Advertisment

Rising out of the Recession

author-image
DQI Bureau
New Update

Larry Ellison and his company can be accused of many things, but not of

aversion to risk. Ellison may suffer from many eccentricities, but a failure of

nerves is not among them. So when Buzz Aldrin repeated his famous lament at the

OracleApps conference in San Diego this February, he found a sympathetic

audience which understood and cheered. In the footsteps of its founder, living

on the edge has come to be the Oracle Way.

Advertisment

"At

the core of our risk-free society is a self-indulgent failure of

nerves"

Buzz

Aldrin



Astronaut and the second

man



to set foot on the Moon

And some of that on-the-edge Ellison-style vision-making was at display at

the conference. In a databases-of-the-world-unite speech, the 58-year-old

chairman and CEO of the company drew a picture of what the information hierarchy

will look like a few years from now. "Databases will get fewer and bigger,

and eventually hold everything. In ten years, I see a vision of national–if

not global–databases that do it all. You could have a global education

database, one health database and so on," he said.

Ellison believes the first stage of the evolution is already taking place.

"Large companies, Oracle included, are increasingly moving a large number

of smaller databases into one large database." His oft-repeated example–how

the company moved 97 different HR databases to one about a year ago, saved

$1billion in the process and could actually get usable information out of it,

for a change.

Advertisment

Eventually, however, he says, databases would move from being simply

structured information to more complex, unstructured information monoliths that

would include everything–from core data to documents, even e-mail. "The

most interesting database application is e-mail" he said, "which is

why we’ve come up with the collaboration suite that manages a whole host of

things for you, including mail."

According to Ellison, Oracle "got rid of hundreds of e-mail servers and

thousands of file servers" when it set up its own collaboration suite

recently.

Specialists will die



No Ellison address is ever complete without a dig at his current cast of

villains. In addition to traditional foes, this time around, it was the entire

CRM and SCM industry. For starters, he said–"Our competitors continue to

use proprietary languages for applications. SAP applications to this day use a

language called ABAP4 that is proprietary and unique to one company only.

Advertisment

I’m not sure if programmers would want to build their careers around it.

PeopleSoft is 100% written in a proprietary language called PeopleTools."

Ellison chose his timing well. Till a few years ago, Oracle itself wrote most

its programs in a proprietary language which it started moving away from. Now,

says the CEO, "almost all our ongoing and future development is in Java. It

is open standards-based and allows customers to gracefully add to their

application suites".

More importantly, Ellison believes the end of specialized applications is at

hand. That applications like customer relationship and supply change management

are inherently incomplete solutions that cannot deliver what they promise.

"The CRM promise–and it says write there on some of their front pages—

is that they give a 360-degree view of your customer. But it’s an impossible

promise if your customer pays you money," he said to much tittering. Why?

Because financial systems are completely outside the standard CRM ambit.

"It is the height of absurdity that a CRM system claims to give you a 360

degree view without giving you the financials. What you actually get instead is

a number of 10 degree views. The specialists–the CRM and SCM vendors will die

out."

Ellison’s suggestion? Use suites. Even Microsoft has said suites are the

future.

Advertisment

The future is in pricing



Ellison apart, the rest of Oracle’s top executives spent the week

convincing customers, programmers, analysts and the rest who made up the 12,000

attendees, that lower cost of ownership is now Oracle’s key mantra. Chief

marketing officer Mark Jarvis explained why. "Irrespective of when the

recovery happens we all know that over the last year some things have changed

drastically. And they’ve changed for ever. It’s a lot about cost now. We

want to be sure we’re doing the right thing."

Most messaging and almost all the announcements at the January AppsWorld

rotated around that central theme. Key among them–Linux and Oracle

outsourcing. "A year ago, Larry (Ellison) felt that Linux did not have

enterprise level support," Jarvis said. "But we now believe Linux is

very much ready for use by enterprises and e-business customers. It offers

substantially lower cost of ownership and far higher stability."

Ron Wohl, executive V-P and chief architect, said–"I am making two

claims today. One–that 100% of our customers should use Linux in the mid-tier.

And two–that 75% of our customer should use Linux on the database tier."

Wohl said 40% of Oracle’s outsourced customers were already on Linux, 25% of

the company’s development systems and 100% of the production mid-tier and demo

environments were on Linux.

Advertisment

According to Jarvis, it has been a customer-driven phenomenon. Downloads of

the Linux version of their software from the company’s web site come a close

second to Microsoft and had been doubling almost every month over the last 18-24

months. As Ellison said–"When we moved our demo environment to the Linux

people within our company said ‘no way we’re going to do this on Linux’.

But they did and found it was more stable and faster."

We’ll do it for you



The largest messaging effort, however, went into pushing Oracle outsourcing

and hosting which has a different model from others like JD Edwards, SAP,

PeopleSoft and Baan. Jarvis pushed the concept and various Oracle executives

spoke of it repeatedly. The value proposition–the company takes over the pain

of system implementation, maintenance and upgrades, leaving enterprise IT

departments free to focus on strategic issues. Tim Chao, president (outsourcing)

at Oracle, said–"I’m always a little surprised when people come back to

me and say they got a good deal on that software. What most don’t realize is

that the total cost of software includes cost of the software itself,

implementation, management and maintenance."

Chao quoted some recent studies that seemed to indicate that 79% of all IT

costs go into maintenance. In a difficult business environment, Oracle believes

its outsourcing model has both a cost and quality proposition to offer. However,

the company will not reveal what part of its business comes from outsourcing. At

the moment it has a total of 500 outsourcing customers with about 300 of them in

what Oracle calls "application outsourcing," and the other 200 in

"technology outsourcing." Future internal projects talk of an

estimated $1 billion in revenues by 2006.

Advertisment

Other announcements included the introduction of 26 new Oracle Business Flow

Accelerators; Oracle All-in-One; a greater focus on the subscription edition of

it e-business suite; and outsourcing. BFAs are horizontal and industry-focused

offerings to help companies implement the e-business suite depending on their

needs and the company claims they will cut costs by 30% and reduce

implementation time by up to 60%.

Oracle all-in-one aims to provide the exact and total cost of ownership of a

software including software, implementation, management and maintenance costs at

the first instance. The Oracle subscription editions with a fixed set of

applications are meant for companies with about $10-25 million revenues and not

over 10-25 users.

Out of the recession...



For Oracle this is a by-the-bootstraps attempt to rise out of a recession

that hasn’t been very kind to it. The company’s core database market has

been under siege in the last few months from IBM at one end and Microsoft at the

other. Big blue recently took over database vendor Informix and, according to

Gartner Dataquest, unseated Oracle as the number 1 database vendor by revenue.

At the other end, Microsoft’s SQL and Oracle’s own pricing polices have kept

the company shaky in the SMB space. But Oracle executives say all of that’s

about to change.

Advertisment

The really good news, however, came from CFO and executive V-P Jeff Henley,

who said an uptick looked possible in the near term. "Next quarter will see

positive revenue growth for the first time in many quarters." Though in his

ever cautious way, he added. "We think the worst is over in the tech

industry, though we can’t be sure. It may be small, single-digit growth in IT

spend in calendar year 2003 but we do see recovery over the next 12

months."

The industry can live with that.



Sarita Rani

Oracle Thinks Big with its Collaboration Suite...

Oracle recently forayed into the groupware market by launching its

collaboration suite. With this, it is challenging the big bulls–Microsoft’s

Exchange and IBM’s Lotus Notes. Rene Bonvanie, vice-president, Oracle

9i marketing and Oracle Technology Network (OTN), spoke to DATAQUEST about the

company’s collaboration suite and its significance. Excerpts:

l What

is Oracle doing in the collaboration market space?



The collaboration market is an interesting phenomenon. There are already

vendors like Microsoft and Lotus with their Exchange and Notes offerings. Our

foray into this highly competitive space is based on the premise that existing

suites either command high acquisition costs or comes with less functionality.

We are addressing a totally new market what Gartner defines it as smart

enterprise suite. The idea behind such a suite is to unify voice, e-mail, file

sharing, search functions, calendar, real-time conferencing capabilities and

workflow together at less than half the cost of other collaboration products

like Microsoft Exchange. Oracle Collaboration Suite is designed to provide

relief from enterprise pain points like security and integration.

l With the

collaboration market dominated by Microsoft and IBM, where do you see adoption

for Oracle suite coming from?



Nobody dominates the collaboration space. For instance according to IDC the

collaboration market will be worth $7.5 billion by 2006. Moreover when we look

at competing solutions, say like MS Exchange or Lotus Notes, customers face lots

of integration issues and incur higher running costs. Apart from TCO, the other

factor that will hasten the adoption of our collaboration suite will be from

users migrating to higher versions. We see a favorable trend for us here as

majority of the users are still running lower versions like Exchange 5.5 will

chose Oracle in the event of migration.

l What is

significant about Oracle’s collaboration suite?



Integration in the real sense is the bottom line of our suite. We are

delivering everything through a single server that translates into huge cost

savings for enterprises of all sizes. From a technology perspective, at the

backend ours greatly reduces the complexity by consolidating all the servers

into one unit. We see this as a value proposition, for instance if any

enterprise intends to migrate to other competitive suites they have to invest

heavily on hardware. By migrating to Oracle, they will be getting greater

benefits at a lesser price. The other significant thing is the entire

collaboration suite is designed on the Oracle9i Database and Oracle9i

Application Server

l What is

Oracle’s strategy in the collaboration space in India?



We believe there is tremendous opportunity in India for us in offering

enterprises a more reliable, secure and cost-effective alternative to Microsoft.

All Indian companies with 500 employees or more can cut their collaboration

expenses with the use of Oracle Collaboration Suite. We have already set up labs

in Delhi, Mumbai and Bangalore where our customers can experience the benefits

of Oracle Collaboration Suite first hand. To bring Oracle collaboration suite to

the Indian market, Oracle India has teamed with local partners ¾ CMC and HCL.

We are also aggressively targeting customers with 500 or more employees in

various industries.

l Coming to

9i, Oracle all along has been telling that it is superior to SQL. What are the

differentiating factors?



9i is the outcome of more that 27 years of work. And the first and foremost

is all about delivering high volume of data over   the network

reliable, securely, and economically. Reliably, I mean by using 9i, the system

cannot go down that easily. Even there is no planned downtime. The other thing

people cannot break into the system. It is impossible to hack in, even for a

worm like slammer. The economical thing, the first reaction is - it is costlier

than SQL server, but if you take a closer look, the amount of work associated

with both the environment in terms of hardware and the actual running costs of

9i is cheaper by 25 to 45% compared to running the SQL Server. Also, 9i has the

ability to cluster databases and customers can consolidate small systems

together and build a reliable, shared IT infrastructure.

G Shrikanth

Advertisment