Oracle purchases Taleo in a $1.9B response to SAP

Oracle just announced that they will be buying the Dublin, CA based talent management software company, Taleo, for $1.9B. This news is potent for 3 primary reasons.

1.  Taleo will bolster Oracle’s cloud credibility and bring vertical expertise to its growing applications portfolio. Taleo’s SaaS services will become part of the Oracle public cloud.

2.  It is clearly a response to rival behemoth SAP’s $3.4B purchase of SuccessFactors in December 2011.

3.  It demonstrates how acutely aware both Oracle and SAP are of Workday’s success in providing cloud based ERP software for midsize and large multinational enterprises over the past year.

Both IT giants have been criticized for talking a big game about cloud-based solutions but then lacking initiative in this arena. The triumph of Workday in 2011 has made it impossible for SAP and Oracle to continue lagging behind in the cloud. Their respective purchases of human capital management cloud solutions are direct responses to this criticism.

When SAP purchased SuccessFactors last December for $3.4B, Oracle was assessed as having missed a major opportunity, losing a battle in its war against rival software giant SAP. To add insult to injury, SuccessFactors is located right up the street from Oracle’s headquarters in Redwood Shores, CA.

But Oracle CEO Larry Ellison finally found a way, through Taleo, to throw his hat back into the cloud-based human capital management ring.

The rivalry continues…

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