Josh Greenbaum is one of the enterprise-software industry's top analysts, and his "Enterprise Matters" blog posts are always thoughtful, timely, and compelling. Josh is also a friend, but that flaw in his judgment shouldn't be held against him.
Earlier this week, Josh posted an intriguing piece called The Realignment of the Enterprise Software Market: Oracle vs. Everyone, Microsoft in Ascendance, and Watch out for Infor. It's an eye-opening exploration of some of the undercurrents that are rattling the software business these days, and, not surprisingly, Larry Ellison and Oracle are placed in the center of the industrywide action.
So I have three objectives with this column: first, for those who haven't seen it, a look at Josh's probing analysis; second, to offer some counterpoints to Josh's thinking with regard to Ellison, Oracle, and why they do the things they do; and third, to argue that while Ellison's us-against-the-world approach can be seen as corrosive (Josh's opinion), it can also be seen as bold new leadership (my view).
These issues are incredibly vital right now because the enterprise software business—on which all of the world's mid-sized and large corporations run (and think about that for a second)—is, as Josh says in his headline, undergoing some profound realignments and transformations.
So are Larry Ellison's recent moves hurting Oracle, or preparing it for its next waves of growth and influence? Here's a 5-point checklist in which Josh and I each offer our own diagnoses—and because Josh's piece came first, I'll start each point with a comment from Josh, followed by my reaction to his assertion.
1) Larry Ellison's take-no-prisoners competitiveness.
Josh writes, "Larry Ellison makes no bones about it, he’s willing and able to compete to the death, or at least to the near death, with any and all who stand in his way."
My take: Josh frames Ellison's crusade as battling fiercely against "any and all who stand in his way." For myself, that's the sort of CEO I would want to work for, and the sort of company I'd want to invest in: set a strategy, commence execution, and steamroll whatever impediments stand in the way. Appeasement is the strategy embraced by those that can't or won't compete.
2) What does Oracle owe to HP, SAP, and IBM?
Josh writes, "So, despite the billions of dollars in joints sales between Oracle and SAP, HP, and IBM, Ellison has been directly, and at times, viciously, attacking these three companies in very public and very over the top ways. These are not some of Ellison’s finest moments."
HP last week trashed Oracle's acquisition of Sun, saying it was a money-losing outfit whose products even under the new Oracle banner still rank near the bottom of the server standings. Is this vicious? Over the top? Or is it appropriately aggressive and forceful advocacy for HP's servers, which are the top sellers in the world? If it's okay for HP to hammer away at Oracle—and I certainly feel it is—then why is it vicious and over the top when Ellison does it? As for IBM, the last two comments I can find from Ellison about IBM are, in fact, rather graceful and respectful.
A couple of weeks ago, in rolling out Oracle's new Sparc Superclusters, Ellison said this about IBM:
"Okay—the former world champion, the [IBM] P7—the P7's a good product—what can I say? IBM has good products. And they've got an excellent chip, and the guys that our Sparc guys compare themselves to are the IBM Power PC guys." (Read all about it in Global CIO: Larry Ellison Vows To 'Go After' HP; Is Alliance Dead?.)
And a few months ago, in a column called Global CIO: Is Larry Ellison Going Soft On HP And IBM?, I reported that Ellison offered this measured analysis of IBM:
"IBM is a great company and I appreciate the kind words from Sam Palmisano about us as being their #1 competitor now and actually I mean that sincerely. I think Oracle is flattered, we have worked very hard. We look at IBM as our #1 competitor and we are thrilled that they look at us as their #1 competitor . . . .
"IBM's services business seems to be the dominant part of their business and the product business is important but secondary to the services business, if you will. We look at it just reverse. We look at our products being the dominant part of our business, and one of the things we are trying to do with our products is obviate the need for services."
This summer, IBM executive Steve Mills said Oracle uses "bait and switch"tactics with its customers, and went on to lambaste the reputation Oracle has in the market and the tactics he said Oracle uses to win customers. Is that vicious? Over the top? Or is it—as I believe—good, appropriate, and aggressive advocacy and competition?
3) What defines leadership?
As noted in #2 above, Josh wrote, "These are not some of Ellison's finest moments."
Does Ellison speak with more frankness and more bluntness that most CEOs? He sure does. Is that the only way to be successful? It sure isn't. But it is the way that Oracle and Ellison have been successful—hugely so. Strip out a bit of the histrionics and here's what Ellison is saying: about IBM, he's saying that Oracle's going to beat them in high-end systems through providing superior performance, and that Oracle's going to beat IBM in databases; about SAP, he's said that Oracle's technology is superior and that Oracle will use "superior industry-specific functionality" to beat SAP in applications (read all about it in Global CIO: Larry Ellison Declares War On IBM And SAP).
As for HP, Ellison has indeed blasted its board and new CEO Leo' Apotheker in unprecedented ways. But whereas Josh says Ellison did that in spite of HP being a longtime strategic partner, I think Ellison unloaded on HP's leadership precisely because it is (was?) a longtime strategic partner. Seeing HP remove a CEO of whom Ellison thought very highly (Mark Hurd) and replace that CEO with one of whom Ellison thought quite the opposite (Apotheker), Ellison did indeed lash out at perhaps Oracle's top hardware partner on the planet. But he also then went out and found replacements while also creating his own alternatives with new systems from Sun.
To my way of thinking, that's leadership and business savvy—and quite the antithesis of "not some of Ellison's finest moments."
4) Is Ellison turning allies into enemies?
Josh wrote, "Meanwhile, the consequence of Ellison’s attacks and actions regarding SAP, HP and IBM are having the unintended effect of pushing the above three competitors into a relatively united front against the Ironman from Redwood Shores."
I think it's fair to say that SAP has and will continue to regard Oracle as a primary and formidable competitor, even though the companies do some business together as arm's-length partners—so, no love lost there. As proof, check out this column:
Global CIO: SAP: The Top 10 Reasons We'll Beat Oracle In Applications. Oracle and IBM compete savagely in databases and will begin to do so in high-end systems—but Ellison has also taken, as mentioned above, to praising IBM for its technical achievements and for its status as a "fantastic" integration partner for Oracle—so I don't see much change there.
As for the flaming new romance between SAP and HP, I recently wrote a column called Global CIO: Are HP And SAP Perfect Match Or Train Wreck? in which I explored how the limits of that relationship will be defined by HP wanting something that SAP has (world-class enterprise applications), but that SAP can't give to HP on an exclusive basis. They'll be great partners, but they're already great partners—can they forge new levels of collaboration and innovation that will transcend their current relationship? Absolutely—but they might well have done that even without Ellison's tirades against Apotheker and the HP board. Look at SAP's brilliant new Hana analytics machine: HP's a key hardware partner, but so are several other hardware companies.
5) Was the SAP trial a circus?
Josh wrote, ". . . the shenanigans surrounding the circus atmosphere preceding and during the trial against SAP was an unfortunate distraction from the business of actually building and selling innovation. . . . Meanwhile, I have yet to find a single customer who thinks more highly of Oracle since the trial, or for that matter, less of SAP. I do know a number of customers who have really been scratching their heads at Oracle’s conduct, and I personally worry that the lawyers seem to be running Oracle more and more, to the detriment of the people at Oracle who actually develop, market, and sell product."
I agree wholeheartedly that most customers have mostly glossed over the trial as something that happened several years ago and will likely have little or no effect on how Oracle and SAP interact with customers in the here and now. But I'm curious if Josh is arguing that Oracle should not have pursued the trial—and recall that SAP eventually said it would not contest its responsibility for the IP thefts and the resulting financial compensation. Or that it was okay to pursue the damages, but not too aggressively—maybe kinda/sorta make a fuss in court but then say what the heck and drop it?
Take a look at which company's original damages estimate turned out to be closer to the final judgment rendered by the court: Ellison said Oracle deserved $4 billion, and SAP said the damages should not exceed $40 million. The court ruled for $1.3 billion—that makes Oracle's request off by a factor of 3, and SAP's off by a factor of 35. Either IP is worth protecting vigorously or it's not—and the court's ruling (and it's certainly subject to appeal or other possibilities) came in much, much closer to Oracle's sense of justice than to SAP's. So I just don't get how Oracle's assertive and aggressive efforts to protect its intellectual property was "an unfortunate distraction" or bundled up in "shenanigans" and a "circus atmosphere."
So folks, please bear in mind that Josh Greenbaum has probably forgotten more about enterprise software than I will ever know. And in spite of my disagreements with some of his points herein about Ellison and Oracle and the dynamics swirling around them and SAP and IBM and HP, I continue to believe that Josh's analyses of enterprise software are indispensable for anyone seriously involved in this business.
I just happen to think that a lot of what Larry Ellison's doing right now is having deeper, wider, and more-enduring impacts on the IT industry and its customers than most of us are willing to acknowledge.
Bob Evans is senior VP and director of
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