Oracle’s Big Pivot Point

This might be the year we look on in hindsight as the time Oracle got its groove back. It is well known that CEO Larry Ellison thinks in 10-year cycles and about how the industry seems to morph like a caterpillar about every decade. He’s not the only one. Marc Benioff, CEO of Salesforce.com, has referenced the decadal cadence, and others have too.

What’s different this time is the size and scope of the change, especially for Oracle. You can start your timer with Ellison’s unwise commentary at the Churchill Club just a couple of years ago in which he belittled cloud computing. At that point Oracle was about three years late in delivering the Fusion products that were supposed to knit all of its disparate application families together. It had yet to take much if any position on social media, and as mentioned above, cloud computing was at best a form of heresy.

All that changed, curiously enough, with Oracle’s purchase of Sun. Suddenly Oracle found itself in the hardware business with a passel of new products and patents. Oracle began an immediate pivot (a great word out in the Valley) on hardware and brought out a line of Exa-themed compute servers, database servers and analytics that began to run circles around the competition.

The hardware had power to burn and made it possible to rethink software. In the process, an idea that the company had played with for years took on new meaning and relevance. Oracle has always acted and stated that customers ought to limit the vendors represented in their data centers to a small number, preferably one, preferably Oracle. But for a long time that was seen by many as wishful marketing. Wouldn’t it be nice to be the only vendor in the IT stable? I can hear the Beach Boys tuning up.

IT as Utility

Hardware changed this from marketecture to engineered systems, and last week Oracle held a two-day summit for analysts to add some flesh to the marketing bones. What we saw was, well, eye-popping.

I was there, and as a life-long tech industry observer and CRM specialist, I have to say it was impressive. Here’s the big picture, which is all I am qualified to do since so much of this technology is not in the front office scope.

The early adopter customers in a variety of far-flung industries are reporting back that the engineered systems work. Many, but far from all, of the presentations were under a non-disclosure, so I can’t name names. But significant companies sent representatives to basically say that, yes, the stuff works as advertised. What stuff? Exalogic is a big, fast compute server. It is fault-tolerant, it supports lots of users and processing in a small footprint, and it will likely become an important part of cloud computing as customers demand the reliability of an IT utility, which you can’t get with many small, cheap appliance PCs strung together.

Exadata and its compression algorithms, processors, disks and flash memory provide multiple orders of magnitude better database performance. They store more data by a long shot than the competition, and they crunch, crunch, crunch it with a certain delight known only to machines. This will come in handy for managing the Big Data revolution. And Exalytics, which some call “analytics in a box,” is a well-paired addition, though I didn’t get enough of an understanding of it to say much more.

Then there are the applications, especially the CRM-related ones. Here I am more in my element, so I will take more time.

Fast Chaser

Until a bit over a year ago, the front office was an interesting place in the product line held up by Anthony Lye. Lye was making good progress in many areas, but his self-described fast follower approach seemed more like a Sisyphean sentence than strategy.

Salesforce had all the marbles and dibs on the innovator mantle because it was in full bloom with Sales and Service Clouds, social computing which became the social enterprise, and intramural collaboration with Chatter. After last week I’d have to say that Salesforce still leads, especially since some of the NDA stuff we heard related to things not released quite yet. In my book you get no points for gonna-be’s.

Nevertheless, Oracle, by virtue of its deep pockets and Lye’s eye for a bargain, has made following into a chase. Over the last year, Lye has bought five companies — RightNow, Endeca, ATG, Inquira and Fatwire. Each acquisition was designed not so much to fill a hole but to flesh out a vision of computing that supports enterprise social, mobile and analytics, the holy trinity of enterprise computing until we hear differently.

The messaging Oracle sports in the front office (and beyond actually) is of the customer experience and CX, which it inherited from RightNow. The vision is not much different from the RightNow video “The Future of CX” produced just before the acquisition. The rest is there to support the basic CX vision.

Pulling all this together will seem like child’s play after the Fusion development experience. Nevertheless, you should expect to see incremental changes over the next few years, not necessarily a big bang of delivery.

Changing Habits

There is still a lot of work to do (I saw roadmaps that looked like they were developed with Google satellite images), and while the response so far has been positive, Oracle is still very much in the business of convincing its customers that the new approach won’t cost them the farm.

That’s as it ought to be. I’d say that the company today, with its new products and strategies, is at a chasm crossing. It has the early adopters proving its concepts, and more product is still coming to market. At the same time, a huge installed base isn’t going to swap everything overnight, which is good because the strain would be like Y2K all over again. Also, Y2K was easy in comparison.

Oracle and the rest of the industry is asking customers to change work habits and processes for the promise of better things to come. You might be forgiven some cynicism if you have been around this track before. Still, I am crazy enough to think that this time will be different. There is no clock counting down to midnight, companies can take their time because modularity has made the next conversion something they can take in bites rather than gulps. Finally, there is provable ROI for the hardware and the business processes that the software implements.

The big question mark for Oracle will be in if and how it promotes its thought leadership. The company is a transaction machine selling about 6,000 products, I was told last week. But the IT transition happening in front of our eyes won’t be about the new gizmos. The competition will be about convincing the world and the installed base that the new gizmos and the new business processes they support are good, necessary and proper.

I don’t believe that’s an Oracle strong suit, but the reality is that they can buy the expertise if they want to, or perhaps they’ll develop it internally. My guess is that a Steve Jobs type or a Guy Kawasaki isn’t going to walk through the door soon. So that’s Oracle’s next challenge.

My trip was not all work. On the last day a bunch of us were treated to a sail on San Francisco Bay in an America’s Cup yacht. More on that another time, but I will say that a fierce drive for hot technology drives America’s Cup racing the same way it drives the IT industry. Little wonder, then, that Larry Ellison is so wrapped up in it.