You have to give credit where it is due, and today that means kudos to Oracle (Nasdaq: ORCL). More than 40,000 customers, analysts, press and others have converged this week in San Francisco for Oracle Open World (OOW), the annual user conference. It is mind-boggling to think that the 40,000 people in San Francisco represent only a small portion of the people all over the planet who know the company’s products and use them in mission-critical business processes every day. More than that, it is a tribute to one man’s vision of what information technology needed to become that started more than 30 years ago.
I attended the conference wearing my CRM hat, but below the hat there were plenty of memories of relational database technology wars — and a revolution the wars caused in computing that led directly to the jobs many of us have today. I went to the sessions and heard the keynotes and came away with these observations.
A Tale of Two Businesses
Oracle is a giant company with two businesses. Some would say it could easily be two companies, and I might agree, but I won’t quibble. Despite its size and obvious resources, I don’t think I would want to be running Oracle at this juncture, because both of its primary businesses are in the process of being disrupted by changes brought on by on-demand computing.
The first business consists of the database and what many people call the stack — operating system, database and middleware. This stack will continue to be important indefinitely, at least until someone figures out how to do away with databases all together — fat chance.
The database business is changing significantly, because on-demand separates the customer from the database vendor. The on-demand customer today hardly knows — or cares — what’s behind the application service that is running in the browser, and that’s equally true of the operating system and server hardware. Linux, Unix, Windows? Who cares? Ditto AMD (NYSE: AMD) or Intel (Nasdaq: INTC), and ditto again Oracle, DB2, SQL Server.
Trying to maintain differentiation for any of these companies is going to be tough sledding as long as they are contending for hearts and minds in the IT department of individual companies. It was interesting to see the word "choice" bandied about at Open World as in choice of hardware (AMD was a major sponsor) and operating system. In that logic though, it is hard to see how choice stops at the database, and it is hard to see how Oracle’s database business will not be disrupted by low-cost providers — and if not low-cost providers, then by providers of on-demand solutions.
I think Oracle could stem the tide if the company takes a more aggressive position as the premiere provider of infrastructure for on-demand solutions. At the moment, the company positions itself as the backbone of the data center, and I think it could offer a strategy of being agnostic about whether a data center serves one or many companies. Such an approach might bolster its facilities management business too. That’s a manageable shift that I think the company will begin to make as on-demand gets more traction.
The Other Side
At the same time, it doesn’t look like a fun ride to be on the application side at Oracle, either. The company has enormous inventory of disparate applications that it acquired in the last several years. It strikes me as a flawed policy to build a platform — i.e., Fusion — that knits them all together. While building a platform architecture is important going forward, I hope the architecture will not be constrained by the multiple demands of making all that legacy code work together. It would be far better for Oracle to pick the winners and announce sunset strategies, where needed, and migration paths for its customers.
Most importantly, I think the time and resources currently being invested in redundant applications and making everything work together would be better spent on building the applications of tomorrow. One thing that came through loud and clear to me at OOW was that the current batch of products are reaching the ends of their useful lives. The CRM applications were built for a marketplace that is receding from our view. They were made for situations where vendors had the upper hand; where major new products were being introduced, and vendors were fighting for market share.
In a word, contemporary CRM was made for the part of the lifecycle that Geoffrey Moore called the "tornado" phase. That phase is gone. We are now living in a phase that Moore dubbed "Main Street," and the tools needed for selling, marketing and service on Main Street are vastly different from what we now have. At OOW, the words "customer experience" were sprinkled into a lot of CRM discussions like band-aids. While paying attention to the customer and the customer’s experience are valid and important — even necessary — the juxtaposition of the words and the late 20th century applications seemed strained.
In applications, as in infrastructure, it seems to me the market place is in need of leadership that few people or companies are providing. More than anything, the industry could use an injection of thought leadership and vision. What passes for that right now are discussions about information overload, choice, platforms, and the like. All of these ideas are important, but they are only tactics in a strategic vision that leaders like Oracle should be articulating but are not.
Give Oracle credit for bringing together Peoplesoft and Siebel. In only a few months, they have made three disparate companies with different cultures work together, and Oracle has begun delivering on many of its promises. Nevertheless, there is some heavy lifting ahead and some, perhaps painful, decisions to be made. If those decisions are made in time, we could see Oracle move into an even more dominant position. If not, this technology colossus will stagnate — and the market will look for leadership elsewhere, and the cycle will begin anew.
In a way, this all reminds me of the George H.W. Bush administration, in which strategic vision was derogatively referred to by the President as "the vision thing." When it came time to renew the lease on the White House, the voters went with an upstart governor from Arkansas who had multiple flaws — but lack of vision was not one of them.