Larry Ellison's move to step down as CEO of Oracle to become chief technology officer as well as making Safra Catz and Mark Hurd co-CEOs was smoothed over by promises that nothing will change about the company's approach, day-to-day operations or strategy. Are those steady-as-Oracle goes promises a good thing?
Let's get real. Ellison's move to step down from CEO may not amount to much given that Catz and Hurd were effectively running the company anyway. Ellison played large roles in technology and strategic direction, but often seemed more at ease running his America's Cup team.
Aside from title changes, Ellison, Catz and Hurd will likely operate the way they always have. The issue is that Oracle has moved from a technology company to a cross selling machine. Oracle acquires software, cloud and hardware companies, bundles them and sells. Yet Oracle is facing multiple challenges ranging from a transition to the cloud, declining hardware sales and a customer base that is likely to use the company's core relational database as well as alternatives for big data workloads. In other words, Oracle isn't the only database in town.
Here's the exchange that made me go hmm:
Karl Keirstead, an analyst at Deutsche Bank said:
My question is back to the leadership changes. And, in particular, I'd love to learn a little bit more about how these changes might trickle down into the rest of the Oracle organization. Safra, you touched a little bit on the CFO role, and how I think you left a message that really no significant change. I wanted to ask, Mark, as you transition to your new role, whether that would result in any change on the sales leadership and sales structure side as well?
Karl, I just want to make sure, we are very, very clear. There will actually be no changes. Okay? Not no significant changes. I just want to clarify. No changes whatsoever.
Karl, I don't want to be short, but it's just not in my view we're pretty flat. And in terms of the way we run the place, and we want to keep it that way. So I want to stay close to the action, not get farther away from the action. So to be direct, the answer is no. But I wanted to make sure that you heard the rest of that.
Oracle's strategy — embrace cloud, win on applications and keep database customers with in-memory options — can work. But the transition will take time. Will Oracle get more or less patience from customers and investors with Catz and Hurd in charge over Ellison? It's a safe bet that Oracle's dynamic duo will get less. We'll know more about customer reaction at Oracle's OpenWorld conference that kicks off Sept. 28 in San Francisco.
To recap here are Oracle's challenges in a nutshell:
The cloud. Last week on Oracle's first quarter earnings conference call, executives knocked Workday at every turn. Hurd touted more HCM wins and noted that Oracle added more customers in one quarter than Workday has had in its history. Oracle also said it wants to be the biggest cloud company on the planet. However, cloud revenue will take away from applications licensing. Meanwhile, it's unclear whether Oracle's cloud wins are defensive to keep customers under a different business model or greenfield additions.
Database. Wedbush analyst Steve Koenig said "database results weren’t as robust as we would have expected given Oracle’s new in-memory and multi-tenant options." Oracle's 12c product cycle is worth watching because it'll tell you all you need to know about the company's future health. Ellison also plugged Oracle's database as a service launch coming at OpenWorld.
Applications. Oracle is moving its applications customers to a subscription and cloud delivery model. However, cloud customers aren't locked in as easily. Oracle will have to continue to deliver innovation to keep those app customers in the fold.
Hardware. Oracle's hardware business has stumbled for years. This first quarter also highlighted the hardware woes. Oracle's engineered systems sell well, but high-end servers are getting thumped. Oracle is banking on high-end systems to make its hardware unit worth talking about.
Weak performance. Oracle has missed five out of the last seven quarters. At some point, patience wears thin.
Perhaps Oracle has the perfect strategy to navigate these turbulent technology waters. Or Oracle may just have to tweak everything from its sales approach to roadmap to executive ranks. Simply put, it's far too early for Oracle to promise that nothing will change. Those promises could be downright scary to keep.
ZDNet's Monday Morning Opener is our opening salvo for the week in tech. As a global site, this editorial publishes on Monday at 8am AEST in Sydney, Australia, which is 6pm Eastern Time on Sunday in the US. It is written by a member of ZDNet's global editorial board, which is comprised of our lead editors across Asia, Australia, Europe, and the US.