My friend and colleague Vinnie “the Deal” Mirchandani took aim at a lackluster PR release by Oracle as emblematic that Oracle has lost the art of software innovation, in favor the art of acquisition. That’s a rough synopsis, read the full post and Karen Tillman’s well-tempered responses here. As someone who tries to keep a finger on the pulse of innovation, particularly with companies like Oracle, I’m going to beg to differ. Though much of the innovation that comes from Oracle these days is through acquisition, there are a couple of pretty significant pieces of innovation either already released or waiting to be released by Oracle, and more on the way.
The main piece of innovation, still very much in the hopper, though definitely delayed vis a vis its initial, rather optimistic, timetable, is Fusion Applications. We could argue ad nauseum whether what analysts and Oracle Open World attendees saw last Fall was truly innovative, but I can assure you the art of coding, to use Vinnie’s term, is hardly dead at Oracle. As I’ve written elsewhere, the presentation to the analysts was three hours or so of mind-numbing detail, delivered in dry, mind-numbing fashion, that showed that considerable progress had been made on Fusion Apps, with a lot of functionality and a lot of interesting new user interface work in evidence, to say the least. The fact that Oracle hasn’t been running full tilt to the market with Fusion Apps may be more due to the pipeline-killing effect that something that new can have on existing product sales than anything else (for more on this, read my column in Managing Automation here.)
More innovation is coming out of Anthony Lye’s CRM group, in the form of the very interesting social CRM apps, also well-documented and reported on. I’ve had a number of briefings over the last few months, and I would say that innovation is alive and well at Oracle, and anyone, particularly a competitor, who thinks otherwise is seriously misjudging Oracle in the marketplace.
The remainder of Vinnie’s post begs a relatively complex question, which is whether Oracle’s customers have gotten enough value for the $75 billion they have spent on Oracle in the last five years. Vinnie makes a complex problem a little too simplistic by lumping all customer spend in one big bucket that includes net new customers, existing customers who are buying net new functionality, and everyone who is paying for maintenance and service. IMO it’s a little too big a bucket to support a discussion of whether customers are getting enough innovation from the company.
But that’s not to let Oracle or anyone off the hook regarding the value of their spend with their vendors, particularly the 22 percent entitlement, I mean maintenance, fee that is now the norm in the industry. Every vendor needs to think hard about what it’s doing with not just their customers valuable maintenance dollars, but more importantly what they are doing with the much more valuable customer relationship on which this spend is based. If Vinnie is right, that there is little to show for that spend, then shame on the vendors for gouging their customers, and, shame on customers for putting up with that gouging. If he’s wrong, then, it’s the vendors’ job to show that all those revenues actually result in something positive for the customers, instead of just something positive for investors.
I think in the specific case of Oracle, there is something to be said for how they spend their R&D budget, based on Fusion, social CRM, and other new application innovations in manufacturing, finance, and logistics, to name a few. I suggest in particular that Vinnie be given an updated version of the Fusion mind-meld I was part of last Fall. And then let’s have a debate about whether Fusion Apps are innovative or not. Knowing Vinnie, that would be a lot of fun.