The deal can’t help but be seen as a response to SAP’s acquisition last year of SuccessFactors, a Taleo rival. Indeed, Taleo’s shares have appreciated significantly in recent months — from $29 to $42 a share over the course of two weeks in December — on speculation that it would be the next cloud company to fall to the recent burst of acquisitions in the cloud software space. And so it has.

If Taleo is a new name to you, perhaps you should go back and read this interview I did with its CEO Mike Gregoire (pictured), about a week after the SuccessFactors deal. The company had been on track to do $325 million in revenue, and has been growing at a 20 percent annual clip.

What’s strange is that Gregoire seemed uninterested in being acquired by Oracle at the time, mainly because he had lived through Oracle’s hostile takeover of PeopleSoft, and had been with that company “until the bitter end.” Apparently, Gregoire and his board have seen past any reticence about Oracle this time around.

The press release is below:

Oracle Buys Taleo

Adds Leading Talent Management Cloud Offering to the Oracle Public Cloud

DUBLIN, CA–(Marketwire -02/09/12)- Oracle today announced that it has entered into an agreement to acquire Taleo Corporation (NASDAQ: TLEO – News), a leading provider of cloud-based talent management for $46.00 per share or approximately $1.9 billion, net of Taleo’s cash and debt. Taleo’s Talent Management Cloud helps organizations attract, develop, motivate and retain human capital to improve performance and drive growth.

Together, Oracle and Taleo expect to create a comprehensive cloud offering for organizations to manage their Human Resource operations and employee careers. The combination is expected to empower employees and managers to effectively manage careers throughout their entire employment, enable organizations to retain talent and optimize costs, and improve the employee experience through faster on boarding and better collaboration with team members via social media.

The Board of Directors of Taleo has unanimously approved the transaction. The transaction is expected to close mid-year 2012, subject to Taleo stockholder approval, certain regulatory approvals and other customary closing conditions.

“Human capital management has become a strategic initiative for organizations,” said Thomas Kurian, Executive Vice President, Oracle Development. “Taleo’s industry leading talent management cloud is an important addition to the Oracle Public Cloud.”

“Taleo’s integrated cloud-based talent management solutions optimize how organizations hire, manage, develop and reward their employees and gives companies the intelligence needed to capitalize on their most critical asset — their people,” said Michael Gregoire, Chairman and CEO, Taleo. “Joining forces with Oracle gives us the opportunity to better serve our customers.”

Last year, the judge offered Oracle a choice: Accept a judgment of $272 million in damages, reduced from $1.3 billion awarded at trial, or seek a new trial. Oracle says in court filings that it wants a new trial.

The key passage of the two-page court filing reads as follows (the word “remittitur” refers to the judge’s previous order reducing the award):

Oracle has no choice but to elect a new trial, as accepting the remittitur would force Oracle to risk waiving its right to appeal the Court’s decision on the motions for judgment as a matter of law and for a new trial. Oracle’s objective is to obtain clarification of the law and, if it is right about what the law is and what the evidence supports in this case, to vindicate the verdict of the jury and Oracle’s intellectual property rights as a copyright owner. Accepting the remittitur would be contrary to this objective.

And that means that the whole thing starts over again.

Calling the $1.3 billion award “grossly excessive,” U.S. District Court Judge Phyllis Hamilton in February granted an SAP request to throw out the award. Hamilton said that Oracle never proved that it lost enough business to justify so large a judgment.

Oracle had won the award in November, after accusing SAP’s now-shuttered TomorrowNow unit of copying its software without paying appropriate licensing fees. It had been the largest judgment ever in a copyright infringement case.

At trial, Oracle accused SAP’s now-shuttered TomorrowNow business unit of illegally downloading Oracle software and then making several thousand copies of it, in order to avoid paying the relevant license fees that are Oracle’s financial bread and butter. Oracle ultimately won the claim, but then the fight turned to damages.

Lawyers for Oracle had argued that the company’s damages should be tied to the value of a hypothetical license that TomorrowNow would have had to pay for the software, had it been properly licensed. For its part, SAP had argued that, as competitors, damages should have been calculated based on profits lost by Oracle and gained by SAP as a result of the infringement, and as such is in a much lower range than what Oracle argued for.

The case has caused a lot of personal enmity between Oracle and SAP, as well as with Hewlett-Packard, especially during the 11-month period when former SAP co-CEO Léo Apotheker was CEO of HP. Apotheker’s first days on the job at HP were marred by his apparent absence from HP headquarters, in what couldn’t help but look like an attempt to avoid being served with a subpoena. Maybe Oracle will try again.

Now SAP’s chairman, the 68-year-old engineer is trying to take advantage of cheaper memory chips in servers to speed up complex business calculations and allow companies to do in seconds what currently can take hours or days. The aim is to allow executives to quickly access and analyze business data even on hand-held devices.

Read the rest of this post on the original site »

If the name seems familiar, then perhaps you remember something of the episode resulting in Roehm’s acrimonious departure from Wal-Mart. The retailer hired her in 2006 in an attempt to bring its brand image into the 21st century and make Wal-Mart an acceptable choice for higher-end consumers.

A lengthy Wall Street Journal profile that year ran through the highlights of Roehm’s pre-Wal-Mart career: Racy double-entendre-laden ads for the Dodge Durango; a campaign with the tagline “That thing got a Hemi?” promoting Chrysler’s muscular engine. In 2004, she hatched an idea for something called the Lingerie Bowl, a pay-per-view event, tied to that year’s Super Bowl, which was to feature scantily clad women playing football. Car dealers and conservative groups complained, and Chrysler withdrew its sponsorship. Early successes at Wal-Mart included a 2006 TV campaign that poked fun at electronics retailer Best Buy.

However, Wal-Mart fired Roehm at the end of 2006 over accusations that she carried on a romantic relationship with a subordinate, Sean Womack. Wal-Mart also accused her, in a court filing, of using company-paid travel to conduct the affair. Roehm was also accused of accepting gifts from executives of an ad agency she ultimately selected, which Wal-Mart said violated company policy.

What followed was a full-blown ad-industry scandal. Womack’s wife turned over emails between Roehm and Womack, more or less proving the affair. Roehm sued Wal-Mart in 2007, accusing then-CEO Lee Scott and other senior executives of accepting gifts of travel and concert tickets from suppliers, and benefiting from preferential prices on items like boats from the Minnesota billionaire Irwin Jacobs. It only got uglier, until a judge dismissed her suit; the lawsuits appear to have ended.

Roehm doesn’t seem to have much history working on campaigns for business-to-business products of the kind that SAP produces. Even so, given her reputation for trying to shake things up with sleepy brands, it will be interesting to see what she does with SAP.

SAP is definitely on the move. Two months ago, it spent $3.4 billion to acquire SuccessFactors, a cloud-based maker of human resources software. That deal was only the latest in a string of deals by traditional software companies to roll up cloud-based outfits. SAP is also making noises about its own cloud, and will probably want to spend lavishly to market its Business ByDesign and HANA products this year, which SAP’s co-CEO Bill McDermott discussed last year with AllThingsD. That’s going to require some new marketing messages that will probably be like nothing the company has ever done before. It will be fun to see how it evolves.

What is Big Data?
Big Data technologies like Apache Hadoop provide a framework for large-scale, distributed data storage and processing across clusters of hundreds or even thousands of networked computers. The overall goal is to provide a scalable solution for vast quantities of data (terabytes/petabytes/exabytes) while maintaining reasonable processing times. These systems are incredibly effective for storing and analyzing large volumes of structured as well as unstructured or semi-structured data such as text, web or application logs, email, web pages, documents, and images.

Big Data in the Enterprise
Companies are capturing and digitizing more information than ever before. According to IDC, the world produced one zettabyte (1,000,000,000,000 gigabytes) of data in 2010. Fueling this data explosion are over five billion mobile phones, 30 billion pieces of content shared on Facebook per month, 20 billion Internet searches per month, and millions of networked sensors connected to mobile phones, energy meters, automobiles, shipping containers, retail packaging and more. Big Data is a platform for transforming all of this data into actionable items for business decision making.

The barriers to entry for Big Data analytics are rapidly shrinking. Big Data cloud services like Amazon Elastic MapReduce and Microsoft’s Hadoop distribution for Windows Azure allow companies to spin up Big Data projects without upfront infrastructure costs and allow them to respond quickly to scale-out requirements. Commercial vendor support from companies like Cloudera can speed development and deliver more value from Big Data projects. Bundled server options such as Oracle’s Big Data Appliance offer fast setup and scale-out solutions. Finally, modular data center designs are emerging as a way to efficiently manage hardware and scale-out rapidly and cost-effectively.

Companies likely to get the most out of Big Data analytics include:

• Supply chain, logistics, and manufacturing — With RFID sensors, handheld scanners, and on-board GPS vehicle and shipment tracking, logistics and manufacturing operations produce vast quantities of information offering significant insight into route optimization, cost savings and operational efficiency
• Online services and web analytics — Internet companies invented Big Data specifically to handle processing information at Internet scale. Implementation of these analytical platforms is now viable for smaller online services companies to provide an edge over competitors for advertising, customer intelligence, capacity planning and more. Companies who don’t offer online services but do have an ecommerce or other online presence will benefit greatly from understanding customer behavior and buying patterns via clickstream, cohort analysis and other advanced analytics.
• Financial services — Financial markets generate immense quantities of stock market and banking transaction data that can help companies maximize trading opportunities or identify potentially fraudulent charges, among various other uses. New regulations also require detailed financial records to be maintained for longer periods.
• Energy and utilities — Smart instrumentation such as “smart grids” and electronic sensors attached to machinery, oil pipelines and equipment generate streams of incoming data that must be stored and analyzed quickly to uncover and fix potential problems before they result in costly or even disastrous failures.
• Media and telecommunications — Streaming media, smartphones, tablets, browsing behavior and text messages are captured at ever-increasing rates all over the world, representing a potential treasure trove of knowledge about user behavior and tastes.
• Health care and life sciences — Electronic medical records systems are some of the most data-intensive systems in the world and making sense of all this data to provide patient treatment options and analyze data for clinical studies can have a dramatic effect for both individual patients and public health management and policy.
• Retail and consumer products — Retailers can analyze vast quantities of sales transaction data to unearth patterns in user behavior and monitor brand awareness and sentiment with social networking data.

Data Warehouse Integration
To apply this new technology effectively, it is important to understand its role and when and how to integrate Big Data with the other components of the data warehouse environment. In a vast majority of cases, Big Data does not replace the data warehouse. Hadoop is built for speed and flexibility across huge sets of often unstructured data, but is best used for fairly simple workloads, such as sorting, aggregating, converting, and filtering. Hadoop is also not intended to manage schema structure, referential integrity or security. Database management systems are therefore still a vital part of the overall solution architecture. So how will Big Data Analytics be incorporated with existing BI/DW investments?

Hadoop provides an adaptable and robust solution for storing large data volumes and aggregating and applying business rules for on-the-fly analysis that crosses boundaries of traditional ETL and ad-hoc analysis. It is also common for the results of Big Data processing jobs to be automated and loaded into the data warehouse for further transformation, integration and analysis. This allows Big Data to be integrated with data from other sources and exposed to users via BI tools, dashboards and reports. Several options are available for extracting data from Hadoop into the data warehouse. IBM, Informatica, Microsoft, Oracle and SAP have released or announced tools to interface between Hadoop and relational database management systems.

User-Friendly Tools for Big Data
Tools like Apache Pig and Apache Hive provide SQL-like frameworks for advanced data analysts to run queries directly against data stored in Hadoop. This is an effective way to do targeted, one-time analysis, perform exploratory data mining, or develop queries that may later be automated and loaded into a data warehouse. However, these tools require technical expertise and do not cater to end users.

Luckily, there are some exciting end-user tools coming in 2012. Tableau has support for drag and drop Hadoop reporting currently in beta and Microsoft recently announced the Hive ODBC driver and the Hive add-in for Excel which will allow end-user access to data stored in Hadoop through Excel, PowerPivot and Analysis Services. Tools that enable end users to slice, dice and visualize data in Hadoop will become increasingly important components of a company’s Big Data analytics arsenal over the coming years.

Big Data adoption will continue to be driven by large and/or rapidly growing data being captured by automated and digitized business processes. Successful adoption of this technology requires turning this raw information into usable knowledge throughout the enterprise. To accomplish this, companies will need to intelligently incorporate Big Data into their existing information management systems and take advantage of the developing ecosystem of integration and analysis tools. As we move into the age of Big Data, companies that are able to put this technology to work for them are likely to find significant revenue generating and cost savings opportunities that will differentiate them from their competitors and drive success well into the next decade.

Harlan Smith is a Manager in the Business Intelligence and Performance Management practice at Hitachi Consulting, specializing in business intelligence engineering, architecture and project/program management. Harlan is a graduate of the University of Puget Sound in Tacoma, WA, and currently lives in Seattle where he has been a consultant since 2005. Follow him @smithharlan on Twitter.

The new forecast calls for companies and governments to spend a combined $3.8 trillion on information technology, which would amount to growth of 3.7 percent from 2011. The previous forecast had called for growth of 4.6 percent.

For perspective, the difference on a dollar basis is about $100 billion, which is certainly real money, but when you consider the various puts and takes affecting the projected spend, it makes a certain amount of sense.

Gartner says that all four of the major technology sectors it tracks — computing hardware, enterprise software, IT services, and telecom equipment and services — will see their growth rates slow this year.

You can probably guess why: The uncertain global economy, the euro zone sovereign debt crisis and the disruptions on the hardware supply chain from last year’s flooding in Thailand on hard-drive production have all teamed up to perform a triple whammy on the tech sector. The Thailand problem will probably last until well into 2013, Gartner’s Richard Gordon says in a statement, echoing what Seagate CEO Steve Luczo told AllThingsD in an interview in November.

Telecom equipment spending will probably suffer the least, Gartner says. Sales in that sector will grow by nearly 7 percent to $475 billion, followed by the enterprise software market, which will grow by 6.4 percent to $285 billion. The chart at the right, which I screengrabbed from Gartner’s handout, breaks down the revised outlook by each sector versus what the previous growth outlook had been.

Gartner also trimmed its average annual growth projection for IT spending through 2015. It now expects spending to grow by about 5 percent on average, down only slightly from 5.4 percent, but in the wider scope of a few trillion dollars, a fractional change still amounts to hundreds of billions of dollars.

Aneel Bhusri

Allen is said to have advised Workday on its recent funding round, which closed in October. As exclusively reported by AllThingsD at the time, Workday raised $85 million at an implied valuation of $2 billion. The Series F was led by T. Rowe Price, Morgan Stanley Investment Management, Janus and Bezos Expeditions, the personal investment entity of Amazon CEO and founder Jeff Bezos. Bloomberg also says that Michael Dell’s personal investment vehicle, MSD ventures, was in on that funding round, which grew to $100 million since the closing.

Previous investors include Dave Duffield and Greylock Partners, who are in for $90 million across four rounds; and New Enterprise Associates, which joined a $75 million Series E round in 2009.

Apparently encouraged by the successful IPO of Jive Software earlier this month, and the performance of its shares, which are up nicely since the debut, Workday now appears poised go through with the IPO that CEO Aneel Bhusri (pictured) hinted in October would take place during the second half of 2012.

And there’s no question that Workday is in a hot space. SAP’s $3.4 billion acquisition of SuccessFactors last month, plus Salesforce.com’s deal for Rypple last week, attest to the urgency with which larger companies want to be in the HR software business.

Think about it: Every company — of any size — needs to keep track of its people, their salaries, performance-review information and so on. And why bother with software that runs on the local machines, when the cloud is so much more efficient?

Bhusri was a senior executive and co-chairman of PeopleSoft’s board, and was on hand for that company’s hostile takeover by Oracle. After losing that battle, he and co-founder Dave Duffield concluded that the next battlefield for enterprise software would be in the cloud.

Workday’s average customer has between 10,000 and 15,000 employees. Among its 250-odd customers, the biggest is Flextronics, the huge electronics manufacturing company, which has 200,000 employees. Others include Time Warner, Thomson Reuters, Chiquita Brands and, perhaps unsurprisingly, Salesforce.com. Workday has some two million employees in its system.

And while there’s no S-1 filing with the US Securities and Exchange Commission to peruse yet, the IPO watch on Workday officially begins now.

Despite everything, corporate spending on IT was going to hold steady, went the conventional wisdom. Big tech companies selling to big companies — except the financial ones — were supposed to have the situation well in hand. All those big companies looking to get things done in a faster, cheaper and more efficient manner would be writing big checks to the big lumbering tech companies, which would translate into operational savings: Faster servers, faster PCs, cloud services, better software.

At least that was the conventional wisdom until today. Now Oracle has gone and harshed whatever buzz there was left. Once investors got their heads around the wider implications of the software giant’s disappointing quarter, they concluded that the entire enterprise tech sector required a sharp spanking. Here’s a rundown of the damage:

• Oracle shares fell by $3.40 or nearly 12 percent, and briefly traded within 20 cents of their 52-week low.
• IBM, recently the engine of steady, dependable tech growth, fell $5.77, or more than 3 percent.
• Cisco Systems fell 49 cents, or more than 2 percent, and teamed up with Big Blue as the day’s worst Dow performers.
• Salesforce.com fell 5 percent.
• VMWare fell nearly 10 percent.
• SAP fell $3.49, or more than 6 percent.
• Hewlett-Packard held up (relatively) better than the rest, falling only 47 cents, or less than 2 percent.

Okay, you get the picture. Investors wanted out of any stock that touched enterprise tech today. Oracle is considered a bellwether. The result was predictable. But does the crux of the argument that fueled today’s fear have any merit? Maybe not.

There are reasons to hope it’s not quite so bad. For example, IT consulting house Accenture, which saw its own stock fall more than 4 percent today, recently reported a pretty good quarter, with record revenues and earnings. Its strength came from $7.8 billion in new bookings, which isn’t exactly a negative indicator.

Second, even if corporate spending does slow down, tech M&A deals could help larger companies grow despite themselves. Oracle, Cisco and IBM have a combined $87 billion in cash and short-term investments among them. And as we’ve seen, there’s still plenty of appetite among large tech companies for gobbling up smaller ones, especially in the red-hot software-as-service space.

Recent examples include SAP’s $3.4 billion acquisition of SuccessFactors, Oracle’s $1.5 billion deal for RightNow, and Salesforce’s grab of Rypple.

And the potential targets are numerous: There’s Taleo, NetSuite, Workday; even newly public Jive Software.

Finally, the currency weakness that has Oracle and so many other companies running uphill when dealing with non-U.S. customers isn’t going to last forever. Yes, it’s true that IT companies like it better when the dollar is weak against the euro. Considered from that angle, Oracle and other global tech companies suffer less from a demand problem than a temporary — though it is going on way too long — currency problem.

But even if the euro crisis does last well into next year, there are still the BRIC countries, which Intel, another significant tech bellwether, can’t stop praising. And — dare I say it? — the U.S. economy is showing signs of coming back to life. In several states, private payrolls are growing just enough to offset the declines in employment at state and local governments, and as new tax revenue flows, government payroll declines will slow, as well. As 2012 wears on, the U.S. might find itself rolling into an honest-to-goodness recovery, which would fuel improvements to IT budgets. Though the hard-drive shortage caused by the flooding in Thailand won’t make this any easier.

So don’t worry. Or don’t worry too much.

So what happened? A few things, as Oracle execs tried to explain on a conference call.

• The currency effect: As President and CFO Safra Catz explained, what had been a 1 percent tailwind for currency effects turned into a 2 percent headwind. With all the violent swings in the value of currencies around the world as compared to the U.S. dollar, Oracle suffered a negative effect that pinched revenue.

• Deals didn’t close during the quarter: Catz said that in the final days and weeks of the quarter, some customers added an extra layer of executive approval to close deals to buy Oracle stuff. That meant that some deals Oracle had expected to close before the quarter’s end moved into the next quarter. Catz said that Oracle has taken steps to better manage deal flow to take this into account. It is consistent, however, with recent statements from other enterprise IT vendors, like IBM and NetApp.
• Transitions: Oracle’s SPARC server business just switched to a new chip called the T4, which was unveiled late in the quarter. The machines require a total upgrade, and that means a lot of testing with existing applications, which can slow down deals for the new machines, while at the same time sapping demand for the prior generation of products. That had a lot to do with hardware sales dropping by 14 percent year over year to $953 million. As Catz put it: “We saw good early demand for the new SPARC SuperCluster, but only released the product for general availability at the very end of the quarter, allowing us to ship only a couple.”

Catz also predicted that hardware sales will decline as much as 14 percent this quarter, although CEO Larry Ellison was bullish on its growth prospects later this year. New software license revenue, a key metric gauging software sales, is expected to grow in a range of 2 percent to 12 percent. Total sales are expected to grow in the range of 3 percent to 7 percent, and per-share earnings are expected to come in between 56 and 59 cents, which is in line with the consensus of analysts.

There were a few things that went right. Ellison did what he usually does on a conference call, and crowed about examples where Oracle is beating a competitor. This time, the targets were IBM, Cisco Systems and SAP, but not his usual punching bag, Hewlett-Packard. Oracle won several competitive deals from Big Blue and Cisco, as well, with customers as varied as Australia’s University of Melbourne, the U.S. Food and Drug Administration and the Hyundai Kia Motor Company.

Ellison also hinted that Apple is a big Oracle customer. He mentioned a “a very large American smartphone manufacturer” that had bought more than 30 Oracle Exadata systems as it built out its cloud. Unless I’m missing something, there’s really only one company that fits that description, and that’s Apple. Its use of Oracle gear within the mix at its North Carolina data centers has been speculated about before, but never confirmed by Apple directly. (Big surprise, that.)

Salesforce just announced that it is buying Rypple, an oddly-named outfit that specializes in performance management and goal-setting. It’s a cloud-based platform for giving employees feedback on how well they do their jobs, and which attempts to make the annual performance-review process — dreaded by so many employees and managers — less, well, dreadful.

Salesforce says in its press release that it plans to relaunch Rypple under the name Successforce, which to me sure sounds a lot like SuccessFactors, the cloud-based HR software outfit that software giant SAP acquired earlier this month for $3.4 billion. That makes the third acquisition of a cloud-based software firm in recent months. Oracle, you’ll remember, acquired RightNow for $1.2 billion in October. Expect a new round of speculation around other companies in the space, chief among them Taleo, whose stock has picked up considerably since the SuccessFactors deal, but which was down today.

Rypple’s customers run the gamut: Facebook is mentioned as one of them in the press release; Spotify was named as another in a Wall Street Journal blog post earlier this week. Jive Software, a social enterprise software outfit that IPOed this week, is another.

Financial terms haven’t been disclosed, but Rypple’s investors include Bridgescale Partners and EdgeStone Capital Partners, as well as several individual investors, including Peter Thiel, the PayPal founder.

Salesforce’s statement follows; below that is a short video explaining what Rypple does:

Salesforce.com Signs Definitive Agreement to Acquire Rypple — First Step Toward Human Capital Management for the Social Enterprise

Acquisition marks salesforce.com’s first step into Human Capital Management

Rypple’s next generation social performance management app to be re-launched as “Successforce”

New HCM business unit to be run by John Wookey

Rypple to extend value of existing salesforce.com products

Hundreds of companies like Facebook, Gilt Groupe, and Spotify embrace Rypple’s new social model to empower teams to share goals, recognize great work, and improve performance

SAN FRANCISCO, Dec. 15, 2011 — Salesforce.com [NYSE: CRM], the enterprise cloud computing company (http://www.salesforce.com/cloudcomputing/), today announced it has entered into a definitive agreement to acquire Rypple, a cloud-based social performance management company. The acquisition signifies salesforce.com’s entry into the human capital management (HCM) market for the social enterprise. Salesforce.com plans to re-launch Rypple as “Successforce” and create a new HCM business unit, which will be run by John Wookey. Rypple’s unique social technologies will also extend the value of salesforce.com’s existing core products. The transaction is expected to close in salesforce.com’s fiscal first quarter ending April 30, 2012, subject to customary closing conditions.

Comments on the News
• “Salesforce.com and Rypple share a vision for extending the social enterprise to transform the way we work,” said Marc Benioff, chairman and CEO, salesforce.com. “The next generation of HCM is not just about a cloud delivery model, it’s about a fundamentally better way to recruit, manage and empower employees in a social world.”
• “Our social enterprise strategy continues to accelerate, and is at the root of the broad-based transformation and innovation we are seeing from customers today,” said John Wookey, executive vice president, advanced applications, salesforce.com. “With the launch of Successforce, salesforce.com plans to revolutionize HCM starting with an exciting social performance management app that will delight millions of employees around the world.”
• “We chose Rypple to be the core of Facebook’s employee performance management platform because it’s designed from the ground up to be social,” said Tim Campos, CIO, Facebook. “We are delighted to see it become part of salesforce.com’s social enterprise strategy.”
• “Rypple was designed from the start to be fun, social, and mobile — an app that can delight managers and employees in entirely new ways,” said Daniel Debow, co-CEO and co-founder, Rypple. “As the leading social enterprise company with more than 100,000 customers worldwide, salesforce.com will allow us to not only strengthen our offering for the hundreds of high-performing organizations that use Rypple today, but also scale it to reach many more.”
• “We took the science of team performance and applied the collaborative, transparent, and real-time power of social networks to create a completely new model for managing people and the work they deliver,” said David Stein, co-CEO and co-founder, Rypple. “Salesforce.com gives us the opportunity to apply our expertise and extend our vision for Rypple with Successforce.”

Salesforce.com Redefines HCM for the Social Enterprise
Traditional HCM software that many businesses use today was designed 30 years ago for personnel departments whose goal was to minimize the cost and risk of employing people. While HCM software hasn’t changed in decades, the way people work has radically changed.

Today’s workforce demands new performance and leadership tools that are completely transparent and allow employees to be connected to their company’s mission and each other. Social enterprises and progressive HR leaders are embracing apps like Rypple, which focus on the inherent social nature of performance management — goal setting, feedback, recognition and continuous dialogue — to help employees align more effectively around the company mission.

The acquisition of Rypple and its planned re-launch as Successforce signify salesforce.com’s entry into the HCM market. The company plans to expand into other areas with a new social model that will revolutionize the way companies recruit talent, build teams, empower employees and achieve results.

The new HCM business unit, including Successforce, will be led by John Wookey, salesforce.com’s executive vice president of advanced applications. Wookey comes to salesforce.com with more than 20 years of experience in enterprise software, including senior leadership positions at Oracle and SAP.

Extending the Value of Salesforce.com’s Existing Products
A social revolution is taking place today. The number of social networking users has surpassed e-mail users. Nearly a quarter of all time spent online is spent on social networks like Facebook. People access the Internet more from mobile devices than from desktops. Today, companies must change the way they collaborate, communicate and share information with customers and employees to stay competitive. Salesforce.com is helping companies meet the challenge of this social revolution with its social enterprise strategy.

With this acquisition, salesforce.com will embed some of Rypple’s next-generation features into its existing products. For example, people will be able to thank colleagues, win badges and provide recognition – all from within Salesforce Chatter. And customers of core Salesforce products — the Sales Cloud, Service Cloud, and Force.com platform — will be able to connect with new employee feedback tools to help drive business goals and power the future of their employee social networks.

Rypple: Pioneers of Social Apps
Founded in 2008, Rypple pioneered a new approach to performance management — one that empowers managers and their teams to learn faster and perform better. Rypple is a social performance app built for the way we work today — in real time. With Rypple, teams can share key priorities and get the continuous feedback, coaching, and recognition they need to consistently achieve their goals, making performance management painless and effective. Hundreds of companies including Facebook, Gilt Groupe, and Spotify use Rypple’s social performance app, which is based on 50+ years of behavioral science, focusing on what really keeps people passionate about their work.

Details Regarding the Proposed Acquisition
The transaction is expected to close in salesforce.com’s fiscal first quarter ending April 30, 2012, subject to customary closing conditions. The transaction is not expected to have a material impact on revenue for FY13. Salesforce.com will initiate EPS guidance for fiscal 2013 on its fourth quarter conference call in February.

About Rypple
Rypple is web-based social performance management software that helps managers and employees improve performance through social goals, continuous feedback and meaningful recognition. Designed to build a transparent, results-driven work culture, Rypple replaces the traditional performance review with an easy, social and collaborative approach so people know where they stand and are accountable for achieving their goals. Hundreds of high-performing organizations use Rypple, including Facebook, Gilt Groupe, Kobo, Mozilla and Rackspace. Founded in 2008, Rypple is funded by Bridgescale Partners, Edgestone Capital Partners, Peter Thiel and a veteran team of angel investors. Learn more at www.rypple.com.

Last month, the company estimated it will sell 11.7 million shares in a price range of $8 to $10. Lead underwriters on the deal are Morgan Stanley and Goldman Sachs with Citigroup, UBS, BMO Capital Markets and Wells Fargo also participating. At $10 a share, Jive would be valued at $573 million.

The company’s executives have been on a road show in recent weeks. You can see CEO Tony Zingale give a 32-minute talk complete with slides on the company on the Web site Retail Roadshow.

The IPO will mark a nice exit for venture capital investors Sequoia Capital and Kleiner Perkins who have backed Jive to the tune of $57 million in three rounds, the largest of which came in August of 2010.

The deal also takes place against the backdrop of a sudden surge in interest in enterprise software companies, particularly those that run in the cloud. SAP snapped up the cloud-based HR software player SuccessFactors for $3.4 billion earlier this month, while in October Oracle acquired RightNow for $1.4 billion.

Along with Taleo, Jive will quickly become part of the conversation concerning cloud-based acquisition targets.

While initially Jive’s software was delivered as an on-premise, behind-the-firewall product, it has in recent months been boosting its cloud-based business. In its original S1 filing, it said that as of the six months ended in June, it derived 59 percent of its sales from cloud-based software.

It turns out there were some subtle signals that the company was on the block. Theo Francis of Footnoted, the Morningstar-owned blog that follows the nitty-gritty details of SEC filings, notes a classic sign of a pending deal — increases in executive compensation and an apparent preoccupation with change-of-control provisions.

Senior executives often work these provisions into their compensation deals to ensure they don’t leave any money on the table or lose their equity in case a company is sold, merged or acquired. Often any unvested equity or options vest fully.

Francis notes that in July 2010, SucccessFactors added change-of-control provisions to its compensation plans without ever having given a thought to the subject before. Also, severance provisions were revised. For example: CEO Lars Dalgaard’s contract grants him double his annual salary and a target bonus should he lose his job after an acquisition. This comes on top of a $90,000 boost in his annual base salary to $540,000, plus an annual bonus that maxes out at twice that and a pot of restricted stock awards, worth about $6 million, all of which vest in the event of a deal.

All told, Dalgaard could walk away with almost $17 million when the deal closes. You can read more about all this in the original April 22 filing here.

Taleo’s CEO, Mike Gregoire, has been in this position before. As executive vice president of Global Services for PeopleSoft, he lived through Oracle’s hostile acquisition of that company. In an interview with AllThingsD, he didn’t comment directly on the speculation that Oracle might make a bid — Oracle hasn’t hasn’t said anything on the subject, either — but it was clear that he didn’t exactly seem to relish the thought, either. Having run $2.3 billion of PeopleSoft’s $2.7 billion in revenue, he was with that company “until the bitter end,” he told me.

After a stint as an angel investor and sitting on the boards of a few companies, Gregoire decided he was “more of an operational guy.” He joined Taleo and took it public in 2005, and has been at its helm since then. Taleo was at that time the second cloud-based software company to go public after Salesforce.com. It was so early for software-as-a-service (SAAS) companies, where customers pay a subscription fee to use the application, that when he approached banks for some financing, upon hearing the word “subscription” they would initially compare it to a magazine. Eventually they understood, and Gregoire got his loan. Now some of those banks are his customers.

Cloud-based enterprise software companies are suddenly hot acquisition targets. Aside from the SAP-SuccessFactors deal, Oracle acquired RightNow in October. As a growing cloud-based rival to SuccessFactors, with a protein-rich customer base, a solid operating model and an affordable market capitalization of about $1.6 billion, Taleo’s shares have shot up on speculation that it could be next.

On Dec. 2, the day before the SuccessFactors deal, Taleo shares closed at $32.96. On Dec. 5, the first trading day after the deal, Taleo rose almost 20 percent to $39.50. The move by SAP — long a vendor of traditional on-premise business software — to embrace the cloud-based or SAAS model is an important acknowledgement that the business of selling business software is fundamentally changing, Gregoire says. Indeed, it’s a fact that SAP’s co-CEO Bill McDermott acknowledged even before bidding on SuccessFactors.

And it’s hard to argue that Taleo (pronounced Ta-LAY-oh) isn’t making an impressive showing. The company has been growing its sales at between 17 and 20 percent since since 2008, and it’s on track to hit $325 million in sales this year, up from $237 million last year. It has 5,000 customers, including 180 of the companies on the S&P 500, and its product is available in 38 languages.

Naturally, my first question for Gregoire was about his thoughts on the SuccessFactors deal.

AllThingsD: Mike, it has been a busy few days since the SAP-SuccessFactors deal was announced. What did you think of the deal? And what, if anything, does it mean for Taleo?

Gregoire: I think it started a few weeks earlier, with the Oracle RightNow deal. It’s a confirmation that the on-demand model is moving into the next phase of its adoption. We’ve got 5,000 customers. We’ve been the No. 1 on-demand player in the enterprise. No one has as many Fortune 100 customers as we do. We drive the second-largest number of transactions volume of any on-demand player. It kind of felt like we had been pushing this rope, trying to get people ready for that next phase of adoption. So Oracle and SAP are acknowledging that the on-premise solution is running out of gas, and they need to augment that solution with some off-premise cloud solutions. Second, it’s important that SAP has recognized that talent management is extraordinarily important, and it complements a back-end Enterprise Resource Planning (ERP) system. Taking care of people helps your company grow, and without it, your company is at a competitive disadvantage.

A lot of people look at the the phrase “talent management” and think it’s kind of specious — or even boring — software that only the human resources office needs. What does it mean?

If you want to talk about an application that moves the needle for business performance, there’s nothing better. The No. 1 expense in businesses is people. We see the news about the unemployment rates, and then we see that companies can’t hit their productivity goals because they don’t have the right people in the right jobs. Its absolutely crazy. That’s the problem we solve. Talent management is about getting the right people into your company, having them work on the right things, because you’ve got performance goals, measuring those goals, tying that to pay-for-performance and compensation. And, by the way, the chances that person has the right skills at the right time is about zero, so you want to tie those goals to a learning management system, and making that happen in real time, and then providing intelligence about the whole ecosystem of employees. That moves the needle with respect to business performance.

What’s a classic example of this software in action?

I’ll talk about SunGard, which is a customer of ours. They use an Oracle ERP system, and they use our learning management systems. Let’s say you’re a SunGard sales rep and you just got promoted. The day that your promotion goes through in the ERP system, it kicks off a transaction in our learning system that checks your history to see what courses you’ve taken and whether you’ve got all the certifications you need. And then it automatically builds out the courses you need to take to be successful in your new job. We also do succession planning. And the days when you’re only going to consider people inside your company are over. You’ve got to think broader than that. United Airlines, which is a customer, when they think of succession planning, they’re not only thinking about the 200 high-potential individuals within the company. They’re talking to people in the industry so they can take a look at the people inside and outside the company and consider different scenarios. Our application is graphical, so you can drag people around in a visual tree and see what each scenario looks like. And then you can save them for later, so that if someone gets promoted, fired, or leaves the company for another job, you’ll know what to do, should any of those three things happen. Most people do this sort of thing in their heads.

How do you think Taleo stands up against SuccessFactors competitively?

Going forward, we’ll have to see how that works out. [With] due respect to what I’ve read about the deal in the press, I don’t think the integration with SAP is going to be a walk in the park. There’s at least seven platforms in SuccessFactors. And in this deal, you have two companies who have struggled to do SAAS at scale. SAP doesn’t have a very good track record executing on SAAS. They spent a lot of money building Business ByDesign. Rumor has it that SAP spent as much as $500 million building it. Their track record has been very marginal. The same is true with SuccessFactors. They’ve done a good job with one product that’s on an old platform for between 5,000 and 10,000 employees. They don’t have a good track record in the upper end of the enterprise, and they haven’t been able to get revenue from outside of their core, which is performance management. They went and bought a company in learning management. We’re dominant in recruiting; they’ve been trying to build a recruiting engine for five years. I don’t know that they have any significant reference customers on that yet, but they should have some soon, because they’ve been at it for so long.

So why did SAP buy SuccessFactors, then? Was it for the customer base?

SuccessFactors has a pretty small customer base. We’ll know more after they publish the 10-Ks and 10-Qs, so we’ll see more of where the synergies really are. But the synergies that have been reported is they want to be able to take the SAP technology and repurpose it into the SuccessFactors stack, which sounds expensive and time-consuming, and then take that stack and combine it with Business ByDesign and compete with Workday. We work pretty closely with Workday, and often go in with them shoulder to shoulder on deals when a customer needs recruiting and learning. And they use our recruiting products.

So, let’s handle this one piece of business. I’ve seen no fewer than five analyst reports saying you’re going to get taken out by Oracle. Have you been contacted by Oracle, or anyone else, about a possible acquisition?

We don’t comment on that kind of speculation. But a first-year MBA student could connect those dots. We’re positioned to be the only independent full-suite SAAS player in the market right now, and that’s a good place to be. How everyone reacts to that, I can’t control. But we’re on track to do $325 million in revenue this year, and we’re growing at about 20 percent per year. We have 12 percent operating margins. Who else has that? We’ve not only figured out how to do SAAS at scale, but we’ve done it profitably. And we continue to innovate. That’s where we want to be.

What are your priorities for 2012?

Three things. Selling back into our customer base. Most of them came to us for our recruiting heritage. If you take a look at last quarter alone, 36 percent of our net new bookings were in products other than recruiting; we’ve been reporting that number every quarter. So there’s a big push to sell our other products into our existing customer base. Second is geographical expansion. We bought a company in France that effectively doubled the size of our European salesforce. Despite what you hear going on Europe, they are not going to spend as much on technology in 2012 and 2013. If they are going to spend any money, it’s not going to be on upgrades of perpetual software licenses. I think they will spend it on SAAS, and I think Europe is generally way behind on SAAS. If I were to tell you our biggest deal last quarter was going to be a seven-figure deal with a Swiss bank, you would have said I was crazy, and that it would never happen. But it did. The reason it happened is that SAAS is orders of magnitude cheaper than paying maintenance fees on perpetual software licenses. The same thing happened with Société Générale, the French bank, which stopped an upgrade of either Oracle or SAP midstream, and they went with us. There is definitely room for SAAS in Europe, and there will be more room for SAAS in Europe in 2012; I think we’ll be a net beneficiary of that. Third is innovation, both organic and inorganic. We’ve been acquisitive, and every transaction we’ve done has been accretive and has worked out well. We’re good at either buying technology or customer bases and integrating them very quickly. Organically, we’ll be doing a lot of work on mobile and social features.

The traditional narrative of cloud companies like SuccessFactors, NetSuite and Salesforce.com has looked a little like this: Scrappy cloud upstart aims to change the established way of doing things and paints a target on the established, big software company that controls the marketplace. Said upstart systematically goes after its customers, starting with the smaller ones. Big company pretends not to notice.

SAP has regularly been portrayed as the villain in that story. Talk to any vendor of cloud-based software that’s aimed at running some aspect of a business, and it doesn’t take long for the founders to start talking about SAP as the company whose business they would most like to disrupt.

The part of the story that hasn’t played out yet, but which appears to be starting, is that eventually the big companies do notice, and when they do, they start buying. SuccessFactors is the second acquisition of an enterprise cloud software company in as many months. The other was Oracle’s $1.4 billion deal for RightNow.

The first and most obvious thing that’s going to result from the SAP deal is that speculation will surge about another, similar deal. Already this morning, analysts at BMO Capital have upgraded Taleo, a SuccessFactors rival, on the theory that it is now in play and that Oracle is the most likely buyer. Taleo specializes in cloud-based talent management software, and is about the same size by revenue as SuccessFactors. Publicly traded since 2005, Taleo saw its shares close Friday at $32.96, within 13 percent of its historic high of $37.10, giving the company a market capitalization of about $1.4 billion and making it a relatively easy target for Oracle and its $32 billion war chest. BMO boosted its price target on Taleo shares to $40 from $28.

Another one to watch is Workday, yet another provider of cloud-based human resources software, which last month raised $85 million at an implied valuation of $2 billion as warm-up for an expected IPO next year. It’s on track to do about $320 million in billings in 2011, and is nearing profitability.

Another company that will probably be considered for takeout is NetSuite, the company that specializes in cloud-based software for running a business. Trading as of Friday at a valuation just shy of $3 billion, it could be a takeover target, too, though its business is humming along just fine. It’s on its way to closing the year with sales north of $235 million — much of that derives from taking customers away from SAP.

NetSuite CEO Zach Nelson said the SuccessFactors deal basically confirms that Netsuite’s approach has been the right one all along. “It’s far more beneficial for NetSuite than it is for SAP,” he told me by email over the weekend. “With this acquisition, SAP has told their customers that the path NetSuite pioneered a decade ago is the future, while the acquisition does little to advance their own product architecture.”

Which raises another question: What will this deal do for SAP? In the plus column, it makes SAP a share-gainer and not a share-loser in the $13 billion talent management software business, and improves its competitive stance against Oracle, says Brian Schwartz, an analyst with ThinkEquity, in a note to clients today.

In the negative column, SAP has spent about half of its cash — as of Sept. 30 it had €5 billion ($6.8 billion) in combined cash and short-term investments — to acquire a company that amounts to less than 4 percent of its revenue. SAP will have to struggle to get SuccessFactors to scale up to the point that it moves the needle. Even SAP co-CEO Bill McDermott concedes that it will take awhile, telling Bloomberg News that SuccessFactors could add €1 billion in incremental revenue — by 2015.

Or maybe buy a tiger. Today SAP said it will pay $3.4 billion to acquire SuccessFactors, a cloud-based maker of human-resources software. The deal values SuccessFactors at $40 per share and works out to a premium of about 53 percent. SuccessFactors shares closed at $26.25 a share on Friday. The shares have fallen by more than 9 percent this year, but traded as high as $40.27 a share during 2011.

SuccessFactors’ software is a cloud-based suite of tools around managing various personnel issues in a business: Performance management, goal setting, managing compensation and even planning for succession among senior managers. Its also has a pretty rich set of customers for so small a company: Among them are chipmaker Advanced Micro Devices, cable giant Comcast and hedge fund BlackRock. The company has about 15 million active subscription seats, and boasts in its earnings reports about one customer in Europe that has 400,000 users and another in the U.S. with 2 million.

The company reported $205 million in revenue in 2010 and a GAAP loss of $12.5 million, but a 7-cent per-share profit on a non-GAAP basis. It was on track to do $330 million or more in sales in 2011.

What’s it mean for SAP? Basically SuccessFactors gets integrated directly into the SAP Business ByDesign portfolio that McDermott talked about. SAP says in its statement that the deal will be paid for with cash on hand, and by a 1 billion euro loan facility.

The question I have now is this: Is this the starting gun for a new round software acquisitions? There are numerous cloud-based enterprise application companies out there. Among those that come to mind are Netsuite, Taleo, and Workday, to name but a few.

The SAP statement is below.

WALLDORF, Germany and SAN MATEO, Calif. , Dec. 3, 2011 /PRNewswire/ — SAP AG and SuccessFactors, Inc. today announced that SAP’s subsidiary, SAP America, Inc., has entered into a definitive merger agreement with SuccessFactors, the market-leading provider of cloud-based human capital management (HCM) solutions, pursuant to which a subsidiary of SAP would offer to acquire all outstanding shares of common stock of SuccessFactors for $40.00 /per share in cash, representing an enterprise value of approximately $3.4 billion . The acquisition will add SuccessFactors’ widely respected team and technology to SAP’s powerful cloud assets, significantly accelerating SAP’s momentum as a provider of cloud applications, platforms and infrastructure. The combination of SAP and SuccessFactors will establish an advanced end-to-end offering of cloud and on-premise solutions for managing all relevant business processes.

The SuccessFactors board of directors has unanimously approved the transaction. The per share purchase price represents a 52% premium both over the December 2nd closing price and the one month volume weighted average price per share. The transaction will be funded from SAP’s cash on hand and a euro 1 billion term loan facility. The closing of the tender offer is conditioned on SuccessFactors stockholders tendering at least a majority of the outstanding shares of SuccessFactors common stock (on a fully diluted basis) and clearances by relevant regulatory authorities. The transaction is expected to close in the first quarter of 2012 and be slightly dilutive to SAP’s Non-IFRS earnings per share in 2012 and accretive in subsequent years.

The acquisition marks another stride in SAP’s strategy of delivering solutions on premise, in the cloud and on mobile devices. It builds on a series of strategic moves in SAP’s targeted growth areas to drive innovation in its core applications and analytics; introduce breakthrough in memory technology; establish leadership in enterprise mobility; and grow its cloud portfolio. SuccessFactors’ solutions are highly complementary to SAP’s core HCM offerings as well as SAP’s strong cloud assets: SAP Business ByDesign for the suite cloud market and SAP’s line of business cloud offerings for large enterprises such as SAP Sales on Demand.

“The cloud is a core of SAP’s future growth, and the combination of SuccessFactors’ leadership team and technology with SAP will create a cloud powerhouse. The acquisition will help us address the top priority for CEOs globally – managing people and talent,” said Bill McDermott , Co-CEO, SAP. “Together, SAP and SuccessFactors will create tremendous business value for customers, with potent synergies to accelerate our growth in the cloud.”

“The depth and experience that SAP brings to customers via our cloud and on-premise portfolio fit elegantly with SuccessFactors’ world-class expertise in providing high-performing, low-cost, native cloud applications that customers are passionate about,” said Jim Hagemann Snabe, Co-CEO, SAP. “Together, we will lead the industry in providing end-to-end solutions consistently to meet any deployment preference, whether on premise, in the cloud or on device.”

“This is a revolutionary combination of proven capabilities that will allow SuccessFactors to accelerate our roadmap by 10 years, and bring the world’s leading application knowledge and intellectual property to our customers through the cloud, and the largest applications customer base instantly,” said Lars Dalgaard , Founder and CEO, SuccessFactors. “Expanding relationships with SAP’s 176,000 customers with our speed to value, friendly user interface, on mobile devices and the web, and seamlessly delivering more SAP solutions in the cloud will be legendary, as organizations adopt the cloud to improve their business. SuccessFactors has proven we have the technology and people to deliver the world’s biggest cloud deployments in terms of users and countries per customer, and also the most applications per customer from the same flexible scalable cloud platform. The business world is ready for enterprise-class cloud applications and together, we can deliver incredible new innovation for global businesses.”

SuccessFactors is believed to operate the largest scale of paying cloud users with 15 million subscription seats. With more than 3,500 customers in 168 countries, SuccessFactors is growing rapidly, recording 77 percent revenue growth year-over-year in the third quarter 2011 and 59 percent revenue growth year-over-year in the first nine months of 2011. SuccessFactors’ scalable cloud application platform supports organizations of all sizes from dozens to millions of users. With proven deployments in SAP environments at companies in diverse industries, the combination of SuccessFactors and SAP holds significant growth potential considering the more than 500 million employees of SAP customers and its 15,000 HCM deployments.

With headquarters in San Mateo, California , and more than 1,450 employees, the SuccessFactors team is widely regarded for creating innovative technology, generating more than 80 percent of new sales from applications that did not exist five years ago, and as one of the fastest growing leaders in cloud applications. Upon completion of the transaction, the CEO of SuccessFactors, Lars Dalgaard , will lead the cloud business of SAP in addition to his responsibility as CEO of SuccessFactors. SuccessFactors will remain independent and be named “SuccessFactors, an SAP company”. The chairman of SAP’s supervisory board, Hasso Plattner , recommended that Lars Dalgaard be appointed to the executive board of SAP AG.

SAP and SuccessFactors Customers to Benefit from Combined Application and Technology Footprint

The combination of SuccessFactors and SAP will create a comprehensive HCM solution, marrying strength in enterprise applications with people-focused cloud applications.
SuccessFactors’ complementary solutions will be an attractive option for more than 500 million employees of SAP customers.
SuccessFactors’ applications are designed for businesses of all sizes, and offer easily adopted solutions for customers of SAP Business Suite, SAP Business ByDesign, SAP Business All-in-One, and SAP Business One.
SuccessFactors’ cloud expertise and know how, rapid cloud innovation and proven success running large scale cloud deployments will help SAP customers more rapidly adopt cloud applications.
SuccessFactors’ mobile applications combined with the mobile expertise of SAP and Sybase will offer customers a powerful business-to-employee mobility portfolio.
SuccessFactors’ focus on enabling business insight and execution fits well with SAP’s business analytics platform, promising new levels of real time decision making across the enterprise.

Revenue grew by 23 percent year over year to $61 million, while earnings per share on a non-GAAP basis were five cents. The results beat the consensus of analysts by a penny on earnings and $1.5 million on sales — just two of the eight records that NetSuite set in the quarter. Recurring revenue — a key metric that combines both subscriptions and ongoing support — was $51.3 million, also up 23 percent. Cash flow from operations was $9.4 million.

Looking ahead, NetSuite said it expected to earn four cents a share in the current quarter, a penny below the consensus, but that it expects to finish the year with earnings of 15 cents a share, which would be in the upper range of its prior guidance of 13 to 15 cents a share.

NetSuite, which last year did $193 million in sales, has already done $172 million for the first nine months of the year; it said it expects to finish the year with sales in the range of $235.2 million to $235.7 million, slightly ahead of its prior guidance, which topped out at $234 million. It also said it expects sales in the range of $290 million to $300 million.

I had a chance to talk with CEO Zach Nelson about the results and the state of NetSuite’s business. And as usual, he had a lot to say — especially about his biggest competitor, SAP. NetSuite started small, but as its software has grown more complex, its customers have gotten bigger and bigger, lured by the promise that they can not only run their expensive enterprise resource planning (ERP) software cheaper in the cloud than in their own data centers, but do it better.

AllThingsD: Zach, NetSuite is setting records on a lot of fronts this quarter. What’s driving the business? Is it companies swapping other stuff out for yours?

Nelson: In our case, because we do all the back-office stuff, someone is always swapping something out for NetSuite. And what’s changing is the profile of what they’re swapping out. In the old days, when we were getting started, it used to be QuickBooks. Today, it’s SAP and Great Plains and Infor, the very large, midmarket and enterprise ERP. We also set a record for average selling price, and that’s because we keep selling to larger and larger companies.

It’s funny you should mention SAP. I visited with its co-CEO Bill McDermott the other day, and he was talking about SAP’s new cloud-based offerings. What kind of a threat do you see there?

I think when SAP talks about the cloud, it’s enormously helpful to our business. We are the only pure-play cloud-based ERP solution out there. For SAP to be giving it credibility only helps us, because they having nothing to back their claims up other than desire. No traditional software company has successfully made the transition to the cloud, and there are a whole bunch of reasons for that. So it’s great that they’re talking about it. It’s just driving our business more. They have a low-end cloud product called Business ByDesign that doesn’t have much functionality. But we saw more competition from their traditional on-premise product than we did from that. So we’re getting sucked into these deals because SAP is telling the customer they should be looking for a cloud solution, and they really don’t have much to offer in that regard.

You’ve tended to stay away from business functions that aren’t transaction-driven. I’m thinking a little about something like Workday, which does a lot in the human resources area. Do you partner with other companies to shore you up in areas you don’t tend to specialize in?

We have a platform like Salesforce.com does with Force.com. We call it SuiteCloud. So as we go to a lot of these larger companies, it’s important that we augment in areas we haven’t built in, where we don’t have domain expertise. We work with Box.net, for example, on file storage and collaboration, and with SuccessFactors in the human capital management area.

Everyone’s worried about the world economy, especially Europe. Are you?

We aren’t that exposed to Europe. We do some business in the U.K. But Asia has been strong all year. And with regard to the world economy, its important to understand that moving to the cloud is a massive cost reduction for these companies.

You once told me an interesting metric about the costs of on-premise software. It was about how much companies spend to support and run their software.

Every SAP customer I’ve ever talked to tells me that they spend about 2 percent of their revenue getting it running and keeping it running, after you add up all the consultants and other things you need. That’s not just their problem, it’s the customer’s problem. If you’re competing with a company that’s running NetSuite and you’re running on-premise software, you’re at a competitive disadvantage. People are realizing that it’s not just saving them money but it’s also helping them do things better. Disruptive technology doesn’t just help enable you to do the things you’ve always done cheaper than before, but it helps you do them better; and it also helps you do new things that you couldn’t do before. Improving the cost model gets you that 2 percent back, but the real payoff comes from the productivity gains that come on top of that.

Having last week reported that quarterly earnings surged — in part because it’s likely to pay smaller legal damages to Oracle than had been expected following the TomorrowNow lawsuit — SAP showed strength across all its geographic regions as sales of its software licenses increased 28 percent.

The next day, McDermott stopped by my office in New York, where we talked about SAP’s plans for the cloud and mobile applications. But first I asked about SAP’s role as one of two targets that cloud application companies like Salesforce.com and Workday are gunning for.

AllThingsD: Business at SAP seems pretty good, as your recent quarterly results bear out, but you have all these different companies gunning for you. Whether its Marc Benioff at Salesforce.com or Aneel Bhusri at Workday, and several others, they all say they want customers from Oracle and SAP. You’ve got a lot of these high-protein customers that everyone wants to take away from you. What does that mean for you?

McDermott: If you look at the market we serve, we have 176,000 customers, and the best names in the world run SAP. It’s no mystery that a Salesforce or a Workday or any number would want to take some of that away from us. They want a bite at that apple. The difficult thing to replicate is what it took 40 years to build. The big themes we have in our favor is one, we have this consistent core platform. If you think about it, you’re a CEO, you have a company, you build things, you have financials, you have supply chain, you have customers, you have suppliers, and on an end-to-end basis you have to make the business network logistically sound and operationally excellent because there’s a lot of endpoints, and margin points in doing that well. And by the way, if you don’t do it well, odds are your competitor will and you’ll lose the game. This is a foundational layer. That took 40 years to build into a masterpiece.

And so what are some of the newer themes?

One recent trend that’s important is this idea of the real-time enterprise. Most of these companies are dealing with heterogenous environments for one reason or another. They had legacy systems, they bought other companies, they’ve done things with maverick buyers, so they have a lot of stuff. They’re looking to aggregate all their data into one comprehensive master data strategy. That’s where the magic of the platform happens because if I can get the data aggregated in the right way I can ask the platform any question I want. So we layered on business analytics technology and this thing called HANA, the high performance application appliance, puts all that information in main memory, so you don’t have to go to the disk to get your data. It’s right there in main memory. For example, let’s say I’m an auto manufacturer and oil prices spike. Smaller cars are going to sell better than big ones and so my mix is going to shift accordingly. What’s that mean to my earnings per share? In the old days that would mean lots of analysis and lots of spreadsheets and after three months you get sort of an answer. Now you can just ask the system the question and it will give you the answer based on data.

When I think of SAP I think of an older-world type of software that has to run on-premise, and as we both know that’s a model that’s constantly under attack from people who say the cloud is where it’s at. But SAP has its own cloud strategy and product, doesn’t it?

We also have our own cloud strategy. And we have a serious plan to promote SAP Cloud. And in that cloud we’re going to unleash Business ByDesign. We’ve been on a slow roll to 1,000 installs this year. That is the commitment we’ve made. The beauty of Business ByDesign for small- and mid-sized companies is that it does all the things an on-premise suite can do except it does them in the cloud. So we’re going to let the tiger out of the cage. The second thing we have is Sales OnDemand. It’s very like Facebook in its orientation. It’s a people-friendly app. The sales professionals love it. It doesn’t take a management hierarchical point of view. This is taking a more people-to-people, community-to-community approach, where you’re in pursuit of a sales opportunity and everyone in the flow who needs to participate. We think that is going to make a big difference. So far the feedback is that the customers love it.

Is this essentially a case where you have a cloud offering and it’s really just not promoted all that well?

Yes. I think there’s a lot of it that we don’t market and there’s a lot that we’re assembling for scale right now. And that’s because we see a market opportunity. When we look at the participants in the market, we’re not overwhelmed, and let’s leave it at that. We want to turn on our best SAP playbook and get busy being the standard in the cloud. We think we can do it in business applications.

Then lets talk about applications. Where do you see your strengths and weaknesses relative to the competition?

That’s an important part of this quarter. We chose an innovate-the-future versus a consolidate-the-past strategy. Others chose to buy companies, consolidate them, rationalize the headcount, leverage the margin and improve shareholder value. It’s a viable strategy. But what we chose to do was to innovate and let that be our guidepost. And we think if we can innovate and make the customer the first, middle and last part of our story and encourage a large part of our ecosystem to do the same, the customer can see the difference between consolidation and innovation. I think customers are seeing a new SAP in terms of attitude and speed of execution.

SAP is also widely exposed to Europe and yet you seem to be hanging in there nicely. The conventional wisdom says you’d be worried sick about the economic troubles on the continent. What are you seeing in Europe, good and bad?

I’m hanging in there because — take a company like Carlsberg, the beer company. And they have an interest in point of sale right now. So they’re using SAP to connect on their mobile device at the point of sale to their supply chain so that the shelves are always filled with Carlsberg beer wherever it’s selling so that the customer always has that choice. These companies are living in uncertain times but they’re investing because they know that if they do and others don’t they get a leapfrog advantage. If they don’t do it now, and others do, they lose the game. The companies that invest in downturns and uncertain times always come out the leaders in their industry when things improve. CEOs know this is not a choice anymore. Technology is not just an enabler of business anymore. It often is the business.

So what are your big bets for the time we’re in?

Bet number one, we’re going to remain the world’s leading business software company. We have a 2.5x lead on the number two and we intend to extend that. We are absolutely going to a be cloud player. The SAP Cloud is a real strategy and we’re going to turn the corner on that by letting the world know that we’re here and we’re here to win. We have a very interesting company in terms of database technologies. HANA is part of that, but we also have SyBase. We think we can be a strong player not only on the database side, but also on the main memory side with HANA as the flagship. We believe we’re the mobile business software standard and we’re now the number one and industry standard and we’re committed to remaining the business analytics leader. We have a 1.5 to 2x lead. Those are the five things we’re going to do to absolutely change the world. Whether the European debt crisis is serious or not, we’re not backing down on the strategy. Like I say to all the CEOs who care to listen, don’t let all this make you back off your strategy because if you decide to slow down or sit on your hands and wait for things to improve, you might just get wiped out by your competitors.

“A good company but an unrealistic valuation” is how Tilson, the founder and managing partner of T2 Partners and the Tilson Mutual Funds, summed it up in an appearance on CNBC today (video below), arguing that Salesforce could be the next company to fall by 75 percent, a la Netflix.

Hype about the cloud, pushed by CEO Marc Benioff, whom Tilson called a “world-class salesman,” is giving way to the fact that Salesforce has what he calls “a nice app to help mid-market companies manage their sales force.” Its other lines of business — including Chatter, its social application, and its plans for pushing into larger-sized enterprise companies — just don’t justify its huge market cap, which was until today north of $17.5 billion. Today, Salesforce’s market cap was about $800 million smaller as the shares fell by $6, or 4.6 percent, to $123.56.

Tilson is betting that Salesforce’s fair value is about 75 percent lower than its current trading range, which, based on Tuesday’s closing price of $129.56, would put it at about $33 a share.

It’s been hard not to wonder when the Salesforce valuation rocket was going to run out of fuel. Two years ago, Salesforce was trading at $59 a share, and in July peaked just above $159 a share, amounting to a surge of about 170 percent. But since the start of 2011 the shares are down 7 percent (which in fairness includes today’s drop), while it has traded at a seemingly ridiculous 600-plus times trailing year’s earnings.

Benioff and Salesforce have usually had a friendly platform at CNBC. Jim Cramer, the exuberant two-fisted host of its “Mad Money” investertainment show has hosted Benioff numerous times and even admitted that while Salesforce seemed like “Kool-Aid,” he was not only drinking it, but “liked the taste of it.”

Indeed, Salesforce is growing its sales — Benioff recently said it’s on track do $2 billion in sales this fiscal year — but it has been doing so at a loss. It reported a $4.3 million loss on $546 million in sales in its July quarter. Benioff has argued that Salesforce needs to spend now to grow its customer base and to try to take business away from the likes of Oracle and SAP, that he says “don’t get the the cloud.” We’ll see about that. Salesforce next reports quarterly results on Nov. 18.

Here’s the direct quote taken from the transcript:

“IPhone continues to be adopted as the standard across the enterprise with 93 percent of the Fortune 500 deploying or testing the device, up from 91 percent last quarter and 60 percent of the Global 500 testing or deploying iPhone, up from 57 percent last quarter. A recent example of iPhone’s enterprise success is Lowe’s. Lowe’s is in the process of rolling out over 40,000 iPhones with a custom application to allow their store associates to execute real-time inventory checks, product orders and interactive customers with how-to videos.

Additional examples of companies around the world supporting iPhone on their corporate networks include L’Oreal, Royal Bank of Scotland, SAP, Texas Instruments, Jacobs Engineering Group, Tenet Healthcare, Jaguar Land Rover, Takeda Pharmaceuticals, Lincoln National and CSX Corporation. And of course, we’re thrilled to begin shipping iPhone 4S this month.”

And later, a similar section devoted to the iPad:

“Every day, we learn about innovative new ways our enterprise customers are using iPad. The airline industry is a great example of the momentum we’re seeing. United Continental Holdings is putting iPads in every cockpit to replace heavy, paper-based flight bags. In Japan, All Nippon Airways is now using iPad in training programs for flight attendants.

Sonic Automotive is using iPad for customer check-in at the service department and also to provide analytics to regional managers. Aflac, Biogen and General Mills have developed internal apps that their field sales teams leverage daily, and technicians of Siemens Energy are bringing iPads along when they do maintenance work at the top of their wind turbines.”

It turns out that it’s not a new thing, exactly. Cook has recited similar lists on Apple conference calls before. But as recently as 2008, when Businessweek published its cover story called “The Mac in the Gray Flannel Suit” (which, full disclosure, I worked on), Apple was generally considered an outsider in the enterprise IT business, and Apple products a novelty in the office. In broad brushstrokes, Macs tended to show up at media and advertising companies, and in the creative and marketing departments of other companies. The iPhone, and later the iPad, changed all that.

Here’s about as good an indication of that trend as I’ve ever seen: Intermedia, a company that operated a hosted Microsoft Exchange service for small and mid-sized businesses, said earlier this month that among its 41,000 customers, 78 percent are using Apple devices to get their mail, contact lists and calendars.

Meanwhile, look at all the companies that have developed enterprise applications for iOS: Salesforce.com, NetSuite and Citrix immediately come to mind. And Tidemark — the business intelligence start-up I wrote about yesterday — is iPad-ready from the start. There are probably hundreds, if not thousands, of examples I’m missing.

Apple has cumulatively sold 40 million iPads since the device launched last year. The company doesn’t offer much in the way of a data breakdown of how many of those are sold to businesses, but it almost doesn’t matter, because in so many cases, people buy one and just take it to the office. When you hear the phrase “consumerization of IT,” which already feels pretty worn out to me, it refers mostly to people who want to use iOS devices at work, and to a lesser extent, Google’s Android. A recent survey of 750 IT managers found that the iPhone led the pack of personal devices used at work, followed by Android Phones and the iPad.

I probably shouldn’t be surprised by all this, but when I heard Tim Cook list all those big companies using iThings to get things done, it finally dawned on me: Apple is as much an enterprise story as it is a consumer story.

It also got a new round of funding, including an investment from Greylock Partners, that brings its total capital raised so far to $11 million. Also joining Tidemark’s board are Peter Currie, president of Currie Capital; and Phil Wilmington, former co-president of PeopleSoft and the CEO of OutlookSoft. Both have joined Tidemark’s board of directors. Also on the board are Aneel Bhusri, co-CEO at Workday and a Greylock Partner; and Ben Horowitz, partner at Andreessen Horowitz.

Tidemark is building what it calls an Enterprise Performance Management application — all in the cloud — but it is also built from the ground up with mobile applications in mind. I had lunch with CEO Christian Gheorghe last week, and I have to say that what he described to me sounded, at first, a lot like what I’ve heard from lots of other companies wanting to give business leaders useful, up-to-the-minute business information they can act on.

Too often in business intelligence and analytics, projects fail to deliver, Gheorghe says, because they’re good at showing data but lousy in leading to action. “They give you a lot of information, but the next step is what to do about it,” he says. “What are the courses of action I can take, how do I react to what’s happening?”

And maybe this sounds familiar: Data from one application that you’d like to use is tricky to move over into another. “We call it the alt-tab syndrome,” Gheorghe says. “You have to alt-tab between applications, some of which were built before the Internet, back in the client-server era.”

Lots of the existing business intelligence tools are old, not designed to be mobile or to handle volatility in the markets, and they don’t deal well with unstructured data, which everyone seems to want to get a handle on these days.

Gheorghe spent five years and change at SAP, including a stint as its CTO, by way of its acquisition of OutlookSoft. He then spent about nine months as Greylock’s Entrepreneur in Residence. During that time, he realized a perfect storm was happening: If you had to build the business of analytics from scratch, it would solve the problem of making you both cloud-ready and mobile, but also ready to handle mountains of big data. “We found a lot of pain in the core analytic processes that companies had spent a lot of money trying to solve,” he says. Pain like that creates an opportunity for the one who can make it go away.

Tidemark aims to deliver real-time metrics information that has been adjusted for risk and which takes into account all the various strategic, financial and operational forecasting a business does. “There are so many things that the consumer-side companies have done with big data like Facebook and Zynga, but nothing like that has happened in the enterprise,” he says. “Basically they’re still using things that are drilling down and across in grids that no one uses, and dashboards that are two weeks behind.”

Tidemark is launching three applications: Metrics Management and Management Reporting, which aims to answer not the “what’s happening?” question about a business but “why is it happening?”; Enterprise Planning, the classic budgeting, forecasting and analysis functions; and Profitability Monitoring by product, customer and channel — essentially where you’re making and losing money.

The company has also teamed up with three partners: SnapLogic has hooked up with Tidemark to integrate data in the cloud. And since you can’t seem to do anything in big data these days without using some version of Hadoop, the open source big data platform, Tidemark says it has signed up with Cloudera, which sells its own tricked-out version of Hadoop; and VMware, whose vCloud will run Tidemark’s cloud.

Gheorghe’s backstory is interesting. He escaped communist Romania in the late 1980s, but what moved him to leave wasn’t entirely political. He was involved in the trade of bootleg cassette tapes and heard Pink Floyd’s “The Wall.” As a product of the evil West, it was forbidden under the regime of Nicolai Ceaușescu. Gheorghe decided there was no way that a country that produced such music could be all that bad. So off he went.

It was of course more complicated than that, but the anecdote serves as a pretty good metaphor for what Gheorge is trying to do with Tidemark, Horowitz says. Yes, there are an awful lot of companies that seek to use the cloud to provide business intelligence. “There’s a lot of new things out there, including Salesforce.com, Successfactors, any of them, they’re new but they bring a lot of the old software paradigms with them,” he says. “None of them have been a complete re-think. But Christian has really done it. It’s ironic that he was the one who could get his mind out of the old paradigm, having been in it for the last 15 years.”

“It is critical that we speak with one voice,” wrote Whitman in an internal email I obtained (below).

Thus, she has appointed longtime HP exec Lynn Anderson (pictured here) to “take on the role of acting Chief Communications Officer reporting directly to me,” according to the memo she sent to senior leaders at the company.

Not sure what “acting” means yet, but Anderson has gotten the job that was once that of former SAP exec Bill Wohl. He was put on “special assignment” late this summer, whatever that means, with his duties being taken up by Global Marketing EVP Marty Homlish.

Now Anderson is taking over, having helped during the Wohl transition. She previously headed up influencer relations for HP’s enterprise business.

And before that, she worked on a variety of marketing jobs for HP Canada. Anderson’s background is wonky, according to her company bio: “Before joining HP in 1983 as a systems engineer, Anderson was a programmer, analyst and operations manager for several IT departments.”

During the initial announcement of her new job running HP, Whitman relied on longtime comms adviser Henry Gomez. Gomez, who worked closely with her when Whitman was CEO of eBay and later on her unsuccessful run for California governor, has a consulting business and presumably did not want to work full time for HP.

Here’s the memo:

To: Senior Leaders
Subject: Acting Chief Communications Officer

As we continue to execute our strategy for HP, communications will be an extremely important function and it is critical that we speak with one voice.

I want to thank Marty Homlish, EVP Global Marketing who stepped in and provided leadership during a critical junction. Going forward, I have asked Lynn Anderson to take on the role of acting Chief Communications Officer reporting directly to me.

Please ensure that Lynn is brought into all communications activities.

Regards,

Meg

Now we have another entrant called Birst, which today will announce what it calls a Business Intelligence appliance. No, it’s not hardware — that’s what I thought, too . It’s actually software that you install locally on your own on-premise servers. And yet it’s still a software-as-a-service (SaaS) offering. How does that work?

Having already become a player in the basic cloud-based BI business, the company realized that most of the data that makes BI valuable in the first place doesn’t live in the cloud but actually is used with applications that run behind the firewall.

I talked with Birst co-CEO Brad Peters, who told me that the software runs like a SaaS product — you access it through a browser, just like you would any other typical SaaS product, and you get the same benefits, including zero worries about upgrading or adding new features. But you also get the benefit of having it run on-premise behind the firewall. “It’s the exact same experience as with the cloud,” he says.

The whole point of BI, Peters says, is to take data created in various business applications — whether it’s SAP, Salesforce.com, Concur, Omniture, Siebel or what have you — into a dashboard, where it is arranged into a graphical presentation or report that you can then use to make business decisions.

The textbook case for BI is comparing data on marketing spend to deals. If you find you’re spending a lot of money on one type of marketing campaign that seems not to be generating leads and deals, and not enough on one that seems to be working better, you can see the pattern and make needed changes, Peters says. “What BI is really about is taking the raw data and synthesizing it so that business people can act on it,” rather than relying on spreadsheets.

Big companies like SAP and Oracle are in the BI business, too, but their solutions cost a lot of money and are therefore aimed more often than not at bigger companies. Yet Birst has its share of larger customers: Citrix Systems is a Birst customer, as is Rackspace, the Web and cloud services host.

So far, Birst has raised a combined $20 million in two rounds from Dag Ventures, Sequoia Capital and Hummer Winblad. Peters said the company is keeping most of its funding details close to the vest — he wouldn’t say how much Birst’s most recent round was, for example — arguing that there’s been too much attention paid so far to BI start-ups and how much money they’ve raised. “Ultimately, a software company needs to make money, and BI is really hard,” he says. “You can waste a lot of money really easily. There’s been about $300 million raised by companies trying to do BI, so clearly the amount of money raised doesn’t correlate to success.” Those sounds like words to the wise.

It was a pretty fast turnaround for Hurd, who resigned at HP following an unpleasant flap. But at the time, Oracle was in the process of acquiring Sun Microsystems and adding a sizable IT hardware business to its portfolio. Hurd, having earned a reputation for running a tight operational ship during five years at HP, was available and had already built a friendship with CEO Larry Ellison, who had publicly castigated HP’s board for acting rashly in dismissing Hurd.

Hurd has been quietly working away inside Oracle since then, getting to know its business and regularly speaking at small Oracle customer events, like one in New York in March. He’s also been a regular on Oracle’s earnings conference calls.

Now Hurd’s public profile at Oracle is about to rise considerably. With Oracle set to hold its annual Oracle OpenWorld conference in San Francisco next month, Hurd will be delivering a keynote address of his own and will from here on be taking on generally more public roles at Oracle. Make no mistake: He won’t be standing in for CEO Larry Ellison — what mere mortal could? — and Ellison will be doing two keynotes of his own at the Oracle event. But Oracle customers and investors will be seeing more of Hurd than they have before.

Hurd today granted AllThingsD his first on-the-record interview since joining Oracle. (We published a few highlights earlier today.) It comes on the heels of last week’s surprisingly strong earnings report by Oracle, which is what we talked about first. Hurd declined to offer any good-natured advice to Meg Whitman, HP’s newly named CEO, and also declined to answer any questions whatsoever about the circumstances surrounding his departure from that company 13 months ago. (I did ask, I swear!).

He also sort of diplomatically avoided naming competitors, so I’ll do that on his behalf. When he mentions database and middleware competitors, he means IBM. When he refers to “point products” and “boutique companies,” he’s referring to Salesforce.com and Workday, both cloud-based applications that compete with Oracle offerings.

The full transcript of our conversation is below.

AllThingsD: You had a pretty good quarter, in a tough environment. What in your view is going well at Oracle, and what could be better?

Hurd: Well listen, we released a quarter, that I think was a great quarter, that had 17 percent new license growth which is outstanding. In Q1 of 2011 we had 25 percent license growth. The good news is that it was 25 percent, and the bad news was that it was this year’s comparison, so when we grow 17 on top of 25 it’s just outstanding license fee growth. When you remember that last year we had 33 percent revenue growth and 33 percent earnings growth, these numbers we just posted are coming against a really good 2011. So they’re just outstanding. Also, we had Exadata growth that was just outstanding. We talked about that on the conference call. We had a good launch for Exalogic during the quarter. We had a growth in the T-series and M-series, which are the traditional Sun servers, during the quarter. Then I’d add that our industry verticals grew faster than Oracle overall. That’s an important strategy for us. We get deeper into these industry verticals, and they solve our customers’ most difficult problems. They’re very industry- and business-specific, and when you add to them the rest of our portfolio, it made for a strong quarter all the way around.

The other thing about the quarter is that you were strong in Europe at a moment when Europe seems to be melting down. Why is Oracle so strong when others would be seeing weaknesses? What is Oracle doing differently in Europe that others aren’t?

I wouldn’t comment on what others are seeing, because I only know what Oracle is seeing. It may be that it’s just Oracle-specific momentum more than anything else, but when I look at each segment of our business in Europe, if I actually read to you the growth rates of each of our product segments, it would sound very consistent. We didn’t have any one big deal in Europe, no big transaction. We didn’t have any one country that stood out. It was just broad-based, across-segments, across-countries performance. And the performance in Exadata, Exalogic, overall hardware growth, all very strong in the quarter. So forgetting the macro environment, Europe was a bright spot for Oracle last quarter and very strong. Also one quick note: Whenever you have a quarter in Europe where the applications growth in the quarter was 63 percent — when you grow like that it’s just great stuff.

Let’s talk about the hardware business a bit, which is still relatively new. You talked on the conference call last week about how you’re focusing more on hardware with higher content of Oracle intellectual property, and less on commodity stuff, what we often call the x86 servers that use chips from Intel and are less distinguished from what other companies offer. Where are you in that process and how long do you think it will take to get where you want to be?

I think you’ve got it right. We’re very focused on growth in Exadata and growth in Exalogic. You know this but it bears repeating, Exadata is a combination of server and storage and software technology integrated into a single solution that we think gives our customers a better total cost of ownership, or TCO. Some of the performance gains our customers are seeing are 30 or 40 or 50 even 70 times the performance improvement. Not 30 or 70 percent performance gains, but 30 or 70 times better than before. On top of all that we support them remotely, diagnose their problems remotely, sometimes before they even know they have them. And so growing that Exa line is very important to us. Now, next week at Oracle Openworld, we’re going to release more Exa lines and more technology than you’ve ever seen from the company at any one time. Last week we introduced an Oracle database appliance, which is very much an Oracle intellectual property stack focusing on mid-market and departmental solutions. While it’s not as big a system as an Exadata, it’s a manifestion of the same strategic directions we’ve had before. They’re integrated systems where we can bring a stack of value to our customers.

Your CEO Larry Ellison made a comment on the conference call last week that got a lot of attention: Essentially that Oracle would be okay with the x86 business going to zero. Now I know it’s a little more complicated than that. Would you care to revise and extend his remarks on that subject a bit?

What I would say is that we don’t have interest in selling products where there’s no Oracle intellectual property. We’re very focused on adding value to customers. If there’s no Oracle intellectual property in it, then you ought to buy it from someone else. We’re very focused on getting our technology into the market. We think we can do two things. All of our products are designed to be the best-of-breed, the best in the markets they serve, to work in heterogenous environments, to be open. That is clearly our strategy at every layer of our architecture. In addition to that, we vertically integrate some of these systems like we do in Exadata and like we do in Exalogic and like you’ll see in other manifestations over the next week, where we think we can deliver extreme performance, extreme TCO and extreme serviceability. If there’s some product that comes from a third party that just comes through Oracle where we add no value, that’s the stuff we have no interest in. If we add no value to it, you ought to buy it from someone else.

So that doesn’t mean you intend to get out of the x86 business entirely, only that you’ll want to sell hardware that is sold in combination with Oracle IP whether it’s software or something else.

Yes. We still have an x86 line. But Larry was trying to make a point.

Let’s talk about competitors. Who do you see showing up on deals you’re competing on? Who keeps you up at night?

We have competitors in the industry vertical markets that are really point products, and horizontal apps, there are some that are boutique companies that provide certain functional applications whether it’s in HR [Human Resources] or something like that. We certainly have competitors in database and middleware.

So it’s been a year since you joined Oracle. What’s it like working with Larry Ellison?

It’s great. It’s just great.

What defines success for you at Oracle? If we talk at this time next year, where do you want Oracle to be?

We’re releasing a whole new set of technology next week. Our opportunity is to drive that into the market and increase customer awareness of the portfolio. You’ve got all these smartphones running around the market. They’re basically computers in people’s hands, and they’re begging for data from enterprise applications, and those applications need to be modernized to make that happen. We can help our customers on innovation whether it’s e-commerce or any other environment they want to innovate in and at the same time we get the opportunity to make them more efficient. These engineered systems solutions deliver tremendous performance that help our customers server their customers better and help them get better efficiency at the same time. So we’ve just got a tremendous hand to play and that’s what we’re going to do.

You’ll be speaking at Oracle Openworld in San Francisco next week. What’s on your agenda?

I’ll be doing a lot of stuff. Larry has a keynote Sunday, and he’ll do another Wednesday, and I’ll be doing one Monday. But they’ll all be centered on our innovations and systems and software that we’re bringing to market, so that will be the primary agenda for the week.

Will we be seeing you in a much more public role at Oracle generally? Are you going to be more of a public face of Oracle going forward?

I have a job to do, so it won’t be to the exclusion of that. I spend most of my time working on customers and making sure we have the best team in the industry. Last year I’ve spent time on customers, people and products. I don’t see that changing. To the extent that we have things to announce I’m clearly going to be doing all that in addition. I’ve been seeing lots and lots of customers, and will be continuing to work on building our team and making sure I’m participating in the product process in every way possible. That’s what I’ll be focused on.

What are you hearing from those customers? What are they worried about? What are they telling you about their business?

They love our products, they love our people and want to get more deeply engaged with Oracle. It’s a huge opportunity for us, but it’s also a challenge, because frankly there’s a lot to be done. And frankly we can’t do everything, so we have to pick our spots to engage properly. It’s important for us to focus.

Former eBay CEO Meg Whitman is being considered by Hewlett-Packard directors as a possible candidate for CEO, in a move that would replace its current leader Léo Apotheker, according to several sources close to the situation.

The appointment of Whitman — a longtime and experienced Silicon Valley exec, who joined the board of Hewlett-Packard in January — to the top job at HP is by no means a done deal, sources said.

But a significant contingent on the board is keen to remove Apotheker after what some directors consider a series of management mishaps.

If it occurs, it would be the second major CEO ouster in a short time — Yahoo recently fired its CEO Carol Bartz due to lackluster performance.

[UPDATE: Wall Street seems to like the Apotheker-gone idea, with HP shares spiking almost eight percent on our news, as well as a simultaneous Bloomberg report. The rise has added almost $3 billion to HP's market valuation.]

In addition, sources said Whitman has been contemplating taking another big exec job, after a 10-year stint at eBay, which was followed by an unsuccessful run as the Republican nominee for governor of California last year. Since then, she has been a part-time consultant at top venture firm Kleiner Perkins.

Her role there — which has largely been seen as a temporary one — has included acting as a strategic adviser to start-ups and evaluating investment opportunities.

Sources said Whitman — who has also been active with her family foundation — has shown some interest in talking about taking the HP job.

Turning to Whitman would not be a surprise, given there are few execs in tech experienced enough to run such a large and complex organization as HP.

Still, her expertise has mostly been in the consumer space and she has never run what is largely a hardware company and one with major enterprise clients.

So, if appointed, Whitman would need a lot of help, especially to fix one with as many troubles as HP has seen of late.

That is why the board has been meeting by phone and in person this week to talk about a range of issues, focused in part on how to spin the company out of its current cycle of bad news and what to do about the situation.

Its most recent spate of trouble was the announcement of layoffs of hundreds of employees in its Palm division.

This inevitable move to jettison Palm employees came after HP’s sudden news in August that it was shuttering its webOS hardware business.

Add to that a proposed class action lawsuit, filed Sept. 13 in the U.S. District Court for Central California, along with another handful of law firms that are launching their own investigations of HP over the move.

In the suit, according to a report by Arik Hesseldahl, an “HP shareholder named Richard Gammel alleged that comments by CEO Léo Apotheker — concerning the company’s earnings expectations, the importance of its personal computer business and plans to move ahead with devices running the webOS operating system — gave a vastly different indication of actions HP took on Aug. 18, when it killed the webOS hardware business and announced plans to spin off the PC business and spend $10 billion to acquire Autonomy.”

In other words, lots to discuss for HP’s directors, who have been under siege, essentially, ever since the former CEO Mark Hurd resigned under pressure more than a year ago over a variety of allegations about expense reports related to a sexual harassment inquiry. The board found no evidence to support the sexual harassment claim.

In the wake of that scandal, HP appointed Apotheker to take over for Hurd.

It has been a bumpy ride, as HP’s stock has plummeted almost 43 percent in a year’s time. By comparison, rival Oracle’s shares are up more than three percent in the same period, and Apple stock has risen more than 50 percent.

That share decline, given a series of major moves and just as many gaffes, has put Apotheker — who has been trying to reposition HP largely as an enterprise company — in the hot seat.

An HP spokeswoman declined to comment. I have several calls in to reach Whitman and have not yet heard back.

More to come, obviously. But, until there is more news, here is the video of the full interview with Apotheker at the ninth D: All Things Digital conference this summer.

At D9, the former SAP chief declared that he would not ship the now-doomed TouchPad until it was perfect. Ooops!

Enjoy: