Oracle's Plan To Beat Salesforce: Give Customers Their Own Server (ORCL, CRM)

Oracle (ORCL) thinks it’s found’s (CRM) Achilles heel: “Multitenancy.”

In English, that means when a customer uses Salesforce’s Software-as-a-Service CRM, multiple different companies share the same physical server on the back end. In Oracle’s CRM On Demand Release 16, due out later today, Oracle will offer new single-tenant services, so Oracle’s customers won’t share computers with anyone else.

Why does “multitenancy” vs “single-tenant” matter? Two reasons:

  1. When a single-tenant server crashes, only one customer feels it. When multi-tenant clouds go down, like we saw in the hour-long crash earlier this month, everyone may be affected. “The bad thing with multitenancy is when it goes down, you guys write about it on the front page,” [Oracle CRM Chief Anthony] Lye says. “I don’t want to be on the front page for anything bad.”
  2. A single-tenant model may help Oracle compete in Europe. “We have some multitenant customers. But we have others that say, ‘I like CRM On Demand, but I want my own server,'” says Oracle president Charles Phillips. “There are much stronger [data] privacy laws in Europe than the rest of the world, and that’s why we’ve gained a lot of share against in that region, because it can’t accommodate that [multitenant] model.”

But you get what you pay for: Oracle’s multitenant CRM costs $70 per user per month, compared to $125 for a single-tenant setup.

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