I attended Oracle Open World a few weeks ago (and been traveling since, which is why I am just getting to this now – but then again, there is more information in this post than Just that catalyst event of #OOW13). It brought together a few items that have been bouncing around my head for the past few years and I wanted to put them down somewhere — this is a good place.
This is not a review of the show, uber-friend Paul Greenberg did a sensational job at his ZDNet blog and I agree with most of what he said there, but an analysis of the position that Oracle has in the market – not just for CRM, but overall (yes, I am stepping away from my well-known focus, but I think it will be OK).
Oracle Full Stack – the Red Stack
Before we start, disclaimer. Oracle is a client, was a client and may continue to be a client. They are currently publishing a series of posts I researched and wrote on customer experience (more on this coming up). They also graciously pay my expenses for Oracle Open World, and invite me to meals and other events during the year. I appreciate the access I get to people and information from them, and their support for my habit of attending conferences on a yearly basis. Of course, none of that has any bearing on my analysis of their position or their potential – but you already know that.
Ok, on to analysis now.
The biggest mistake we all make with Oracle is to consider it just one company. It is not, it is three different companies in one – and that is where the analysis breaks down. We (and will put myself in this group until after I am done with this post) all knock them down for what they do poorly in one area and forget to contrast it to the others. Or, even worse, we analyze the entire company based on the limited exposure (and our knowledge) of one or two elements that we know deeply. I’d like to use this post to move past that.
First, and foremost, Oracle is a database company. This is where they started and where (in all honesty) they make the biggest inroads and investments these days (even until now). I won’t bore you with technical details, but Oracle 12c (their latest release) is a technological marvel considering who they are aiming as their target market (basically, all the companies that bought and are using all previous versions of their databases). It delivers value by focusing on the latest-and-greatest innovations in database management and it incorporates them into their solutions.
Their customers’ needs and desires, mixed with the latest-and-greatest in databases, drives their innovation. Of course, there are companies out there that are producing new-and-innovative models for databases (unstructured, in-memory, NoSQL as examples) but that talks more to the Control Oracle exercises in their market and the inability to new companies to produce competitive solutions. Oracle has incorporated all these innovations to some degree or other into their database solutions and will likely continue to do so.
Second, Oracle is a hardware company. They acquired Sun Microsystems in 2010 and has since been busy transforming what was world-class machines and hardware into some of the sexiest, sleekest, best-performing machines in the their class. I mean, honestly – who can see the specs of their new machines and not drool a little? Fine, who among those hardware geeks amongst us can see the specs and performance numbers and not drool? Serious hardware porn if I may use that term. Way serious.
The “engineered to work together” campaign also talks to their hopes and aspirations for their hardware: they would love nothing more than being able to sell hardware-to-database-to-software solutions that perform as well if not better than similar offers in the market. As good as their hardware is, and their databases, this is still an early move and something that needs to be worked over the next few years.
I believe they are missing what should be a key component of their hardware strategy going forward: delivering both data-centers as well as hosting data-centers services in the cloud. Don’t be confused with their current (poorly worded and worse imagined) “cloud strategy”; Oracle has the potential to become the hardware layer for cloud services directly and by selling to others (or even renting to others – a far better cloud strategy than their current private-hybrid-public interpretation of cloud strategy).
Alas, their hardware is the second best feature (following databases) and one where a better strategy and different focus on an open cloud for the enterprise could provide a killer differentiation and far better market presence.
This leaves their software applications – a messy, poorly delivered approach to fit in a market where they have limited possibilities in my opinion. Let me explain.
There are many facets to Oracle’s approach to software applications – too many in fact to cover them all. There are some good intentions, some of them even met with decent results, but no matter what they do and present as strategy they will always be victims of their three largest blunders in this area:
- Fusion Applications (and hosted application, and cloud applications). Fusion, and if you are reading this you’d know, was first announced in 2005 (shortly after the acquisition of Siebel, PeopleSoft and JD Edwards). It has since then produced very limited results (both in number of applications migrated to it as well as in adoption of the solutions by customers). In the more than eight years since it was announced it has gone through many architecture and positioning changes (including being used to encompass hosted applications, cloud applications and related strategies) alas it has still not produced a final placement or even a strategy as Oracle intended it to be. To be frank, the Applications Forever initiative (while not as innovative or forward-thinking, but announced at the same time) produced better results with far less investment and confusion. Indeed, Fusion Applications is a tired, mixed-results, not-well-focused program that should disappear if Oracle wants to have a good presence in the cloud (but more on that in the next two points).
- Acquired Applications. Oracle made 30 acquisitions since February 2010 (when, in my opinion, first indicated their intent to “go cloud” by acquiring AmberPoint – a SOA Management tool). The vast majority of them have been, by conventional wisdom, ho-hum when it comes to measuring success: the massive majority (eighty percent average by popular wisdom – there is no official number) of employees of the acquired companies left (including key technology and architecture people as well as entire sales teams) and customers also left (based on our ongoing market research) since they did not want to be Oracle customers. Further, revenue levels have been shaky (one of the recently acquired companies saw their revenue expectations for the year reduced by over 80% based on information we received) and ongoing attempts to either integrate the new technology or even to consolidate some of the overlapping solutions failed. While there is a certain hope and degree of success involving Eloqua, Vitrue, and Collective Intellect so far (and I hope it continues and grows to show they are getting the idea of extracting value out of acquisitions) three out of thirty is not a great measure of success.
- Innovative Solutions. To be fair and give credit where due, Oracle has made some amazing applications over time. Oracle Social Network was a very early pioneer in the social business world (and the attempt to make it part of the basic architecture across all products was copied by other vendors later), some of the deep integrations between business intelligence and databases are still awe-inspiring today, and their presence in verticals (Pharmaceuticals and Government are core examples) is definitely not missed. Indeed, they have had extremely well developed and innovative applications over the years – yet they don’t seem to get the results intended. After more than five years working on OSN it is still not deployed as intended, the BI innovations have been done by most other vendors, and their vertical leadership is beginning to be challenged by newcomers. All these problems stem from the same issue: political fighting over product ownership and direction. If Oracle can successfully defuse these issues they can make a real attempt as leading the market in innovation – as it is, not even Steve Miranda (whom I deeply admire and has done an amazing job at leveling some of these problems) can make it work as it should.
Phew, that is a lot of thinking and lots of words – no?
Oracle’s position, market presence, and mastery of Databases and Hardware cannot be matched overall (there are areas where you will see innovation and different implementations, but none of them will ultimately challenge Oracle should they continue investing as they have). Oracle Software Applications (and there are other data points I did not mention in an effort to focus on three key problems) has more problems than solutions currently.
Can Oracle pull out of this and become successful at applications? Yes, they can. Some of the things they need to do are above: focus on a common applications architecture, successfully connect them together, and stop the brain drain from acquired companies. Some other items (like a better cloud strategy, a reimagined view of what applications do – including mobile apps going forward, and far better work at “hardware and software engineered to work together” at the application level) are not mentioned.
The first thing they have to do: stop giving so many people so much power and find a chief applications officer (for lack of a better title) that can both dictate standards, common vision, and integrated solutions across the entire spectrum.
At least, that is my perspective – What’s yours? What says you? Am I way off here?