1977, Ellison and his co-founders began Software Development Laboratories, renamed Oracle a handful of years later. Within a single decade, Oracle had not only made their public debut with $55 million in revenue, but also reached status as the largest database management company in the world.
This, says Kamryn McKell, ex-Oracle CPQ sales engineer, was the first of many defining moments for Oracle. Even as Oracle began to expand out of pure database offerings, these early days constructed the era “where a lot of people know that they came from and really where they got started.”
The goodwill fostered between Oracle and its users saw the company through a tumultuous patch in their second decade. Between 1990 and 1995, Oracle saw unprecedented loss that catalyzed widespread layoffs and an overall company restructuring. By the end of the 1990s, though, Oracle would start to see the dust settle and work toward reestablishing themselves on the right side of the line.
Around this time, a young Oracle employee was starting to make quite the name for himself within the company’s inner ranks. From clinching the title of Oracle Rookie of the Year at age 23 to becoming Oracle’s youngest executive just three years later, Marc Benioff was catching the attention of some heavy hitters – namely, Ellison himself.
Whether Ellison saw bits of himself in Benioff, or the two were just cut from the same cloth, a deeply-seated – and often questioned – relationship formed between them over the course of Benioff’s thirteen-year tenure.
And for as much of the Oracle spotlight as Benioff was soaking in, he had his eyes firmly set on a different horizon. In the way that Ellison and a core group of trusted, talented friends came together to revolutionize the database management world with Oracle, Benioff saw a market gap he trusted himself — and his own inner circle — to close.
Software-as-a-service, or SaaS, was a seed of an idea rooted in Benioff’s brainspace in the late 1990s. In it, he saw the potential to forge a new path in thedevelopment of business software applications. This “trailblazer” mentality stuck, and would later become the cultural foundation for a flourishing Salesforce. He shared his thoughts with Ellison, who initially seemed to be supportive of the potential venture.
In 1999, Marc Benioff formally left Oracle – outfitted with both blessings and funding from Ellison, who was to sit on the new board of directors – to co-found Salesforce.
Leaning heavily into the concept of cloud-based solutions, Benioff wanted to do away with the heavy implementation and coding requirements seen in comparable software. The idea was that, by leveraging the new Salesforce cloud solution, businesses would be able to reinvest resources into customer experience, top-tier CRM offerings, and front-end simplification.
John Wright, ex-Salesforce business development representative, says that, “from the very beginning, Salesforce’s mantra was, ‘no software clicks, no code.’”
In fact, Salesforce was so committed to the mantra that Benioff ended up running a formal, national campaign that declared Salesforce “the end of software” entirely.
Taking a stance in such strong opposition to the software status quo meant Salesforce sent ripples throughout the industry; all of a sudden, the core foundations of software offerings like those from Oracle were thrown into question.
Was it possible for an immaterial solution like the cloud to supersede physical legacy solutions by following different means to a different end?
Benioff surely believed so, and fans of his bold positioning followed suit. He had seen and done enough while at Oracle to garner widespread trust, and the fact that Ellison was so on board didn’t hurt.
The early days of Salesforce were playing out better than Benioff could have dreamt. He had a growing core team helping bring his cloud vision to life, a steady hum of interest throughout the software sphere, the backing of his mentor, and a clear runway to launch.
Then, he found out what Ellison had been working on in his own time.
CRM Bait-and-Switch
Inspired by the CRM spin Benioff was putting into the Salesforce product strategy...
Ellison had Oracle engineers quietly develop a CRM of their own, designed as a head-to-head Salesforce competitor.
In one fell swoop, Ellison went from Benioff’s starting mentor and benefactor to biggest adversary, and a permanent fracture formed in both the personal and professional relationship he was to hold with Benioff moving forward.
Ellison was pressured to resign from the Salesforce board of directors for his dealings, marking the moment when the software industry’s history took a sharp new direction and a paradigm shift began to take form. Benioff was, in the public eye, the one and only man to have tamed Ellison’s ego, and arguably, come out on top.
Was Salesforce establishing itself as the foil to Oracle’s growing legacy and thrive on its own? Or was Benioff resigned to build his name within the confines of Ellison’s shadow?
In 2004, when Salesforce became publicly traded, the market answered; the Salesforce IPO raised the company $110 million, just about double what Oracle pulled with their 1977 IPO.
From there, the game was on.
Oracle and Salesforce turned their strategic dials to eleven, and began expanding rapidly in their own directions. Benioff and Ellison continued navigating their on-again, off-again relationship, at times collaborating constructively, and at others forgoing sportsmanship entirely.
There were years of billion dollar revenue, acquisitions and expansions, and a volley of compliments and challenges on ever increasing scales. Benioff and Ellison took their rivalry from conference panels to literal street corners, but never truly lost their guiding dedication to software greatness.
Now, that dedication has been rewarded in kind.
Up to Now
The law of inertia tells us that momentum in a singular direction wants to keep going in that same direction, barring any external influence.
With Oracle and Salesforce, we see each company using incredibly directed momentum to forge paths of connection with their target user audiences.
Both Oracle and Salesforce are master classes in how to position companies with overlapping offerings and clientele as go-to experts for users inhabiting their own industry niches. Over the years, they’ve identified and committed to satisfying complementary personas; one focused on front-end operations, one focused on back-end operations.
Fazal Gupta, ex-Oracle CPQ
with a track record of successful product launches, explains that the dichotomy “goes back to the [market] culture, as ERP growth culture and CX growth culture are somewhat different.”
Oracle expends the majority of their operations energy aligning with the back-end administrators and financial operations teams – think Chief Financial Officers and the like. Raw processing power is the name of their game; their product suite appeals to sellers with high levels of complexity and has built a stalwart reputation for Oracle with manufacturers, specifically.
Matt Hobbs, who has prior professional experience with BigMachines, Steelbrick, and Salesforce, says,
The tool [being sold] is important, but at the end of the day, it’s a tool, right? They’re all tools… [which is why] it’s extremely important to have domain expertise.”
This reputation tracks back to their early days and has remained a consistent pillar of the Oracle scaffolding. Hobbs explains that, across the decades, Oracle has “stayed in that complicated manufacturing talk track, leading more towards the ERP than the CRM.”
Companies can rely on those same ERP- and MRP-centric solutions to support core business functions from top to bottom. There is so much reliance on these solutions that experts project their maintained priority in years to come.
Gupta says “everything at Oracle really anchors around how to make [their] ERP work well, because that’s their, probably, multibillion dollar business and strongest growth rate for years… and that’s going to [continue to] be the strongest growth vector for years.”
With an if it isn’t broken, don’t fix it mentality, Oracle has happily committed to their backend prioritization. That isn’t to say they don’t still invest in front-end and experiential projects to stay competitive and aligned with a dynamic market, but their order of strategic operations will always begin at the back.
Salesforce, commanding presence on the opposite end of the arena, has literally made a name for itself by putting sales experience for representatives and shoppers alike at the forefront. Salesforce exists to bridge gaps left by Oracle and comparable legacy systems while further extending the reach – and business value – of top-tier experiences.
Looking at experiential value, Gupta says it simply “historically hasn’t been Oracle’s strength.”
John Wright, ex-Salesforce business development representative, says that “the technology [Salesforce] serves is all about delivering a very good experience [in which] the Cloud model is going to be able to do all the hard things for you.”
The “hard things” in question can range from opportunity management to recurring revenue models to streamlined revenue operations.
Hobbs defines revenue operations as “the business processes that exist between an opportunity and posting to the [general ledger], which is by definition a very back-office function.”
This, though, is where Salesforce was able to establish a far more user-friendly interface that thought less of the Chief Financial Officers appeased by the Oracle suite, and more of the day-to-day, front-end teams with less flashy titles and different key metrics.
Wright notes that “the audience that [Salesforce] serves is really going to be more the end users than the technical folks.”
Salesforce’s cloud-based, industry-specific product suites and robust community of external AppExchange partners gave time back where it mattered most.
Gupta explains that when it came to customer experience, Oracle tried to “differentiate on CX….by acquiring a lot of companies…but it just couldn’t build it out.”
McKell says the market watched in real time as Salesforce “came up as the big front office application and really digitized the front office process of companies.”
o customer experience, Oracle tried to “differentiate on CX….by acquiring a lot of companies…but it just couldn’t build it out.” McKell says the market watched in real time as Salesforce “came up as the big front office application and really digitized the front office process of companies.”
While heavy-duty manufacturers and the like still needed their main investments to go toward software maintenance, companies with softer configuration requirements and more discerning, consumerized buyer bases jumped at the holistic user experience Salesforce provided.
Wright said that Salesforce is “very capable [and] it’s been very widely adopted across the world, but there are certainly other systems out there that are far more powerful than the Salesforce solution.”
CPQ Comparisons
Evolving CPQ Products: A Competitive Area
An area of the two respective businesses which has become more relevant over the past 5-10 years is their competing CPQ (Configure, Price, Quote) Products.
The key points of differentiation between the respective CPQ solutions from Oracle and Salesforce tie back to differing perspectives on the role of technology as a business tool.
In 2013, Oracle broke into the configure, price, quote market with its acquisition of BigMachines, propelling development of a highly utile, back-end focused, legacy pursuant solution. Just two years later, Salesforce successfully navigated a 2015 SteelBrick acquisition and utilized it as the scaffolding for a specialized, customer-experience focused CPQ offering
Generally, Oracle CPQ exists as a means to increase their overall enterprise customer base. In the words of Gupta, Oracle CPQ is a hundred million dollar question in a ten billion dollar conversation – an interesting application for certain user demographics, sure, but built on a far different scale with much lower stakes in the grand scheme of things.
Gupta reminds us that Oracle is always “thinking of their enterprise strategy.” Through that lens, Ellison will find the ultimate value of CPQ through whether it “has helped them grow more enterprise customers with their ERP,” not whether they’ve broken new ground on experience.
According to Wright, “Whenever I came against Oracle in a CPQ evaluation … I was always nervous because I knew that their configurator was so much more powerful [than the Salesforce configurator].”
McKell notes “If I am the CFO, I am probably more open to listening to an Oracle side that has an ERP cloud, has accounting and all of these different functionalities built into it versus the Salesforce side.”
Similarly, Gupta says that for sales aligned stakeholders needing a functional, robust offering, Oracle’s “CRM side or CX side always suffered…because default culture is to sell to that CFO.”
But a core configurator and ERP cloud are only a few of many overall aspects to consider when assessing CPQ solutions. With great configuration power comes equally great maintenance requirements, which companies on a smaller scale than Oracle can severely struggle to match.
An environment centered so tightly around a heavy-duty configurator like Oracle’s also requires a disproportionate amount of resources to be allocated back its way, as compared to the quoting and pricing aspects of a balanced CPQ solution.
The gap Oracle leaves between pricing and quoting expectations and offerings just so happens to be the space Salesforce nestles into.
With such a back-end strategy at their core, Oracle looks to airtight configurators as their strategic cornerstone, while Salesforce leans heavily on sales user experience. After all, “sales” is the foundation of their operational brand.
While the Salesforce CPQ configurator is admittedly constructed for use cases requiring less power than those at Oracle, the downstream pricing and quoting offerings have a far higher benefit to reps.
For things like multi-channel sales, recurring revenue, subscription services, and partner channels, Wright notes that “Salesforce is still going to be the better solution” when looked at against Oracle.
Hobbs explains that “depending on what time type of revenue you have, you may have gaps in the Oracle model because they may not necessarily be looking at renewals and add-ons and things that would potentially happen across the term.”
Continuing that train of thought, McKell posits that “if I’m a Head of Sales and I want everything within one place, and I want it to be really easy for my sales team [to sell], I’m probably going to focus more on the Salesforce side” of CPQ solutions.
Wright confirms such a hypothesis from the other side of the field, stating that the “power of the Salesforce platform and having everything all under one cloud umbrella is how [Salesforce reps] actually would win deals against Oracle.”
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Up Next
Where the Two Tech Giants are Headed
Of Oracle CPQ expansion, McKell says, “I don’t know exactly where their journey’s going to go with the CX side of the house, but externally, it seems like they tried it, they didn’t really get the return on investment and they’re not continuing to invest in that side of the house.”
Hobbs too says, “I haven’t seen a lot of material innovation or feature releases over the years out of Oracle CPQ,” countering that “Salesforce has got a slightly different vision….which speaks to the continued investment that Salesforce will make in the [CPQ] space.”
On the immediate future of Salesforce CPQ development, Wright predicts the market will “see Salesforce being a much more focused organization with more cohesive technology….things actually [should] be more integrated [with] fewer acquisitions, more focus and stronger execution.”
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