Larry Ellison

  • October 3, 2011

    • I went to Oracle OpenWorld as a guest of Oracle and came away with a variety of observations that I can share.  Some of what I saw was under NDA and that will remain undisclosed though I have to tell you that I did not see any labs or next generation products beyond what my colleagues saw at the show.  My secret experiences revolved around customer stories.  I also went to an America’s Cup qualifying race as a guest and had a great time on San Francisco Bay.  The only reason that matters is in case you think I’m cutting Oracle some slack.  I won’t do that but I will say that I was treated well all week, thanks to the efforts of Susie Penner, who runs the influencers program and does a bang-up job, and others.

    Some of my colleagues were grumbling, and perhaps have done so in print, that they didn’t get enough time with executives — or any at all in many cases (me included) — and that their experience was diminished by the lack of a good séance.  I can only observe that with 50,000 or so customers and press in town your executives can only be spread so thin.  More importantly, I have always found that when I call up I can speak with the person I need to find plus or minus some obeisance to the gods of Wall Street and the public company’s quiet period.  My take on meeting with executives is to make a call when I need information and not to expect so much from a conference like this.  To that point we had a good meeting with executives and product managers in May when Oracle held an analyst day.

    I must also say though that the company makes an unnecessary distinction (my humble belief) between an analyst and an influencer.  Analysts seem to get greater access and are sequestered from the influencers in part because they work for brick and mortar analyst firms while people like me who are analysts, bloggers and occasionally journalists, get lumped into a separate but equal program.  But, as I say, I can always pick up the phone.

    As a CRM guy, the show was a bit light on information and the impression I have is that Oracle is only two or three years into a transformation that starts at hardware and moves steadily up its stack to applications.  The hardware announcements at OpenWorld were superb and I can see a bright future for all of computingdom (a new technical term to be sure and evidence of continuing innovation in Silicon Valley) with Oracle’s devices.  But I have been saying this for three years.

    Each year the Exa-hardware line (Exadata, Exalogic, Exalytics) gets more robust. This year the company finally aimed Exa-hardware squarely at cloud computing to claim a spot as a serious infrastructure supplier.  It also announced a new version of the database (Oracle 12c) for its public/private/hybrid cloud strategy to complete the picture.  I am not much of a fan of private clouds because they seem oxymoronic, like jumbo shrimp as Steve Martin used to say.  But for many, the idea of a private cloud is what will finally get them to cloud computing and sooner or later true cloud computing will break out as hybrids die a natural death.  But also, I see great gains for sustainable computing with these announcements and with them lower operating costs for users.

    The private cloud, seen for what it is, is a transition state.  Neither fish nor reptile, it is an amphibian capable of adjusting to multiple surroundings and it will be the parent of something better adapted to an energetically more stringent environment.  This is the greatest differentiator between Oracle and all of its much further progressed competitors in the cloud in my opinion.

    Oracle has hundreds of thousands of customers and most of the biggest companies in the world use its products.  It will not turn on a dime and it will need to support its customers and their older products for many years as they transition to cloud computing.  So, Oracle’s strategy cannot be the same as a pure SaaS player and I believe the two should not be directly compared without caveat.  In fact, I think Oracle’s next big innovation will not be hardware or software related.  It will focus on the high-wire act of changing its business model to subscriptions while encouraging its customers to do the same all while running full tilt into the future — just what you’d expect from a company headed by a yachtsman captivated by speed.

    I was not impressed by the front office applications and they fell into three buckets – new product acquisitions, existing products i.e. those bought in 2005 and Fusion.  The products that Oracle bought last year are all up and running as they were when they were purchased but they are only lightly integrated, I think.  The glue that is supposed to hold them together was hardly in evidence.  I am talking about Fusion.  Whatever Fusion is going to be is still in the future as far as I can see and I can’t say much more than that because I didn’t get to see much.  The older applications are quite literally getting older and the race is on between them and the new acquisitions to see if the new apps can spin up quickly enough.  Fusion is a very important of that dance.

    On the other hand the company has adopted RightNow’s customer experience or CX mantra completely and did a reasonably good job of introducing its customers to those social ideas.  Unfortunately for me — and many of my colleagues who have been swimming in the social soup for many years now — Oracle’s CX Summit was aimed at its legion of neophyte customers.  There’s nothing wrong with that.  It accurately shows where everything and everyone is relative to social. But the net effect of it all is that we didn’t see behind the curtain and didn’t get a glimpse of what’s ahead in social for Oracle.

    We did hear about the importance of social networking and collaborating and how Oracle Social Network (OSN) fills a void etc., etc.  But I have profound doubts.  I consider social as a recently blank canvass, which has been filled by things like Twitter, Facebook, LinkedIn and, yes, Chatter.  In each case, creative types tried to paint it with transcendence and visions of what can be.  Then consider OSN, a plow horse of a name that says “we checked off another box,” and you get an inkling of where Oracle is in its social rollout.

    On applications, my net impression is that Oracle has not yet generated a lot of thought leadership.  There are times when thought leadership is not as valuable but we are at a crossroads and the signs point to cloud, social, mobile and all of the above.  The Oracle messaging was long on “here are the facts about our new products” but relatively short on the part that says “and here’s why that’s important to you in today’s economy/market place/world” pick one.  Oracle wants to be the go-to technology business partner but to achieve that goal in a new generation they need to throw some fastballs down the middle of the plate.  Every year I see progress and maybe next year they’ll get the thought leadership.  It will be vitally important as the company moves not just into the cloud but more and more into the subscription economy and expects its huge customer base to follow suit.

    Published: 220 days ago


    This week Zach Nelson, CEO of NetSuite, a.k.a. Larry’s other company, took over the Marc Benioff chair as guest antagonist but given the relationship between the companies the vibe was more sedate.  For instance, no one went to the talk at the Lam Theater in Yerba Buena Gardens wondering if Nelson would be controversial or if he would utter the words, “We come in peace,” as Benioff once had.  That much was a given.

    Nonetheless, Nelson served roughly the same purpose as Benioff; he was the emissary from the cloud.  He functioned as a third party thought leader pointing off in a future direction that Oracle itself could not for various reasons.  Nelson’s direction and his talk cemented one of the key elements of cloud computing for large enterprises contemplating — what to do about the growth of increasingly expensive and hard to maintain ERP systems.  In an era where data and decision-making are continuously being pushed down the chain of command conventional on premise ERP has a flexibility problem and that was the subject of Nelson’s talk.

    For at least the last year various vendors have been talking about their two tier strategies in which they provide a second layer of ERP support or they cooperate with other vendors to do so.  Nelson used his time to describe the advantages of using a product like NetSuite in a variety of ways that demanded a second tier of ERP.

    For instance, a large multi-national company might use a second tier of ERP systems to capture local or regional data, convert currencies and adhere to local regulations before rolling the results up to corporate in a more tidy bundle.  The two tiers could in practice be all NetSuite but Nelson’s point was to also support heterogeneous environments in which Oracle or SAP might be the corporate standard.

    Finally, an question that is on lots of minds during a merger, acquisition or sale of a division is what to do about the financials.  I have to confess that this is not top of mind for me but I can understand how it can be for the principals.  Nelson’s point is that his product, by virtue of its cloud residency, can spin up a company very quickly and enable the separation or merger as the case may be.

    The two tier strategy is a happening thing and I expect that we will hear more about it over time and not just from ERP vendors.  Much the same argument could be made for front office conversions.  As multiple conventional CRM systems begin to age out we might see SaaS CRM vendors trying to ease the transition for their own products.

    Finally, two tier provides other benefits to companies such as limiting the growth of conventional ERP and initiating a transition that will move some to the cloud eventually and away from big ERP systems.  That’s what Oracle can’t say on its own because as much as it would like to surround SAP systems with NetSuite and eventually convert them, it would not like to see the same thing happen with, say, Microsoft ERP surrounding and ultimately ejecting Oracle from an account.  NetSuite has an inside track right now because it runs a complete Oracle stack which will make conversion easier while keeping it all in the family.

    Zach Nelson’s talk was a success.  He presented an appealing vision of ERP in the cloud and for that I think it’s a lock that he’ll be invited back.

    Published: 226 days ago


    All right!  Recess is over!  If you went to Dreamforce last week you can be forgiven for taking a kind of victory lap in your head today because it was a truly great experience, besides if you are like me you are still tired.  One reason I think so many people like Dreamforce is its relentless focus on the future and on what will likely become standard practice in the not too distant future.  But also, if you went to the keynotes from M.C. Hammer to Colin Powel to Richard Branson to Tony Robbins, you left San Francisco with a certain “lightness of being.”

    However, if you are an analyst you need to put all of that behind you and get ready for Oracle OpenWorld (OOW), which promises to be a barn burner for its own reasons.  Same city, same Moscone Center, same closed Howard Street, similar large crowd — where Dreamforce was all about the social enterprise, OpenWorld is about a lot that might not be so clearly connected.  There’s hardware and operating systems and then software for the back office, front office, databases, middleware, and development tools.  There are things I’m leaving out too like the America’s Cup.  At OOW Oracle will provide a glimpse of its own into what the future looks like for the enterprise and in some ways it’s very different from what Salesforce is talking about and in some ways they are similar.

    This is not to say that one vision is less good than the other, far from it.  The competing visions reflect different world views and different realities.  For instance, while Salesforce approaches things from a clean slate perspective, Oracle takes the view that what it introduces has to work with what delivered before.  You can see this in its disciplined approach to supporting customers of the companies it bought way back in 2005.

    Companies like Siebel and PeopleSoft whose products are getting long in the tooth and are prime targets for Oracle’s new offerings that are based on its platform called Fusion.  You may recall that Fusion went GA (that’s general availability, not the mid-night train), more or less, at last year’s OpenWorld but it hasn’t exactly set the world on fire and there are persistent rumors that the stuff doesn’t work very well or that it requires a phalanx of consultants to make it do its tricks.

    The big hurdle for Oracle therefore will be to convince the assembled multitude that Fusion is real and that the path to the future goes through the intersection of Fusion and Big Iron.

    Speaking of big iron, last year the company rolled out some additional gear to complement its Exalogic computing devices.  It seems this family of hardware is built and optimized for very big jobs involving terabytes of data gazillions of users.  That’s exactly the kind of stuff the growing cloud computing movement might gobble up.  Currently data centers are masses of commodity servers in racks running feverishly but without a layer of sophisticated management that would optimize their utilization and reduce costs.

    There has been an interesting series of articles by James Glanz here and here in the New York Times over the last few days focusing on the power consumption and pollution caused by data centers.  The pollution comes from diesel generators periodically fired up to test the centers’ ability to withstand a power interruption.  The consumption is gargantuan.

    But a bigger question, for which there are ready answers, asks why so much power demand?  Part of the answer lies in how many companies are avoiding the necessary virtualization that will make the cloud much more efficient and sustainable.  According to the Times and backed up by McKinsey & Company, which did the analysis, conventional data centers run many CPUs and disks at much less than capacity in part to cater to the urban myth of the need to keep one company’s data separate from another’s.

    You’ve heard me on this before using the metaphor that we comingle our funds in banks and overlay the pool of deposits with metadata like account numbers and statements.  Why are we resisting do this with data?  Companies like Salesforce are already doing the same virtualization in the cloud and Oracle has an opportunity to strongly support virtualization and point to a more sustainable future.

    Will it?

    I’m going out on a limb to say yes.  Maybe it won’t happen right away but keep in mind that two or three years ago Larry Ellison ridiculed the cloud and now that he has modern hardware and software he’s a big proponent.  The next logical step would be to endorse the Exa-hardware as a sustainability tool for a power hungry planet.  I’m looking for some sustainability messaging from Oracle and it could even happen.

    This is not a digression.  Sustainability is not alien to ideas like mobility, cloud, social and analytics, you can’t separate them.  I think if Oracle wants to maintain its leadership position with many of the largest companies in the world, it needs to put a stake in the ground and become a thought leader here.  The next decade in IT won’t be like the one that preceded it and if Oracle simply comes out with a grocery list for replacing old hardware and applications with more modern stuff it will be missing a great opportunity.  At the end of the day people go to these conferences looking for new ideas and things they haven’t seen before.  That’s what I’ll be watching for.

    Published: 236 days ago


    Ahh, what a difference a good night’s sleep makes.  The Greeks are still threatening default on their bonds, the economy is still in the loo, the major stock indices are teetering on a bear market precipice and Marc Benioff is still going to speak at Oracle OpenWorld or at least next door.  But there is some clarifying news.

    First, the guys at Oracle can claim that they didn’t cancel Marc, they simply moved his talk to Thursday.  Unfortunately, Marc is getting on a plane this afternoon to go on sales calls back east (The man still visits customers and asks for the order.  Not making any comparisons, just sayn).

    The trip was planned for weeks according to my sources at Salesforce so there was no way to reschedule.  I am sure that was communicated when Oracle offered the choice 8 am slot on Thursday morning instead.  It’s sort of like saying, no, your vacation was not really cancelled, it’s just been rerouted to Siberia.

    There’s been some good analysis by Larry Dignon suggesting that the audience is being played and I think there might be some truth in it.

    Last year, if you recall, there was a minor contretemps in the press between Ellison and Benioff over cloud computing.  Larry had introduced his compute server, Exalogic, and Marc was deriding it as a cloud in a box.  “Beware of the false cloud,” he said.  We all laughed and reported all of it.  Larry got coverage, Marc got coverage and it was all good for business.

    I am sure this was not collusion, just two guys who know each other’s moves and how to play a certain game.  This resembles improvisational comedy quite a bit or maybe it is real life imitating improv.  Here’s how it works — two funny people can riff on an idea for a long time without ever having a script by knowing a simple rule or two.

    The first is be funny and the second is always say yes.  In other words, regardless of what the other comedian says, accept it as valid and build on it, just never say no, I don’t think so, and the sketch can go on for a long time.

    “Cloud!”

    “False cloud!”

    Resembles

    “Tastes great!”

    “Less filling!”

    Don’t you think?

    Like many human activities improv resembles an arms race with each iteration ratcheting up the stakes.  Start with an insult, end with a war.  Perhaps.  There are some grains of truth in all this but as with improv, it is hard to determine how much.

    For certain, Larry’s talk on Sunday was a train wreck panned by even the mainstream press.  Was there concern that Marc would upstage Larry in his own venue?  I believe Larry speaks this morning also.  Marc will certainly talk about cloud computing and software and deride Oracle’s hardware despite the obvious fact that at the end of every cloud rainbow there is not a pot of gold but a server farm.

    On the other hand, Oracle is late to the game with its Fusion products that would give them a whole cloud story.  I sat in a briefing yesterday with nine IT executives and CTOs of companies that were in the Fusion beta program.  We couldn’t report names of companies, but they exist and appear to be happy.  That’s the state of Oracle’s newest cloud software though certainly products like CRM On-Demand have been around almost as long as Salesforce.  Not to worry though, I think Oracle has made excellent progress, as I relate here, in the two years since Larry first derided cloud computing at the Churchill Club.

    At any rate, the Larry and Marc show will go on today.  It will be great theater and, like great improv, there will be a grain of truth in everything said by the participants.

    Published: 591 days ago


    Two years ago almost to the day, Larry Ellison interviewed with Ed Zander at the Churchill Club.  In the video you see him poking fun at the cloud.  Just two years later Ellison is the cloud’s biggest promoter, in fact he exemplifies Kennedy’s maxim that “Victory has a hundred fathers, defeat is an orphan.”  In two years Oracle has gotten the social and cloud religion and done a stunning job of building out products in multiple directions. Historically, this rivals Paul’s conversion on the road to Damascus.

    Published: 593 days ago