Oracle's (NASDAQ:ORCL) $1.9 billion acquisition bid for Taleo (NASDAQ:TLEO) Feb. 9 was a matter of if and not when and comes in the wake of SAP's (NYSE:SAP) $3.4 billion for SuccessFactors and Salesforce.com's (NYSE:CRM) acquisition of Rypple.
Taleo offers a "talent management cloud," for human capital management (HCM) software, a jargon-laced way of saying the company's software aims to help lure, hire, motivate and keep employee talent at a lower cost than traditional HCM practices.
Taleo has more than 5,000 customers, ranging from small and midsized businesses to larger enterprise fish. Oracle expects to use Taleo's team and customers to fortify human resource operations for its public cloud, in which the software giant hosts apps and provisions them over the Web to end users' computers via browsers.
While Oracle CEO Larry Ellison spent much of the last decade deriding the notion of the cloud, enterprise customers are increasingly turning to the cloud to offload server management and defray maintenance costs.
Seeing this trend, Oracle in the past few months embraced cloud computing to chase the likes of enterprise cloud pioneer Salesforce.com and keep up with SAP.
To wit, Taleo is Oracle's second major purchase bid for a Web-based software purveyor after the company acquired RightNow Technologies, challenging Salesforce.com's cloud customer relationship management (CRM) apps.
Oracle already commands a suite of on-premise human capital management (HCM) solutions, but the popularity of SuccessFactors, Taleo, Kenexa, Cornerstone and SumTotal Systems validated the sector, Forrester Research analyst Paul Hamerman said.
"By acquiring Taleo, Oracle puts itself back in the game for SaaS recruiting and talent management," Hamerman wrote on his corporate blog Feb. 9.
Oracle's bid for Taleo is more than six times Taleo's $309 million in revenues in 2011. Such premium-paying is catchy: SAP paid 11 times SuccessFactors' 2011 revenues, underscoring just how hot the sector is for growth and potential.