Inside Oracle: A vendor dossier

Ellison Inc...

Ellison Inc...

Oracle is one of IT's heavyweights, an enterprise software company many users turn to and one that keeps the pressure on Microsoft's climb up the value chain. Sonya Rabbitte has been following the company for several years. Here's her insight... At a recent Oracle conference one member of the company's sales brigade was excited. She'd been with Oracle nine years but never seen CEO Larry Ellison speak. It was to be her big day.
No doubt Ellison did not disappoint. Oracle's CEO is a charismatic wordsmith. Immaculately groomed in designer suits and with a Californian sun tan there is something of the modern-day evangelist about him. Indeed, he could probably sell heaven to an atheist. Not surprisingly, then, Larry - because, like Madonna, he requires no surname - has staff who shower him with a reverence usually reserved for deities. They might chuckle at rumours about plastic surgery or gossip about his partner but when it comes to the crunch he is revered. And perhaps feared. Oracle has built its reputation and credibility as much on the man as the products. Without Ellison there is no Oracle. As much as Bill Gates is seen as the class swot in software circles, Ellison is the suave sports captain, the golden-mouthed debating team winner, the guy who gets all the girls. But how much substance is there to Ellison's and, by implication, Oracle's charm? The company has come under fire for sales tactics that can be as aggressive as Ellison's tongue. Just last month Oracle cancelled a $95m deal with the California state government following allegations of underhand negotiations and dubious political donations. Also, not too long ago analysts at Gartner Group and Meta were advising clients to call lawyers before paying Oracle. Customers alleged the company adds additional fees when contracts are renewed. The problem with Oracle, according to many watchers, is that it operates with just one man at its helm. The company has recently suffered a brain drain, with one senior executive after another resigning In the past two years Oracle's executive team has dwindled with the loss of influential COO Ray Lane and senior sales executives Sebastian Gunningham, Jeremy Burton and Gary Bloom. Ellison has said he does not need a second in command. But one senses all is not right at the Redwood Shores headquarters. Ray Lane recently questioned his ex-boss' approach to management. He told silicon.com: "It is the kind of company that can run like that [single-handedly] but what happens when Larry goes off to do the Americas Cup? That's when the politics start." But before he sets sail Ellison has laid out his strategy for the next year. Oracle's plan of attack remains firm. The future is databases - no surprise there - and especially building databases on clustered computers. Oracle's vision is exemplified by a deal that sees Dell hardware, Red Hat operating system software and Oracle databases together. The trio recently agreed to work together on distribution and development of Linux for databases - an alliance dubbed Unbreakable Linux. This latest strategy uses real application clustering, a computing process unveiled by Oracle about this time last year. The idea is simple: buy an IBM mainframe and the chances are much of that expensive computing capability will go unused until a company's computing demand grows to fit. Opt for Oracle's clustering and computing requirements are spread across a 'cluster' of powerful PCs/servers. Businesses add or subtract computing power as they need it. Oracle seems to be changing its approach to customers too. Not long ago the database giant aimed at Fortune 100 companies. Now talk is of the mid market. While Ellison may think Oracle is including the little man, one Eastern European hack was quick to point out at a recent Q&A session that Oracle's definition of a SME - companies with a market valuation of $500m-$1bn - is about proportionate to the annual budget of the Latvian government. But for those who can afford it, Oracle is keen to not just sell the software but host and manage it too. So much so that Tim Chou, head of Oracle.com, has predicted 50 per cent of customers will have a hosting contract within five years. Sales staff are being trained to offer hosting services with every contract and for the first time each country must meet hosting contract targets. But not even Ellison gets it right all the time. Back in January he was almost certain June would greet us with an economic upturn. CFO Jeff Henley said "the worst is over" and forecast fourth quarter profits of 17 to 18 cents per share But June has come and gone. Oracle missed its target, posting 14 cents per share earnings. At a European conference in June Ellison reined in his previous optimism, saying the economic recovery would be "ugly and brutal". "This IT recession will be a killing field," he said. It was typical Ellison. Speak now and grab the public attention, and let the PR minions do the damage limitation exercise later. In this last case, should we hope he's wrong or right? Whatever, the industry will keep listening.