Oracle CRM: spot the disconnect

Oracle CRM: spot the disconnect

Summary: Despite all the glowing reports about Oracle SocialCRM among my fellow bloggers here and elsewhere, I had an uncomfortable feeling. Something didn't quite jibe with me.

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Despite all the glowing reports about Oracle SocialCRM among my fellow bloggers here and elsewhere, I had an uncomfortable feeling. Something didn't quite jibe with me. Step back about three months when I attended an internal Oracle EMEA marketing meeting. I saw Sales Prospector and listened to the pitch but was sort of impressed but not totally bowled over. Somehow I couldn't connect the inclusion of Yahoo! News and Google as being remotely 'social' though I did get the bit about connecting with others. Oracle then pitched it at Enterprise 2.0 Boston. While the pitch might have been OK in another setting, the audience was pretty hostile.

This is so typical of the software industry. A meme gains traction, enough noise is made for it to become a talking point and wham! Before you know it, every man and his dog is adding the meme or moniker to whatever the next thing is that they're peddling. It used to be the case that such memes came from industry analysts, notably Gartner, doyens of the Three Letter Acronym or TLA. That's how we got ERP, CRM, SCM, BPM, BPO...you get the picture. Now it's the social media crowd hanging out at Techmeme that get to make the noise.

Don't get me wrong. Sales Prospector is a very good looking product and the demo I saw was slick at the surface level and the interface is a darned sight better looking than most I've come across the last few years. Then the penny dropped.

In and among the hubris, Larry Dignan caught up with Anthony Lye, senior vice president of the company’s customer relationship management software unit, quoting him as saying:

“The CRM business at Oracle is growing significantly in every single region. It’s growing at double digit on premise and in triple digits for on demand”

Eh? How does that  match up to what was said on the earnings call? If you check this Oracle earnings transcript post from 18th September at Seeking Alpha, you'll see there is very little emphasis on CRM. Four mentions, none of which make the same claims. That despite there is a major internal push and the emphasis it received at OpenWorld. Instead, Safra Catz, the company's co-president and CFO said:

Our applications license revenue contributed $331 million in the quarter and that is down by 12% in the quarter, primarily due to the 65% applications growth we had last Q1. We are extremely pleased with our execution and growth in our applications business, since our application license revenue has more than tripled over the last three years.

Spot the disconnect? If CRM is so good wouldn't the company yell that from the rooftops? They're pretty good at that sort of thing. Instead, the only deal they mentioned was Farmer's Insurance where they beat out Salesforce.com and SAP. Or maybe it's the other stuff Oracle sells, like good ol' databases that's taking the hit? But the biggest problem I have with Oracle and SocialCRM in particular is that we are way too early in the cycle for this type of product in the broad enterprise market and at a time when IT budgets are being crimped.

Oracle will need to make an incredibly good business case for this to fly. Current evidence is clearly divided. So while the UI and graphics are a welcome step forward, that isn't enough to win over customers who will be asked to shell out more in license fees plus the inevitable 22% support cost.

Topics: Enterprise Software, Oracle, Software

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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8 comments
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  • Oracle's 10Q and CRM

    Some more color from the 10Q:

    On Demand revenue growth was positively affected by foreign currency rate fluctuations of 4 percentage points in the first quarter of fiscal 2009. Excluding the effect of currency rate fluctuations, On Demand revenues increased in the first quarter of fiscal 2009 due to an increase in each service category?s subscription base as more customers engaged us to provide IT outsourcing solutions. On a constant currency basis, Oracle On Demand, Advanced Customer Services and CRM On Demand contributed 41%, 52% and 7% to our On Demand revenues growth, respectively. Excluding the effect of currency rate fluctuations, the Americas contributed 54%, EMEA contributed 19% and Asia Pacific contributed 27% to the increase in On Demand revenues.
    Larry Dignan
  • RE: Oracle CRM: spot the disconnect

    Hi Dennis - note of clarification. Anthony's comments were in reference to our last fiscal year, not to our last Q1.

    Thanks - KT
    K. Tillman
  • RE: Oracle CRM: spot the disconnect

    An additional note of clarification, Dennis:

    Oracle Social CRM applications are sold as on demand (SaaS) offerings. Therefore, the following comment in your post regarding Oracle Sales Prospector is factually inaccurate: "So while the UI and graphics are a welcome step forward, that isn't enough to win over customers who will be asked to shell out more in license fees plus the inevitable 22% support cost."

    Steve Diamond, Oracle Employee
    steve_san_carlos
    • I'd be interested

      Thanks for that Steve - in which case I'd be interested in learning how the pricing works then, given what Larry D has surfaced from the 10Q
      dahowlett@...
  • RE: Oracle CRM: spot the disconnect

    Seeing Anthony Lye's presentation on Oracle's CRM vision, I think there's no question they deeply understand the business case. Whether the nice UI translates into business benefits -- more efficiency, easier to use, etc, is another matter, however.

    For me, there are two meaningful issues, although both are off-center from the point behind your post:

    1. The Social CRM product legitimizes Enterprise 2.0 for large companies. I think that's a big deal.

    2. The team is passionate and creative about creating great software. That's a breath of fresh air in the general enterprise world, which produces so much crap.

    [By the way, I really wanted to write about the business vision behind these products, but despite many (and repeated) requests, no one from Oracle was willing to give me Anthony Lye's presentation.]
    mkrigsman@...
    • We'll see

      I have no doubt that they're excited and passionate. Software marketers usually are when it comes to the latest shiny new thing. Don't get me wrong, I like what I see. But there is a world of difference between what looks great and what can be sold into the enterprise.

      One caveat I have is about the sharing element. Sales people are notorious for hoarding information so implementing the solution will require an element of change management in many organizations.

      I am mindful of just how hard it has been for the social media mavens, who have long touted this stuff, to come up with more than a smattering of use cases. Even then, most are smallish in scope and impact. We are very early in the life cycle on this and I am much more cautious in my view today than I would have been a year ago.

      The one thing I don't know is how they will build the business case and how that will be translated into business benefit. It would be interesting to learn more about that element rather than concentrating on the bells and whistles.
      dahowlett@...
      • Business case

        I'll grant you that the key issue remains whether the business case is strong enough to overcome the seemingly natural tendency of salespeople to hoard, rather than share, information.

        I'm also interested in Oracle's answer to the disconnect you raised in the post: is Oracle really and truly experiencing the CRM growth they describe. If so, then why not more top-level emphasis? For example, why did Charles Phillips talk about Beehive, rather than Social CRM, in his keynote.

        We disagree on a major point, however. I don't view the social aspect as merely bells and whistles, to use your term. Rather, it represents the tip of an important iceberg in terms of improving collaboration in a meaningful way. I'm sure you would agree that's goodness.

        Also, enterprise software needs better user interfaces based on learnings available from mass market consumer software. Much of the debate around whether or not enterprise software is sexy hinged on UI and workflow problems with enterprise software, relative to what's been available for a long time in the consumer world.

        There are solid reasons making it a difficult, and sometimes almost impossible task, to build sexy enterprise software. Therefore, I strongly applaud anyone making serious inroads in that direction. You call it "marketing"; I call it "forward-thinking design."

        [I still don't know why Oracle won't share some of these presentations. The stuff has been put out there in the public eye; why not let us scrutinize them a bit more closely?]
        mkrigsman@...
        • We're not that far apart

          ...but as the natural skeptic and having been burnt by being overly enthusiastic about some of this stuff in the past I really want to see the business gains.

          I really think that there is a lot to prove and in a tight economy CXOs will bethinking hard about where to make their IT investments. This is a version 1.0 in many senses (as Larry pointed out) and I'm not sure there are that many businesses out there right now willing to make those sort of bets before squeezing more cost of their businesses through productivity efficiencies while at the same time ensuring they're in compliance.

          But as always I'm happy to be proven wrong.
          dahowlett@...