Is Oracle Dying......

Oracle Corporation was founded in Jun 1977 by Larry Ellison, Bob Miner, Ed Oates. Over the years, it has risen to become almost indisputable leader of the Relational Database Management System (RDBMS) market with 44% (Source: IDC 2009) – at least, for now, though, no one is sure how long that numero uno position will last. There were heady days of 1996-2008 or so when Oracle ruled the world of RDBMS. It was unchallenged crown king that could do no wrong. Hundreds of thousands of Database engineers, architects, administrators spoke of Oracle as if it was actually the famed “Oracle of Delphi”. Conference passes to Oracle Open World were so coveted that it was distributed to star employees in any company using Oracle Products. 

However, after 2008, the downward spiral was very perceptible to the database communities. The hush hush talks could now be heard loud and clear. Only that Oracle was perhaps hearing it but not listening. It continued to maintain the arrogance of a star past its prime - denying that it was aging, claiming that the talent would always trump the age.

I think the Oracle Goliath had forgotten that for every arrogant Goliath, there is a David that is bound to introduce it to its nemesis.  But my guess is that this downward spiral perhaps set into motion long before 2008 or so when rest of world started noticing it or at least it became very perceptible.

Time machine

Let us trace Oracle's journey through its very meager beginnings and how it lost its course along the way. The chronological sequence of this journey could be roughly as I have shown below:-

1977  SDL (Oracle's predecessor) founded

1978   Oracle Version 1 developed 

1979   First commercial SQL RDBMS

1983   Oracle Version 3, built on the C programming language, is the first RDBMS to run on mainframes, minicomputers, and PCs, VMS Based database
1984   first RDBMS to offer read-consistency
1985   Released of Oracle Version 5, one of the first relational database systems to operate in client/server environments
1986   Oracle goes public on the NASDAQ exchange
1987   Becomes world’s largest database company, Oracle gets into building enterprise applications, introduces UNIX-based Oracle applications
1988   Oracle Version 6 debuts with several major advances: Row-level locking, Hot backup, PL/SQL
1989   Oracle provides DB support online transaction processing (OLTP) and moves Oracle moves its headquarters Redwood Shores, California, campus.
1990   Launches Oracle Applications Release 8
1992   Launched Oracle 7, offers full applications implementation methodology
1993   Client/server environments enhancements
1994   Oracle earns the industry’s first independent security evaluations
1995   Offers the first 64-bit RDBMS
1996   Releases feature rich 7.3, Oracle to manage any type of data—text, video, maps, sound, or images, moves towards an open standards-based, web-enabled architecture
1998   With Oracle8 Database and Oracle Applications 10.7, Oracle is the first enterprise computing company to embrace the Java
1999   Offers its first DBMS with XML support
2000   Oracle ships Oracle E-Business Suite Release 11i
2001   Oracle9i Database adds Oracle Real Application Clusters,  becomes the first to complete 3 terabyte TPC-H world record
2002  Offers the first database to pass 15 industry standard security evaluations
2003  Oracle debuts Oracle Database 10g, more robust clustering software
2004  Declares Oracle “the Information Company” and spreads into many other areas
2005  Oracle completes the acquisition of applications rival PeopleSoft , releases its first free database, Oracle Database 10g Express Edition (XE)
2006   Declares a 30-year commitment to open standards computing with Unbreakable Linux—giving customers
2008   HP Oracle Database Machine/Exadata storage
2009   Gets into too many things - including BEA products, launch of Oracle Fusion Middleware, 11g advance Oracle
2010   Oracle acquires Sun Microsystems, announces Sun based Exadata/Exalogic machines
2011   Keeps adding bells and whistles to same Exadata/Exalogic machines
2012   Announces initiative focused on Cloud

Rise of Oracle

Most of the engineers in software industry were not even born when in late seventies, it struck young Larry Ellison, after reading the 1970 paper written by Dr Edgar F. Codd on relational database management systems (RDBMS) named "A Relational Model of Data for Large Shared Data Banks, that a software could be designed that could follow the principles of relational databases.  His belief was reinforced when he read an article, published in the IBM Research Journal, by Ed Oates of IBM about the IBM System R database. System R itself was based on Codd's theories. In 1977, Ellison co-founded Oracle Corporation with Bob Miner and Ed Oates under the name Software Development Laboratories (SDL) and in 1979, SDL was rechristened as Relational Software, Inc. only to change its name again in 1982 to Oracle Systems Corporation. In 1995, Oracle Systems Corporation changed its name to Oracle Corporation. From 1979 through 1992, Oracle primarily focused its attention on making its flagship product, Oracle RDBMS, strong. Oracle was getting complacent after version 5 and then it came out with version 6 – this was huge fiasco product and it was nightmare for customer support and Oracle support. Corporate customers were threatening to pull off Oracle. Version 6 was quickly followed up by version 7 which saved the day for Oracle. 7.3.4 turned out to be very stable product. Version 8i, 9i and 10g added to Oracle RDBMS core competence. These versions by themselves attracted customers to Oracle.  If everything was so good at that point in time and continues to be good then why do I particularly feel that Oracle could be dying as a company?

Lack of Level 5 leadership

Oracle has been led by Larry Ellison all these years - since its inception. Larry is a level 4 leader – wish he was level 5! Under his leadership, Oracle has always focused on “what” should be done and a very little on “how” will it be done. Level 5 CEOs first focus on “who” and then on “what” and “how”.  People part of the equation remains very flaky, to say the least, with Oracle. It has been notoriously uncaring about exodus of top talent. Many ex-Oracle top performers have gone on to form companies, rise to be C staff levels, unleash innovations but Oracle didn’t really do anything specific to stop the fleeing top talent.  

Also, like many other celebrity CEOs, Ellison is getting too distracted by things that he and his company should not be focusing on – example, Oracle’s American Cup sponsorship, Ellison’s many prime properties, Ellison’s unflinching support for former ousted HP CEO and great friend Mark Hurd, Ellison’s purchasing Lanai Island and somewhat ill advised potshots at erst-while partner turned arch rival, HP. All these have direct impact on Oracle’s future – why? Because all these are issues that distract the CEO. Similar distraction proved a debacle for Lee Iacocca – once he turned around Chrysler, he focused more on politics, image building, helping White House with many initiatives which distracted him from his duties as a CEO. And Chrysler slid back into the mess that it had barely recovered from. Mark’s hiring into Oracle forced Ellison to send Charles Phillips off. Charles was a great executive and leader recognized for his talent in and outside Oracle. Letting a great leader go in favor of a friend whose moral ethics are somewhat doubtful can never go well with the employees.

Also, Oracle doesn't have conversations like “what can we do to stop you from leaving” with most of their top talent attritions.

5 Phases of a perilous corporation

Any company going through the general growth, if not managed in a disciplined manner, can hurtle itself into peril. Jim Collins brings this out very succinctly in his book “How the Mighty Fall – any why some companies never give in”. The 5 stages of this journey from greatness to perish are very perceptible when they happen.

The Path to Destruction

So if it is not 2008, when do I think Oracle started slipping? I suspect Oracle’s downward spiral started after 2001-2002 (or at least sometime during that period). It could not come to terms with the ever high stock price of more than $45 and started developing unreasonable greed.

Perhaps under some implicit or explicit mandate from Uncle Larry, the sales people were sent marching to see how much more they could milk out of their unsuspecting and totally Oracle dependent customers. And perhaps the sales people came back with the message that customers would not mind paying more for the crown jewel product – core RDBMS as well as Oracle ERP Suite – 11i. Oracle (read, Larry Ellison) could not stand competition – especially those then started looking at how to kill rivals – hostile and non-hostile acquisitions of rival JD Edwards, PeopleSoft and Siebel.

Every growing company reaches a point where growth starts flattening – happened with Apple, happened with Google and will happen with next big shinning company as well – Oracle was not particularly immune to it so in an attempt to offset the flattening growth of its flagship core database product, Oracle started developing another front that it could open - this was business of  application servers - an exploding market back in the day.

An application server is software that helps developers write and deploy specific applications. The market has exploded past decade or so since many application server vendors are trying to build dynamic applications for the mobile devices. The market could perhaps be as lucrative as the core database market.

Oracle was very late entrant into this market but it quickly acquired BEA Software (leader in the space) and started competing neck to neck with IBM WebSphere. Within Oracle, Application Server business is viewed as “third business” besides core RDBMS and ERP.

Oracle built its business by dominating the database market, providing the central repositories of crucial information that businesses must maintain and use to complete transactions. This has given it an unrivaled position of power when dealing with customers. Capitalizing on such an edge, Oracle’s sales representatives have earned a fearsome reputation as hard-line negotiators determined to squeeze customers – and they are squeezing where it hurts the customers most – at their licensing and support costs.

However, like it had opened a third front by getting into Application Servers market, it has since then opened many more such fronts via its acquisition spree - Oracle moved well beyond the database and into business software, buying up the important products that companies use to keep track of their technology infrastructure, employees, sales, inventory and customers.

Undisciplined growth

In their pursuit to keep up with their YoY growth, Oracle has descended into a very undisciplined growth. There was also very unreasonable desire to grow into every domain. While growing via acquisitions, Oracle Executive Management has forgotten that it is not simply enough to acquire good companies, it takes good and dedicated diligence to grow them into great companies. Some of the companies Oracle acquired are as under:-

2013                      

Feb-13  Acme Packet  Networking hardware for telecom service providers

2012                      

Dec-12  Eloqua   Marketing Automation platform for managing sales/leads

Dec-12  DataRaker    Cloud based Analytic platform

Nov-12 Instantis   Cloud and premises-based Project Portfolio Management 

Sep-12  SelectMinds   Cloud-based social talent sourcing 

Jul-12    Xsigo Systems   Provider of network virtualization technology 

Jul-12    Skire  Solutions provider for managing capital projects/facilities

Jul-12    Involver   Social media development platform

Jun-12   Collective Intellect  Cloud-based social intelligence solutions

May-12 Vitrue   Social Marketing Platform provider

Mar-12 ClearTrial Cloud-based Clinical Trial Operations and Analytics products

Feb-12  Taleo   Talent Management Software

2011                      

Oct-11   RightNow Technologies    Cloud-based CRM

Oct-11   Endeca E-commerce & Business Intelligence

Sep-11  GoAHead    Service Availability and Management Software

Jul-11    InQuira Service Knowledge Management Software

Jul-11    Ksplice Rebootless Linux kernel updates

Jun-11   FatWire Software  Web Content and Web Experience Management 

Jun-11   Pillar Data Systems         Storage systems

Apr-11   Datanomic          Data Quality Software

Feb-11   Ndevr - Select IP only/Environmental Reporting/BI

2010                      

Nov-10 Art Technology Group   Ecommerce software vendor

May-10 Pre-Paid Software    Payment Solutions

May-10 Market2Lead  Applications

May-10 Secerno  Data protection hardware and software

Apr-10  Phase Forward Applications for life sciences cos/healthcare providers

Feb-10  AmberPoint  Service-Oriented Architecture (SOA) management

Feb-10  Convergin   Telecom Service Broker

Jan-10   Sun Microsystems Computer servers, storage, networks, Java, MySQL database, software, and services

Jan-10   Silver Creek Systems  Product Data Quality Solutions

2009                      

Oct-09   SOPHOI  IP management for Media & Entertainment Industry

Sep-09  HyperRoll   Financials, software and IT services

Jun-09   Conformia  Product Lifecycle Management

May-09 Virtual Iron Software Server Virtualization Management Software

Mar-09 Relsys International Drug Safety and Risk Management

2008                      

Oct-08   Haley (RuleBurst Holdings)  Natural Language Business Rules / Policy Automation

Oct-08   Advanced Visual Technology  Retail Space Planning

Oct-08   Primavera  Project Portfolio Management

Jun-08   Skywire Software    Document Management

May-08 AdminServer  Insurance Policy Administration

Jan-08   BEA Systems   Enterprise Software

2007                      

Dec-07  Moniforce   Real User Experience Monitoring

Sep-07  Bridgestream    Enterprise Role Management software

Jul-07    Bharosa, Inc  Online Identity Theft and Fraud Detection

May-07 Agile Software Corporation   Product Lifecycle Management

Apr-07  Lodestar Corporation  Utilities Application Software

Mar-07 Hyperion Corporation   Enterprise Performance Management

Mar-07  Tangosol Inc   Datagrid Software

2006                      

Nov-06 Stellent Inc. Universal Content Management, Digital Rights Management

Nov-06 SPL WorldGroup  Utility Billing and Customer Service Systems

Oct-06   Sunopsis   ETL, Data Integration

Oct-06   MetaSolv OSS service activation

Jun-06   Demantra  Demand-Driven Planning Solution

Jun-06   Telephony@Work   Leading IP-based Contact Center Solution

Apr-06  Portal Software  Billing/Revenue Management solutions

Feb-06  HotSip   Communications infrastructure solutions

Feb-06  Sleepycat Software  Open-source db software for embedded applications

Jan-06   360Commerce   Retail Industry Solutions

Jan-06   Siebel Systems  Customer relationship management

2005                      

Dec-05   Temposoft    Workforce Management Applications organization

Nov-05 OctetString   Virtual Directory Solutions

Nov-05 Thor Technologies     Enterprise-wide User Provisioning Solutions.

Oct-05   Innobase  Discrete Transactional Open Source Database Technology

Sep-05  G-Log    Transportation Management Solutions

Aug-05  i-flex      Banking Industry Solutions

Jul-05    Context Media  Enterprise Content Integration

Jul-05    ProfitLogic           Retail Industry Solutions

Jun-05   TimesTen      Real-time Enterprise Solutions

Jun-05   TripleHop   Context-sensitive Enterprise Search

Apr-05  Retek    Retail Industry Solutions

Mar-05 Oblix      Identity Management Solutions

Jan-05   PeopleSoft     Enterprise Software

2004                      

Jun-04   Collaxa  Business process management

May-04 Phaos    Identity management

Jan-04   SiteWorks Solutions   Clinical trials management

2003                      

Jun-03   Reliaty  Enterprise data protection

Jun-03   FileFish Enterprise content management

2002                      

Jun-02   Steltor  Enterprise calendaring system

Jan-02   NetForce   Adverse event reporting system

Jan-02   Indicast      Voice portals

Jan-02   TopLink   Object-relation mapping technology

1999                      

Jun-99   Thinking Machines Corporation datamining technology

1995                      

Aug-95  IRI Software  OLAP products

1994                      

Oct-94   Rdb Division of Digital Equipment Corporation   Relational database

The early acquisitions show Oracle focus on growing its databases market but acquisitions of past few years including very surprising $5 Billion acquisition of Sun MicroSystems do not give us good sense of where Oracle’s focus is. The strategic theme in Oracle’s acquisition spree is missing and seems more like reactions of leadership focusing only on “growth”. Take a look at spread of Oracle into sectors and even a layman would agree that it is stretching itself far too thin.

If people outside of Oracle can’t understand why Oracle acquired Sun Microsystems, the confusion is equally evident inside Oracle as well. No one can put a figure on if Oracle acquired Sun for hardware market entry point or MySQL or Sun Solaris OS or was it a combination of all these and then some.

Oracle has come out with an integrated ERP product suite – Fusion. The sales teams do not fully comprehend how to package Fusion compared to Oracle 12 version. As such Fusion itself is at least four years too late. In its attempt to create a unified platform for ERP software, it has managed to successfully scare customer who want just a small focused set of modules – like AR and GL or Manufacturing.

There was Steve Jobs who made the famous statement that “…we tell customers what they want…”. Larry Ellison can make the same claim – but to be successful at doing that, you have to be a visionary and not be distracted so hopelessly as Ellison currently is. And, customers seem to the last thing on most of Oracle’s moves. For example, some of Sun’s largest former customers consist of the large Wall Street players, and they were miffed and pushed back last year when Oracle wanted restrict their choices around the Sun technology. Oracle ultimately gave in to their defiance, reaffirming deals that would let Hewlett-Packard and Dell offer prized Sun software on their hardware.

“Customers will always gripe about giving too much control to any one company,” said Israel Hernandez, director of software research at Barclays Capital.

In 2010, Oracle hired Mark V. Hurd, the former chief executive of H.P., as a co-president. Analysts viewed the hiring as a positive outcome for Oracle as it looks to expand. However, Mr. Hurd’s arrival was quickly followed by departure of one of Oracle long-timer, Charles Phillips.

Oracle customers are worried about putting all their eggs in one basket. Every company that they tend to do business is being bought by Oracle – much to customers’ dislike. And for hosts of Oracle’s Annual Open World program, San Francisco officials must wonder if the city could survive the demands of an Oracle four times its current size. A look at its portfolio will tell you more about scary reach and disappointing and unfocused spread that Oracle has now – 110 product lines spread across 14 different domains.

DATABASE

    DataScaler (October 2010)

    e-Test (acquired from Empirix) (March 2008)

    Innobase (October 2005)

    Moniforce (December 2007)

    mValent (February 2009)

    Secerno (May 2010)

    Sleepycat (February 2006)

    TimesTen (June 2005)

    TripleHop (June 2005)

               

MIDDLEWARE

    AmberPoint (February 2010)

    BEA (January 2008)

    Bharosa (July 2007)

    Bridgestream (September 2007)

    Captovation (January 2008)

    ClearApp (September 2008)

    Context Media (July 2005)

    Datanomic (April 2011)

    FatWire (June 2011)

    HyperRoll (September 2009)

    GoldenGate (July 2009)

    Java (April 2009)

    Oblix (March 2005)

    OctetString (November 2005)

    Passlogix (October 2010)

    Sigma Dynamics (August 2006)

    Silver Creek Systems (January 2010)

    Stellent (November 2006)

    Sunopsis (October 2006)

    Tacit Software (November 2008)

    Tangosol (March 2007)

    Thor Technologies (November 2005)

               

APPLICATIONS

    AppForge (April 2007)

    Collective Intellect (June 2012)

    Eloqua (December 2012)

    Haley (October 2008)

    InQuira (July 2011)

    Interlace Systems (October 2007)

    Involver (July 2012)

    LogicalApps (October 2007)

    Market2Lead (May 2010)

    Ndevr (February 2011)

    RightNow (October 2011)

    SelectMinds (September 2012)

    Taleo (February 2012)

    TempoSoft (December 2005)

    Vitrue (May 2012)

PRODUCT LINES

    Agile (May 2007)

    ATG (November 2010)

    Endeca (October 2011)

    Hyperion (March 2007)

    PeopleSoft (January 2005)

    Primavera (October 2008)

    Siebel (January 2006)

    Telephony@Work (June 2006)

  

IMPLEMENTATION AND INTEGRATION TOOLS

    Global Knowledge Software (GKS) (July 2008)

SERVERS, STORAGE, AND NETWORKING

    Ksplice (July 2011)

    Pillar Data Systems (June 2011

    Sun (April 2009)

    Xsigo Systems (July 2012)

    Virtual Iron (May 2009)

               

INDUSTRY SOLUTIONS

               

COMMUNICATIONS AND MEDIA

    Acme Packet (February 2013) (pending)

    Convergin (February 2010)

    eServGlobal's Universal Service Platform (USP) (May 2010)

    GoAhead (September 2011)

    HotSip (February 2006)

    MetaSolv Software (October 2006)

    Net4Call (April 2006)

    Netsure Telecom Limited     (September 2007)

    Portal Software (April 2006)

    Sophoi (October 2009)

  

ENGINEERING AND CONSTRUCTION

    Instantis (November 2012)

    Primavera (October 2008)

    Skire (July 2012)

FINANCIAL SERVICES

    i-flex (August 2005)

HEALTH SCIENCES

    ClearTrial (March 2012)

    Phase Forward (April 2010)

    Relsys (March 2009)

INDUSTRIAL MANUFACTURING

    Agile (May 2007)

    Conformia Software (June 2009)

    Demantra (June 2006)

    G-Log (September 2005)

INSURANCE

    AdminServer (May 2008)

    Skywire Software (June 2008)

RETAIL

    360Commerce (January 2006)

    Advanced Visual Technology (AVT) (October 2008)

    ProfitLogic (July 2005)

    Retek (April 2005)

UTILITIES

    DataRaker (December 2012)

    SPL WorldGroup (November 2006)

    LODESTAR (April 2007)

Failure to accept reality

It is also felt that Oracle executive management is out of touch with reality. The typical strategy is to first make fun of competitors, then ridicule them and finally scare the wits out of the customers who were even thinking of adopting competitors’ products.
They did this for Sun, HP, NetApp, EMC, VMWare, Salesforce, Microsoft (for MS SQL Server). Most of the times, customers can see through this and continue their adaptation of new products from customers.
Finally, Oracle sees the “writing on the wall” and realizes that it has to do something quickly – one in that mode, it joins the race by acquiring a competitor or second best guy in the race. PeopleSoft, Siebel, Sun (MySQL) and hosts of cloud acquisitions are cases in point.
Most recent examples are Oracle’s taking potshots for two consecutive years in Oracle Open World 2010 and 2011 at Salesforce.com and then when it couldn’t wean away customers from Salesforce.com or slow down the ramp up, it launched its own versions of cloud offerings in 2012 Open World.

Grasping for straws

Good news first, Oracle has not yet reached this stage yet – in this stage, very perceptible symptoms are – changing CEOs and executive staff in quick rotation and changing the product directions every so often. However, there is bound to be a moment, not in very distant future, when we will find that people will become so weary of Oracle products that Ellison will be either dislodged by a hostile board or will leave on his own. He has essentially no succession plan in place except bunch of execs like Thomas Kurian or Mark Hurd who can stake their claim to the crown. Thomas is well respected within the company but lacks charisma and chutzpah of Ellison. Mark may not be as respected but has good experience of cutting costs – like he did at HP.

Death Knell

In this stage, the company will slowly vanish into irrelevance or acquired/merge into another competitor or go belly up. For the sake of hundreds of thousands of professionals using, preaching and earning their bread from Oracle Technologies, I just hope Oracle never reaches that stage.

Will it be able to recover from this downward spiral?

Oracle can arrest this dance towards its vanishing into oblivion – question that really begs for an answer is – will it have the honesty to first admit and then stop this march?

First of all, Oracle should focus and determine its core strength and then focus on building up on those. There is no prudence demonstrated in draining money on acquisitions and then selling those companies at markdown, or worst, writing off the charge as a loss.

It is about time Oracle give up its greed on squeezing more money out of its customer and first create products and value that customers will willingly play obscene amount of money for.