The race to the cloud in talent management continues with Oracle's $1.9 billion acquisition of Taleo, the largest provider of recruitment software. That's a hefty price tag, considering  Oracle CEO Larry Ellison once called cloud computing  “gibberish” and a passing fad. But SAP recently bought SuccessFactors for $3.4 billion and Salesforce.com scooped up Rypple for an undisclosed sum. According to eWEEK, only Salesforce.com records and stores more daily transactions than Taleo. As it explains Oracle's strategy:

Oracle and Taleo will team up to offer a full-service cloud service for organizations to manage their HR operations and employee careers. Oracle's ready-to-go public cloud infrastructure and market gravitas melded with the Taleo know-how will push ahead the development of the HR cloud services model in large measure.

The move is widely viewed as a stepped-up challenge to SAP for a market valued at $6 billion. Financial Times points to an IDC study that found a market growth rate of 41 percent for the sector between 2009 and 2010, with Taleo and SuccessFactors as leading players. However, analyst Frank Scavo, president of Computer Economics, tweeted Thursday that the real challenge Oracle is trying to address is not from SAP, but Workday, the software created by PeopleSoft co-founder Dave Duffield after Oracle acquired the company. All this acquisition fever could make the timing right for a Workday IPO, according to Forrester Research analyst Paul Hamerman. He pointed out to The Associated Press that Oracle is paying about six times Taleo's annual revenue while SAP is buying SuccessFactors for about 10 times its annual revenue. And analyst Josh Bersin said of the deal:

Companies like Workday, Salesforce.com, ADP, and IBM are not going to sit back and wait for Oracle and SAP to grab market share. Plus, there are hundreds of well-capitalized, innovative young companies in talent management software who will continue to innovate in this market. These companies will likely continue to grow, and hope that they too can be acquired by SAP or Oracle. There are still many "unsolved problems" in the talent management space, just now two very big players to deal with.