It's a while since I read Bruce Richardson, chief research officer at AMR but a couple of his most recent posts rang bells with me. The first: Who Drives Software Innovation? The “Best-of-Breed vs. Giants” Debate raises a donkey's year old discussion where he concludes:
Call me cynical, but I believe today’s large vendors are more interested in commoditization than innovation. Ideally, they want to be able to sell a generic version that will appeal to customers across dozens of verticals, hundreds of countries, and tens of thousands of customers. For them, true breakthrough innovation doesn’t scale.
I'd go further. The large companies are little more than financial engineering outfits with Wall Street masters. If you track Oracle's history, you'll quickly see they are masters of managing investor expectation. Sam Diaz most recent report says it all: Oracle bucks trend; beats Q4 estimates.
Sure, they understand innovation but do we see it? Do they talk about it in any meaningful way? Often the answer is 'no' or it crops up in tiny pieces. That's because of the generic nature of what they offer. They may be in x-industries but you can be sure they only touch 15-30% of any particular company's requirements. That's not to say innovation doesn't happen from the efforts of the larger tech companies.
In the last couple of weeks I've heard stories of several brand leading enterprise customer projects that are truly changing the way they do business through technology. Mostly with sensor and predictive analytics capabilities plus hardcore integration. No sex, no sizzle but making a huge difference for both consumers and the companies themselves. If I ever get clearance, I'll write them up. They beat the heck out of anything you'll hear from Enterprise 2.0 hand wavers.
More broadly, Bruce is right. Time and again, the most striking innovations I've seen over the years come from the smaller companies (ie best in class/breed) that no-one hears too much about in the mainstream until they either get acquired or themselves turn into giants. There are of course exceptions in the non-tech world: Wal-Mart, Harrahs, P&G to name but three. Can we say the same about large tech companies? Not really. They look at their balance sheets and cash reserves, shrug and say 'We've got a successful business model.' Back to Oracle and Bruce Richardson.
Anyone who has met Bruce knows that while his public statements may not always be so strong, his private opinions often get to the heart of issues in an unvarnished manner. That makes him eminently quotable and fascinating in discussion. In his second piece entitled Oracle Set to Kick Off 100 Days of Innovation, Bruce recounts what happened when he met with Oracle to be pre-briefed on the upcoming Fusion Middleware launch:
I had been warned by friends inside Oracle that some of the company’s executives had taken exception to a recent blog post I had written—Who Drives Software Innovation? The “Best-of-Breed vs. Giants” Debate. Sure enough, we had barely sat down for our meeting with Sonny Singh before the Oracle SVP brought up the topic. And he wasn’t the only one to mention it.
As it turns out, my [first] post came out just as Oracle was putting the finishing internal touches on a new 100 Days of Innovation campaign to tout the company’s development skills. As one marketing executive explained to me, Oracle is doing this to counter all the negative press about the poor state of the economy and promote the company’s organic innovation. “There is a perception in the Valley that we have to acquire innovation. That’s not true,” the executive said.
Translation: Bruce got his ears singed by a ticked off Oracle exec. They're (in)famous for doing that because as one Oracle person recently told me: 'They don't like people messing about with the message.' In this case, Oracle PR and marketing doesn't want Bruce punching the wind out of their messaging sails in advance of the company's '100 Days of Innovation' campaign. Yawning already? Well get ready for this:
Mr. Singh sees innovation at the point of convergence, and offered two examples. One is innovation at the user interface. In this case, he described the “seamless convergence of structured information and transactions with unstructured information and transactions.” Examples of unstructured transactions would include search or collaboration. The net result is a much more productive user experience.
Does this mean we'll see more than year old SocialCRM, the mashup of some Google tools, other bits and pieces plus Oracle CRM that has been positioned as 'innovative?' Twitteresque integration perhaps? If so then they're going to have to do a lot more to convince than what I have already seen. Oracle's transaction UI sucks mightily so unless they've got something akin to SAP WebDynpro client (which is a vast improvement on the pug ugly SAP GUI) to show then expect a lot of groans and dings. Concidentally, I hear that Fusion apps may in fact be a reality in the not too distant future. But then we've been hearing that for five years. Moving on:
For his second example, he pointed to Oracle’s Application Integration Architecture (AIA): “AIA is not ‘net new,’ but what it delivers is innovation.” He then described a customer that had spent more than a year working with an integrator to build a custom billing system. Today, that customer could use AIA to orchestrate or sew software components into a seamless, end-to-end business process. The whole project could be completed in a fraction of the time.
Yeah right. Can someone please explain to me where the innovation comes from getting your applications to actually work? C'mon, you've got to do a lot better than that. I could equally point to situations where Oracle has sold product that took eons to get working. That should not be a surprise when you bear in mind that Oracle, along with SAP in particular, are not providing end to end business processes at all but generic functionality bundled up as a toolbox the customer has to build. In this case, it sounds like Oracle is disguising a SOA project as the logical means for creating end-to-end business processes. If so then they'd better have a fast track way of doing that at sensible cost.
Here's the difference as I see it between 'innovation' as defined in this case by Oracle and what I see in the smaller company/start-up markets.
For me, innovation is about creative destruction and the emergence of something new the drives business value following a pattern of past commoditization. Simon Wardley is a good source for discussion on this topic for which I suggest trawling through his utility computing posts. If you believe in this general theory and then compare it to Bruce's analysis, it quickly becomes apparent that the big vendors are largely 'stuck' in an old model. It is for that reason I caution anyone to make sure they're carrying a sack of salt when 'innovation' is mentioned by companies such as Oracle.