The Innovator’s Dilemma, Oracle Style

The Innovator’s Dilemma, Oracle Style

Summary: Is Oracle an innovative company, as Charles Philips contended, or is it more of a legacy apps company largely focused on protecting its equally conservative customer base? This was the gist of an interesting discussion among the Enterprise Irregulars following our meeting with Philips, and one that I explored in subsequent discussions with other Oracle executives and customers on day one of Oracle OpenWorld.

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Is Oracle an innovative company, as Charles Philips contended, or is it more of a legacy apps company largely focused on protecting its equally conservative customer base? This was the gist of an interesting discussion among the Enterprise Irregulars following our meeting with Philips, and one that I explored in subsequent discussions with other Oracle executives and customers on day one of Oracle OpenWorld.

My answer is that Oracle can and does innovate, and we will be seeing further proof of that in the aforementioned CRM application to be demoed this week. But Oracle's overall level of innovation may be not as innovative as Oracle would like to think, nor as innovative as the larger enterprise applications market is capable of. That may not be a problem in the short term, and clearly Oracle’s numbers prove that they seem to be providing the right degree of innovation for their customers. Today.

But is innovation Oracle-style really the way to go, or is there something that Oracle – and thereby its customers – may be missing in the Oracle innovation model? The answer is a definite yes.

At Oracle, innovation is largely driven by internal forces, and resources, many of which have come to Oracle through the acquisition of companies whose market-leading innovative days are several years in the past. In fact it could be argued that most of Oracle’s major acquisitions have been of companies somewhat past their innovative prime – Siebel, PeopleSoft, JDE, Agile, to name the main ones – and even some of the more exciting “edge” applications, such as G-log, Numetrix, Demantra, i-Flex, among others, are not so much innovative as representing good upsell opportunities for Oracle’s ever-broadening customer base.

The fact the these acquisitions weren’t by themselves representative of true innovation is not really a problem, partly because there were a lot of smart people who came over in those acquisitions, and they brought a lot of great ideas with them, many of which are surfacing this OpenWorld in applications and innovations that are truly worthy of the term.

But, as someone who works with a lot of early stage companies, I’m convinced that internally-lead innovation, no matter how well qualified, doesn’t necessarily lead to the greatest possible level of innovation. It’s one thing to give customers the innovation they are looking for, which is very much a key element of Oracle’s innovation model, and one that Oracle execs measure by the kudos – and license and maintenance fees – that customers are sending their way. But it’s another to lead the market – and not just follow it – with innovative applications that are actually beyond current customer thinking. These are the applications that the customer never imagined possible, not the ones that they wish their vendor would develop. And, as far as I can tell, it’s this class of innovative application that Oracle’s current development model makes it hard to come up with.

Granted, Oracle’s internal innovation resources are vast, and OpenWorld is showcasing a fair amount of that innovation, some of it genuinely impressive. But there’s a whole class of innovation that Oracle and its customers are potentially missing out on, and that’s the innovation that originates in garages and is sketched out on napkins around the world. To miss out on those innovations – by focusing on bigger, more mature acquisitions and internal development resources – means that Oracle’s claim to being an innovative company is limited.

In the long run this strategy will leave Oracle at a strategic disadvantage, even if in the short term their customers will be largely happy with the degree of innovation Oracle is currently offering. Oracle may want to rethink this strategy, or find an innovative way to deal with it. Before it becomes a distinct, and highly visible, disadvantage.

Topics: Oracle, CXO, Emerging Tech

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  • Big "I" vs little "i"

    Acquisition-based innovation is like a feature; when integrated, it adds to the functionality of the end product. But strategic Innovation is a new set of functionality altogether.
    3dguru