In the battle for a share of corporate software budgets, winning depends on confidence. That is, a company will only spend its money on software if it believes your company will be around for years to come.

That’s why it is so impressive that Salesforce.com (NYSE:CRM) was ever able to break into the market. Facing competitors like Oracle (NASDAQ:ORCL) and Microsoft (NASDAQ:MSFT), what Salesforce.com accomplished as an upstart is a great lesson for others. But should any of these companies be in your portfolio?

The global market for business software is huge. Ovum expects it to rise 8.2% in 2011 to end the year at $267 billion, then to keep growing at a 7.7% annual rate to hit $358 billion in 2015. What’s driving that growth is “exploding volumes of data, increased enterprise mobility, the transition to cloud computing models, and the emerging markets.”

And the leaders in selling it have big names. Microsoft remained the world’s top software vendor, according to Ovum, retaining 20% of the market. Oracle, IBM (NYSE:IBM) and SAP (NYSE:SAP) followed in that order. But Microsoft is not innovating enough to gain significant market share.

What does it take to win that business? If its fiscal first-quarter earnings report is any indication, Oracle is winning big. Its CEO, Larry Ellison, has spent $40 billion since 2005 on acquisitions of corporate hardware and software companies and has created bundles of products that boost corporate IT productivity.

The result is rapid sales and profit growth. Its sales for the quarter ending Aug. 31 were up 12% to $8.37 billion, meeting expectations. And net income was up 36% to $1.84 billion — $50 million more than Wall Street expected.

Oracle’s rise came on increased corporate spending on its database programs and applications that help run businesses — many of which combine the hardware Oracle got from its $7.4 billion acquisition of Sun Microsystems, according to Bloomberg.

Oracle is a winning company for two reasons:

• Safety. Corporations see it as a safe choice — buying its products will not result in the head of corporate IT getting fired because the company went out of business.
• New products that boost productivity. Oracle is acquiring the products that companies need to handle their information management challenges, then getting them all to work together.

It is remarkable that any small companies have been able to grab business from Oracle. But former Ellison protégé Mark Benioff, founder and CEO of Salesforce.com, did just that. Benioff is a great salesman who used the contacts he developed while selling Oracle products to give business customers the best of both worlds.

Salesforce.com lets companies pay a monthly fee to rent customer relationship management software from Salesforce.com. This lets companies get the benefits of innovation — since Salesforce.com is continuously improving the product — while avoiding the fixed costs of buying the hardware and software and keeping it up to date.

But should you invest in any of these corporate software winners? You should consider Microsoft, but avoid Oracle and Salesforce.com. Here’s why:

• Microsoft: Profitable company, cheap stock. Microsoft revenues are up 12% in the last year and it earns a whopping 33% net profit margin. Yet MSFT’s price/earnings-to-growth ratio is a low 0.78 — 1.0 is considered fairly valued — on a P/E of 9.7 on earnings forecast to grow 12.5% to $3.13 in fiscal 2013.
• Oracle: Profitable company, expensive stock. Oracle revenues are up 32.8% in the past year, and it earns an impressive 25% net profit margin. Yet its PEG is a high 1.58 on a P/E of 17.1 on earnings forecast to grow 10.8% to $2.56 in fiscal 2013.
• Salesforce.com: Barely profitable company, very overpriced stock. Salesforce.com revenues are up 27% in the past year but it earns a slim 1.5% net profit margin. And its PEG is a grossly overvalued 3.37 on a P/E of 633 on earnings forecast to grow 188% to 57 cents in fiscal 2013 — after its earnings plummet 70% in fiscal 2012.

Investors seem to like Oracle’s faster sales growth and solid profitability more than Microsoft’s slower growth but higher margins. Meanwhile, Salesforce.com might be doing an admirable job of attracting customers, but it just ekes out a slim profit in the bargain.

Peter Cohan has no financial interest in the securities mentioned.