Oracle announced today that it will acquire cloud-based customer service vendor RightNow for approximately $1.5 billion. After the acquisition RightNow’s services will be offered as part of Oracle’s Public Cloud. RightNow offers a wide range of customer experience products and services, including CRM, but it’s probably best known currently for its cloud-based RightNow CX service, a customer contact application that integrates social media.

One interpretation of the deal might be that Oracle is adding RightNow in order to offer more coverage to smaller customers, much like Salesforce.com’s acquisition of Assistly. Oracle’s Fusion Applications line does integrate social media, but doesn’t yet include a contact center system. It remains to be seen how tightly integrated RightNow’s technology will be with Oracle’s existing products and whether the RightNow brand lives on (at the very least, according to the announcement, the team will keep its Bozeman, MT office). As Wikibon founder and analyst Dave Vellante pointed out earlier today, Oracle is slow to integrate its acquisitions.

I think this is about more than just getting a solid cloud-based contact center application. It’s about injecting a good dose of cloud culture into Oracle.

RightNow doesn’t have a reputation for being an innovator or early adopter, but it has tapped into most of the major trends in IT: RightNow is tapped in to most of the major trends in IT – social media integration, platform-as-a-service, mobility, analytics and cloud service management. More importantly, however, it has a reputation for solid execution. Paul Greenberg wrote in his 2011 CRM Watchlist that “They are one of these companies that once they get it, which sometimes takes awhile, they not only get it, but they implement and execute it. Whatever ‘it’ may be.”

RightNow was founded in 1997 by Greg Gianforte, who sold his previous company Brightwork Development to McAfee for $10 million in 1994. Gartner ranked RightNow as a leader in its Magic Quadrant for customer contact, rivaling Salesforce.com and Oracle’s own Siebel line. Forrester ranked RightNow as a leader in both its CRM and CRM customer service suites Wave reports. RightNow has particularly good traction in the public sector. According to eWeek, RightNow provides cloud services to 170 federal agencies, including NASA which it landed this year.

In short, this is a serious company with existing traction, not a trendy startup with some sexy technology. But it’s a serious company that gets cloud in a way that Oracle doesn’t – and Oracle can learn a lot from it.

One thing to watch is RightNow’s Cloud Services Agreement. Greenberg notes that the company offers one of the most customer friendly agreements in the business:

RightNow commits to 3 year fixed price with right to renew another 3 – yet client only has to commit to one year; an annual termination for convenience, meaning the customer has the right each year to terminate if they perceive that RightNow didn’t deliver as expected; rollover usage – unused units can be rolled into next period for seasonal peaks; automatic indemnification – RightNow offers indemnification to customers w/o customers asking for it; customers can annually rebalance usage to meet their changing needs; etc. What this reflects is RightNow’s willingness to treat the customer as a partner, not, as I’ve often said, the object of a sale.

Oracle on the other hand is not known for favorable licensing agreements, to put it mildly. In fact, it was a licensing fiasco that cost Oracle RightNow as a customer last year.

However, as part of Oracle OpenWorld this year CEO Larry Ellison promised the Oracle Public Cloud wouldn’t lock customers in and would provide standards-based features to ensure cloud portability. It’s hard to believe that Oracle has turned over a new leaf, however, so it will be interesting to see how this acquisition affects RightNow’s agreements.

Services Angle

It’s hard to say whether this will work. With RightNow’s 2,000 employees staying in Bozeman, it’s going to be hard for their culture to rub-off on Oracle’s 10,000+ employees. But with so many Oracle customers looking for exits to cloud based services, Oracle needs to change its image and its culture.