The fundamental problems plaguing Oracle won’t go away with Larry moving into an executive chairman role, this is more lipstick on a pig than a serious attempt to get the company back on course. The problem is that shuffling the deck chairs does nothing for dealing with the company’s three fundamental problems. Until these are addressed, I think it’s safe to assume there will be no turnaround any time soon.
Problem #1: Oracle needs to do something about its hardware business — jettison is the verb that comes to mind, or at least it needs to stop putting its iron foot forward (or in its mouth) and start talking about higher margin lines of business and more strategic offerings than more heavy iron. It’s the era of the cloud, and pushing a 12-cylinder gas-guzzler when everyone is moving to electric cars shows the atavistic mindset of a company that desperately needs to respond to market as it exists today, not the market that Oracle wishes existed.
That’s going to be impossible considering who is left in charge: Mark Hurd. Here’s why: The hardware business acquisition came as the result of an agreement between Mark Hurd when he was at HP and Larry to keep IBM from buying Sun and getting the Java brand. The original deal was that Larry would buy Sun, and then immediately spin off the hardware division to HP. This looked like a great deal for all (except IBM), and then Mark had a little problem and had to leave HP. Larry hired him pretty much immediately and gave him the hardware assets they had just bought from Sun as his new bailiwick. And the stage was set for an overemphasis on a moribund hardware market and a de-emphasis on enterprise software and cloud leadership. The numbers speak for themselves.
Problem #2: Oracle needs to do something about its software business. The RDBMS market is dying, and Oracle is much too dependent on this market for its own good. Some financial analysts are waiting for a new release of the flagship DBMS as though that will blunt the challenge from an evolving market more interested in the requirements that are driving a surge in no-SQL, in-memory, and unstructured databases than the traditional transactional world that Oracle still lives and breathes. Meanwhile, Oracle is simply not seen as an enterprise software innovator – Larry sucked the juice out of his software side in order to over-emphasize the hardware side. Both of these problems mean stasis or worse for Oracle in a market that simply won’t tolerate any vendor standing still.
Problem #3: Oracle has to fix its overemphasis on lawyering and under-emphasis on customer satisfaction. Exhibit one is the fact that Oracle pre-emptively sued the State of Oregon for the failure of Oracle Consulting to successfully implement Oregon’s ACA website. This is a first – I can’t find a single case where the vendor, who in this case was also the prime contractor (at its own insistence), went after the client in court before the client got there . Sure, there are always countersuits, but if anyone reading this can think of a time when a vendor drew their legal weapons first, please let me know.
Failure is an orphan – always my favorite JFK quote – but that’s almost never the case in a failed implementation. It takes two parties to screw things up as badly as what happened in Oregon. But one of the parties has the knowledge, the methodology, the experience, and the responsibility to pave the way for success, and that’s the prime contractor. Granted, SIs fail in that requirement all the time. But the hubris of blaming the victim – implicit in a pre-emptive lawsuit – is egregious beyond measure.
Oracle has always made customer-hostile selling and contracting part of its business model, as many customers who came into the Oracle fold due to an acquisition found out when their maintenance contracts were unilaterally changed in Oracle’s favor. This culture won’t change with Larry as executive chairman and Safra and Mark in charge. It’s just going to be business as usual.
So, Larry, thanks for the lipstick. But I’m not impressed. This might fool some investors, but judging by the stock’s performance on the day following the announcement, they’re not buying it either. What’s your next big idea? Cause you’re going to need it soon.