Oracle apps: an innovation free zone since 2006?

Oracle apps: an innovation free zone since 2006?

Summary: Last weekend, Vinnie Maintenance Mirchandani took a calculated swipe at Oracle, describing the levels of innovation from that company as 'anemic:'Oracle, in my opinion, has forgotten how to develop code. Its top executives are deal makers, not technology visionaries.

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Last weekend, Vinnie Maintenance Mirchandani took a calculated swipe at Oracle, describing the levels of innovation from that company as 'anemic:'

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 [Worthen - WSJ] touches on that also in his article.

Ouch!

To her credit, Karen Tillman, Vice President Corp Communications Oracle jumped in with:

This is something customers want and need, and not everything we release is radically innovative - that's not what customers want. The real strategy that works for customers is to build products that will meet future needs (i.e. Fusion) while continuing to deliver products today that meet their current needs.

Also, want real innovation? Try Exadata. Try social CRM.

Vinnie slams back and then Karen enumerates a bunch of stuff going on at Oracle, topping off with:

Clearly innovation is subjective!

This last point is a good one because the way I read Oracle's definition of innovation - at least according to the timeline on their own website - is as a series of 'firsts.' What is shocking is that list stopped being updated in 2006. You can argue as Vinnie has that Oracle has been innovating by scooping up large chunks of the enterprise apps market. The numbers bear that argument out.

In the financial years 2007, 08 and the first 6 months of '09, Oracle took $8.8 billion in applications software licenses and product support revenue. In the same period it enjoyed profit before tax of $17.3 billion. It also acquired 21 companies that could be regarded as directly related to the applications business if you exclude middleware provider BEA. Including BEA, the total amount added to intangibles and goodwill on Oracle's balance sheet was a net $12.4 billion during that 30 month period. This represents the cost to Oracle of acquiring the 22 companies over and above their book value. At a stretch, you could argue that Oracle has invested this amount in 'innovation.' When you weight the numbers, those acquisitions sure ate up a lot of Oracle profit.

But that doesn't address the more substantive issue about innovation that reaches the customer. After all, isn't that part of the reason behind maintenance and support costs? That's what software companies usually want us to believe.

Karen mentions Social CRM - this is something I have seen at first hand. It's cute looking and while I kinda shrugged - it is after all a relatively simple, if effective mashup - Paul Greenberg credits Anthony Lye, SVP Oracle CRM as a visionary. I'm not going to argue with Paul, he's way too long in the CRM tooth. But is that all we can really point towards with any degree of certainty as representative of innovation coming out of Oracle development?

Oracle has been promising Fusion for years. Each time questions are asked about delivery, the answers become vaguer and vaguer. My sources tell me that as time passes, the Fusion team sees the work needed to integrate the 22 acquisitions and becomes increasingly disheartened.I have no doubt that Oracle has sunk a fortune into making Fusion a reality but isn't it time customers saw something substantial?

Innovation can have many definitions but in the software world in which I live it means presenting something that provides me with a better, more cost effective and/or revenue enhancing way of getting things done. In a recessionary economy that's an absolute must I hear time and again. How then can Oracle justify its place at the buyer's table if all it can offer is a smorgasbord of acquired functionality, much of which is tuck in or required to flesh out incomplete offerings, ageing apps plus something sexy in CRM? Oh yes - and with a 22% maintenance price tag?

Topics: Emerging Tech, CXO, Oracle

Dennis Howlett

About Dennis Howlett

Dennis Howlett is a 40 year veteran in enterprise IT, working with companies large and small across many industries. He endeavors to inform buyers in a no-nonsense manner and spares no vendor that comes under his microscope.

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11 comments
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  • Timeline Error/Innovation Continues

    FYI, we retired (but apparently did not delete) that old timeline in 2007
    when we launched this:

    http://www.oracle.com/timeline/index.html

    So, innovation continues. You just weren't looking at the right record.
    aaron.lazenby@...
    • Search?

      I'm sorry dude but that's what came up when I searched Oracle's website so please don't shoot the messenger, shoot the idiot who left it in place AT Oracle and as part of the search. Now - as it happens, I also saw the other link to which you refer but quite frankly, there wasn't a whole lot there I could get excited about.
      dahowlett
      • Overreaction

        I didn't see the need for your reply to take the tone it did, calling the poster "dude" and referring to someone who made a mistake as an "idiot". The poster wasn't even criticizing your blog or "shooting the messgenger"; he was simply providing information.
        Bob C User
  • RE: Oracle apps: an innovation free zone since 2006?

    Hey Dennis - So, our bad for not deleting the old timeline. However, I do think it's worth pointing out what the new timeline says about Apps Innovation beyond 2006...I'll leave out Tech, but there were major "innovative" enhancements there as well. A few highlights- Apps Unlimited, Application Integration Architecture, new releases of Siebel CRM on Demand, etc.
    K. Tillman
    • Credit where due

      Karen - thanks for responding. While I tacitly acknowledge what you say, it is clear we are talking different definitions of innovation. I hope that came across.

      As you know, Vinnie put some bald numbers on the stuff you mentioned, I've taken a different approach but there is little doubting that money only stretches so far. I do worry about the 'we added functionality' argument though because as these apps age, I wonder the extent to which Oracle is falling into 'bloatware' territory.' Could some of those additions be regarded as innovative? As you say - all in the eye of the beholder.
      dahowlett
      • add the numbers up

        I challenge Karen and Oracle to list the major "innovations" it has delivered in the last 5 years.

        If they add up to more than $ 2 billion in development costs, I will give Oracle more credit than Google and Apple and amazon on my New Florence innovation blog. Against this Oracle has collected over $ 75 billion from customers over the same time.

        As I mentioned on my blog Oracle EBS 12, probably one of the biggest pieces of code they have delivered could not have cost more than 100 million. And has been adopted by less than 5% of its customers. Most everything else is tweaks and in the meantime they have acquired plenty of code to harvest from, offshored lots of development - so internal development costs have declined nicely.

        Now you could make the point customers do not expect much innovation from Oracle - they expect industrial strength stability. Then I would like to see how Oracle has improved its code quality, service SLAs, quality of implementations - CMM, Six Sigma, better SLAs etc etc

        We are talking $ 75 billion here over 5 years. That's more than what Obama is taking heat for in many line items in his stimulus package. We are talking some real money here.

        Where is the value for that spend in innovation, in base service etc?
        vmirchan
  • RE: Oracle apps: an innovation free zone since 2006?

    Don't care about Fusion. Oracle's APEX (Application Express) seems pretty enough for me.
    prosvet2@...
    • Say more

      So why might that be? It heps people like myself to understand the context in which you are making the case. Thanks.
      dahowlett
  • RE: Oracle apps: an innovation free zone since 2006?

    Well? It is a database! What do you want it to do?

    There is only so much you can do with a DBMS! Even Microsoft is starting to back down from the "Windows is everything" idea (Windows 7 is Windows without all the integrated crap,,,, maybe).

    A DBMS is an app, not an OS, like the idiot running Oracle had in the back of his over-sized brain. OK, I know he hates MS, a lot of companies have $ envy of MS. They want the big bucks? Then they have to jump in the shark tank and survive like MS did. MS made it big, not because they had windows. Hell, Apple had it first and they did not take the market by storm. Why did MS? STANDARDS! MS forced standards on the industry and forced all the proprietary mis-fits out of the tank (or snacked on them). Now all programs play in the sandbox together, whether they like it or not. When someone finds the next big thing the industry needs, all the non-conformists, including MS, if necessary, will be snacked on by the new big bas &$$ shark in the tank.

    So Oracle, cannot innovate, if they don't find some new "thing" the industry needs! And maybe, Oracles time has past! Time for a new young upstart to find that niche and break it into a new shark tank! (just like Oracle did when it was young, strong, and innovative. (Such is the way of business.)
    Atari800
  • Skeptical about Siebel CRM on Demand

    I have to agree, if Oracle thinks Siebel CRM on Demand is innovative, there is not much going on. An article from SearchCRM over a year ago: http://tinyurl.com/arzmfx while lauding the integration of Oracle and Siebel on Demand, really points out the inherent contradictions between on premises and on-demand software. One quote should suffice: "The Oracle integration module is available for a one-time license fee of $35,000 per Oracle Fusion Middleware processor." And a license fee of 22%! Does this sound like an on-demand pricing model?

    The article points out that SAP also has an on-demand product, which they scaled back and are struggling with. The WSJ commented on their struggle with on-demand: http://tinyurl.com/5vevzg .

    Do you know if Oracle has been able to sell Siebel CRM on Demand? Doesn't seem like a viable strategy to me, but maybe I'm wrong.

    Thanks,
    Bob Johnson
    http://www.cloud9analytics.com/
    bajohnson111
  • RE: Oracle apps: an innovation free zone since 2006?

    YOu know, there's one point that seems to be glaringly obvious to me (now that my LASIK procedure has been completed. :-)) Yes, our customers have paid $75 billion. The vast majority of customers appreciate upgrades (again, innovation is subjective then sometimes mundance improvements can make all the difference for customers), 24 x 7 support, bug fixes, legislative updates, tax updates, etc. There are some things that go into products that may not blow Vinnie's socks off, but are highly valued but are highly valued by the end users. And, i understand your skepticism around Fusion - but in all fairness - we haven't shown it to you. So, I guess I'd ask for a little leap of faith that perhaps we have takes some major innovation into the product. The idea certainly isn't out of the realm of possibility, given the brain trust within Oracle. I just don't think it's possible to totally quantify investments as you have done above. Again, what you may see as cool may not be the same as some of our core customers.

    KT
    K. Tillman