After my trip to Oracle OpenWorld in 2007 I wrote about a pattern I noticed – a change from previous acquisition of mature, larger companies with established revenues like PeopleSoft and Siebel:
“Release 1 of most Oracle components are developed (internally), then replaced, by acquired components as the category matures.”
In 2008, we saw execution of that strategy as Ben Worthen of WSJ reports “So in 2008, Oracle zeroed in on much smaller firms. Mr. Ellison's last 10 deals combined cost less than $750 million.”
Fair enough – it’s “acquired innovation” as Oracle President, Charles Phillips likes to call it.
But what happens next?
In existing Oracle internally developed and acquired products in the last 5 years, Oracle’s enhancements have been anemic. This week Oracle sent me an announcement about a recent “enhancement”:
“Oracle User Productivity Kit v3.5 and Oracle User Productivity Kit Professional v6.1 create documentation, simulations and in-application performance support to aid in the adoption – and therefore success and fast ROI – of enterprise applications
They sent it to me twice – almost to emphasize they are still enhancing products. I am sure these new features deliver some utility, but you expect big, bold stuff like Fusion announced 5 years ago. We don’t even hear that word any more from Oracle.
Oracle, in my opinion, has forgotten how to develop code. Its top executives are deal makers, not technology visionaries. Worse, when it comes to their acquisitions, they cannot retain or easily replace the entrepreneurial talent. Every person who departs Oracle comments about the mass confusion that comes with such a rapid accumulation of software IP - and Ben touches on that also in his article.
The rapid pace of acquisitions has also had a significant impact on Oracle support. Customers report frequent and confusing changes to Oracle’s support policies as so many products go in and out of stages of “lifetime support”. Little has been done to rationalize support across products – other than of course, raise maintenance to 22%
The questions every CIO needs to ask as they write maintenance checks to Oracle are: Can my internal team do better with those dollars than the bare 10-15% Oracle allocates to R&D? And how productively will Oracle spend even those limited development dollars? And when, if ever. will Oracle take a breather and tackle its support fragmentation?
And as they look at licensing new products from Oracle, particularly acquired ones, what enhancements can we realistically expect from Oracle in the future given the shrinking development culture and budgets?
The answers should be sobering. While investors cheer Oracle as the "new IPO", customers and the industry as a whole should lament the fading art of development and support at our largest enterprise software vendor.
Update: the continuing debate on how innovative or not Oracle is
Update: Dennis Howlett adds his perspective
Update: See my note - Not just Innovation. Also improvement.