Larry Ellison is a brilliant man. For many reasons, but particularly for knowing the limits of his company. Tomorrow, he is going to talk about synergies between software, hardware and services as he discusses the Sun acquisition.
Except that he made that same announcement a decade ago when he started Business OnLine. Timothy Chou, who Larry entrusted with building that capability wrote about his experience in a guest column last year. His biggest challenge:
“While the business grew to nearly $200M in four years the biggest impediment to growth was educating Oracle people. Never underestimate the power of the white corpuscles.”
So, Larry smartly did not force the issue within Oracle.
Instead, he nurtured two personal investments, NetSuite and salesforce.com which have shown the world how to integrate software with data center with application management into one contract and one SLA. And at price points the world of Oracle and SAP and IBM are still choking at.
So, Oracle gets another chance. They will have a similar learning curve as Microsoft has been through. I interviewed Mike Manos for my upcoming book - he helped Microsoft (he has since moved to another position) with its recent data center investments as it prepares for Azure and other clouds.
He said it was a significant cultural shift for a software company to be presented with a multi-hundred million capex budget for a data center. The biggest capex many software executives have seen is in their office furnishings. Safra Catz, the CFO will have to get used to those capex budgets and those around next generation chips if Sun hardware is to be kept viable..
The other challenge Mike pointed out was about building an operations culture to support 24x7, demanding, transparent to all SLAs. In the traditional software vendor model, some partner or another absorbs that burden over the wall. Mike calls it “industrialization of technology” and it’s not a skill set that can be acquired over night. And, trust me, Sun itself does not have it – they have some outsourcing experience, but little at the “industrial” scale.
Oracle has another challenge which Microsoft has much less of an issue with– price points. Can it compete in emerging SaaS and cloud markets? Time will tell.
The best thing Larry can do for his company is to send it to its remedial education with a “dunce” cap on – it was not serious a decade ago, it needs to go in a lot more humbly this time.