Oracle is to meet the threat from Salesforce head on by offering its customers a single view of its CRM data, courtesy of pre-built integration software for its CRM On Demand product and the on-premise Siebel CRM.

Companies would benefit from a hybrid approach to customer relationship management, because the on-demand model allows companies to more easily add new users, while enabling data from both systems to be analysed at once, Oracle said. The integration software employs Oracle's Application Integration Architecture framework and Fusion middleware. Pricing was not disclosed.

Oracle's news release on the product stressed its benefits for customers. But the vendor's real goal is to fend off competition from Salesforce, which has based its entire strategy on pushing the benefits of on-demand software, analysts said.

"This is how you sell against Salesforce," said analyst Bruce Richardson of AMR Research. "You talk about that as a dead-end silo while selling end-to-end business processes."

"I don't think it will lead to an increase in demand for Siebel," he added.

Denis Pombriant of Beagle Research largely echoed Richardson, while noting that Salesforce offers Salesforce to Salesforce, a means of integrating with fellow Salesforce customers, and also has strong capabilities for tying into systems such as Siebel.

" I expect this is a strategy by Oracle to keep its Siebel customers from looking outside of the barn," he said.

On the whole, Oracle has taken a cautious approach to on-demand software. In May, CEO Larry Ellison told analysts that while the company has been selling on-demand products for nearly 10 years, it only recently began making money at it.

"The entire industry has to get better at making money selling on-demand ... That's what we're focused on before we scale the business," Ellison said at the time.

Salesforce's stock dropped sharply following its recent quarterly earnings report, which saw the company beat analyst expectations for revenue but also indications that business is slowing down.