The Closed World of Oracle Open World

Insofar as I characterized Oracle Open World as a communications disaster in my last blog post, I think it’s fair to explain why I feel this way and what it means for Oracle and the market.

Oracle Open World is singularly the worst customer event I attend every year, a forced march so large and unwieldy that I and most people I know who attend – customers and influencers alike – end up trying at best to endure the event, much less benefit from it. And yet we must attend, as it is for the most part the only time in the year that Oracle will actually try to engage in a meaningful dialogue with both influencers like myself, and, indirectly and directly, with its customers and prospects. Because once the gates close and the drawbridge is drawn up on Open World, Oracle goes back to being a very closed world indeed.

Oracle has always been about controlling the message, something all companies try to do one way or another. But over the years, as the lawyers have risen in power and the company’s acquisition strategy has made a virtue out of bafflingly complex fiscal reporting, Oracle has more and more turned its communications strategy towards the goal of limiting, not expanding, the flow of information from the company to the market, and controlling those who try to cut through the PR and get to the meat of the issues surrounding the company.

This is Oracle’s prerogative, though it comes with an implied arrogance – we are so right in what we do that there is no need for any real scrutiny – and a decidedly anti-customer tilt – trust us, we’re on your side – that is belied by many of the company’s strategies. And that control has its consequences for any company – customer, partner, and competitor – that is making huge strategic bets on Oracle and needs, make that deserves, to know that those bets are based on facts, not something else.

The Open World communications disaster begins with two time-honored traditions at Oracle: The first is that Open World is the only major forum by which Oracle engages with influencers every year. Whereas most of the enterprise software market holds multiple user conferences, tech conferences, partner conferences, analyst summits, and press events, Oracle basically bottles up an entire year’s worth of new products and strategies into a five day window in October.

Into this extremely short window must fall all the aspirations of anyone looking for an understanding of this massive and increasingly important company’s products and strategy, and hoping for a dialogue and some critical thinking to boot. Sure, I am told that Oracle has thousands of events every year around the world, but those are tightly controlled, very select sales and marketing events that are all about lead generation and absolutely not about truly informing the market of what Oracle is up to. (Though, as I write these sentences, the notion that Open World is not a tightly controlled, very select sales and marketing event is starting to seem a little absurd.)

Nonetheless, Open World actually does sort of aspire to dialogue and to opening up the company to some critical thinking, despite the limits of its massive scale and the company’s focus on controlling access and information.  Of course, the fact that Open World occurs once a year and in such a short time frame makes it impossible for anyone – customer or influencer – to truly see and hear everything they’ve been yearning to know for the last twelve months.

And that’s before the second tradition, the Larry Ellison Effect, takes over.

The Larry Ellison Effect takes this once-a-year event and makes it an even bigger disaster through a peculiar twist of executive fiat: Larry likes to bat both first and last at Open World, and that means that while some opening remarks and a couple of announcements get made Sunday night (Sunday night–  Ugh) at the start of the conference, a huge chunk of the really juicy announcements don’t get made until the conference is virtually over: Wed. afternoon this year, 70 hours after Open World began.

This effectively kills any chance for a dialogue about whatever Larry wants to announce. This year it was the company’s cloud strategy, exactly the kind of complex, important announcement that could really benefit from a few days of follow-up briefings, conversations, and, yes, critical thinking. With the announcement on Wed. afternoon, and with not much left of the conference and many attendees already brain dead from the previous three days chasing the Oracle story, Oracle’s cloud strategy was left to be merely pondered, instead of actually understood.

(To their credit, the communications team tried to fix this problem by sending out an email at 3:40 PM on Wed. – right as Larry’s keynote was getting underway – that Thomas Kurian would be available at 5 PM that evening for a deep dive on cloud strategy. Needless to say, with that kind of advanced notice, many influencers, myself included, couldn’t make it.)

The applications team has recently been the major victim of the Larry Effect, as hardware announcements – remember, Oracle’s investors need the company to sell a lot of hardware – have dominated the Sunday night keynote. This means that the apps gang has to sit on its hands and basically say nothing about the most important announcements of the conference, waiting for Larry to deign to deliver their key messages. It makes for an almost comical interchange between otherwise intelligent and capable Oracle execs who have been forced to play dumb and dumber about key issues and strategies for fear of stepping on Larry’s toes.

But wait, there’s more – or less, really. Oracle also makes no bones about Open World being a sales event – point noted – and that means that there are virtually no meetings between influencers and executives, at least not by the standards of the industry: The four or so events Oracle’s competitors hold each year include multiple opportunities to put influencers in front of the execs and get the dialogue going. In doing so, most of Oracle’s competitors believe – or at least pay lip service to – the notion that they learn from the dialogue as much as the influencers. Oracle, with so much to learn, thinks otherwise.

The real question that I keep trying to figure out is whether this is all deliberate – as in, Oracle’s top leadership really doesn’t want to have this dialogue – or whether it’s more just a matter of style. As I ponder the question I am reminded of how Tom Siebel used to conduct his eponymous company’s quarterly financial calls. Rather than discuss meaningful strategy and other useful information, Tom would quickly dive into a level of financial minutia that could put a triple black belt accountant to sleep. Tables, charts, data points, all analyzed in excruciating detail. Minute after minute, on and on he would drone, until time was up and there really wasn’t anything anyone wanted to know other than how to get off the phone.

Could this be the real purpose of Open World: listen to the story we want to tell and don’t expect us to leave time or energy for dialogue? Take the information we want to give you and to hell with the information you think you need to know? This certainly has been the underpinning of the analyst program that I used to be part (I’m now a blogger, according to Oracle, analysts apparently work for big firms that sell Oracle lots of research and over which Oracle feels it has some leverage as a result.) My “handler” at the 2010 Open World said exactly that to me when I dared deviate from the program she put together for “me” in order to try to find out what I had come there to learn.

Regardless, I think that it’s indisputable that the result of this lacuna is a dearth of information and openness about the company’s products and strategy, a company that sits on top of a massive ecosystem of customers and partners who, as I said earlier, need to know a lot more about the Oracle than the company is willing to discuss. Too bad for all concerned. While Oracle seems to get richer by the minute no matter what it does, Oracle’s customers and the market at large are made all the more poorer by what is clearly a deliberate  communications disaster.

The Customer Comes Second…..Oracle’s Engineered for Investors Software Stack

I spent much of last week sorting through the absolutely overwhelming communications disaster called Oracle Open World in search of some clarity on Oracle’s vision for its customers, and have come to the following conclusion: Oracle’s applications customer strategy just isn’t about making things better for its customers.

The problem with the Oracle of today is that the focus of a group of the some of the best technology minds in the industry has been hijacked to fulfill a vision that is skewed more towards fulfilling the promise of a decade-old merger and acquisition strategy than it is towards making customers both successful and happy. And the vision comes with a built-in irony that has me convinced that the customer comes second at Oracle, second to the shareholders whose addiction to Oracle’s margins has driven the executive team at Oracle to consider investors, not actual companies that consume its software, as the real customers.

Let’s start with the irony: Oracle is selling a vision of an integrated hardware stack that is magnificent in its simplicity: everything from the silicon to storage to networking are all “engineered” to work together. I wouldn’t be surprised if the electrons inside their boxes are also engineered by Oracle. If they could gain some sort of system-level efficiency by altering the laws of physics, they probably would do that too.

Contrast that with the software side of Oracle’s product line, and the irony arrives by the bucket load. Oracle’s applications strategy is the antithesis of integrated , in reality a hairball of products and underlying technologies, data models and deployment models, that could have only been “engineered” by an M&A strategist. Any real engineer would be crucified for pretending this software strategy makes sense for the customer looking for an integrated applications environment.

Four (or five, depending on how you count it) main product lines, each with its own code base. And literally dozens of other products, acquired with the goal of improving shareholder value, most of which also came with their own proprietary software or data models. Hundreds of business processes, many overlapping and redundant from one product to the next. And a big, hairy-chested middleware “suite” – Fusion Middleware – that is itself a conglomeration of technologies – a little Java here, some BEA and BPEL there, some MDM, some analytics , some DBMS technology, the more the merrier, all jammed into a one-size-fits-no-one morass of integration options. To simplify things, they also have an integration system called AIA that is used infrequently for the very reason that it’s an expensive, complex, technically challenging, and hard to cost-justify Tower of Babel erected to a false deity, the Oracle integrated software stack.

Compounding the irony is that, despite Larry’s insistence – could he be that out of touch with his customers that he believes this? – that integrating his software stack is easy, the reality is that integration is hard, expense, and, most ironic of all, the responsibility of the customer, not Oracle. There is no magic bullet, no easy-to-configure wizard, for the majority of the integration that Oracle customers require to run their businesses on Oracle software. Nope, it’s all about custom development, using expensive development resources. Sure, there are more and more “integrations” being built by Oracle, and more all the time. And as long as time is not of the essence, one day Oracle will have filled out the massive matrix of integrations required to link hundreds of key business processes across dozens of often overlapping applications. One day.

In the meantime, the customer has to wire this hairball up. And, having talked to many customers about this issue, the conclusion I came to is that Oracle’s investors are missing a big part of the problem they have helped to create. Because, in the long term, as long as customers are not using AIA to solve this problem systematically, the total cost of ownership of the investor-driven software model Oracle has foisted on the market will remain excessive,  and render Oracle vulnerable to a lot of smarter, and more agile, and better rationalized competitors.

The irony of the roll-your-own integration conundrum on the software side is how much of a non-starter it would be on the hardware side. Imagine having to solder the connections in your rack systems, splice the cables to your storage systems, write your own network protocols – kind of reminds me of the state of the art when I started in this business in the 1980s. And here we are, thirty years later, and Oracle’s customers have been pulling out the soldering irons and user manuals in order to realize their vendor’s integrated software stack vision.

It’s amazing how pervasive the problem is, and how out of touch Oracle seems to be about it. Even customers who were hand-picked by the Oracle communications team to talk to the influencers at Open World had war stories about this problem. One customer I spoke with was told by Oracle that Agile PLM would plug right into a process manufacturing instance of eBusiness Suite, and two years later this happy customer (Stockholm Syndrome, anyone?) was still fighting Oracle’s integration battle inside his company, at his expense. Another customer shared a similar story about Siebel CRM and eBusiness Suite, another about PeopleSoft and Siebel. And so it goes in the engineered-for-investors Oracle stack.

This disconnect, this dystopic vision, becomes even more ironic when you add Fusion Apps to the mix. Here’s a new suite that has to be sold in parts to customers using other, older parts of the Oracle product mix because selling it as a suite would expose its severe limitations in terms of industry-specific functionality. With integration as the starting point, you’d think Oracle would engineer the integration between Fusion Apps and the key products in the suite to be a no-brainer for the customers. Wrong. Coders, start your engines: Oracle Fusion Apps require the customer to do the majority of the integration work in order to make the products work with the rest of the Oracle stack. Sure, they are building the integration points – there are 10 or 15 available today as Fusion goes GA – but how that piecemeal approach to the core requirement of integration helps control customer costs and deliver customer value is beyond me.

I’m not even sure it delivers customer value either. Interestingly, I spent much of Open World button-holing applications customers and asking them if they were planning on upgrading to the Exadata/logic/lytics strategy. The answer was universal – not now. When I asked them why, it was because they couldn’t see the value in such a migration, not when they were up to their eyeballs upgrading and integrating their apps. And when I asked them when they might consider such a move, the answer boiled down to the following: when Oracle gives me a clear ROI strategy for migrating that I can take to the board. And when I asked Oracle for evidence of this strategy, the answer was simple, there is none.

One Oracle exec whom I asked did discuss an ROI strategy, but his answer was basically about the ROI for Oracle. (Sound bite: running on Exadata lowers Oracle’s support costs. Translation: investors get even better margins.) And while I was promised that this ROI strategy would be revealed to me when it was available, I’m not holding my breath.

Because in the end Oracle’s roll-up the best of breed strategy has never been about better TCO for the customers. It’s been about optimizing the sales opportunity for Oracle’s incredibly effective sales machine, while bringing smaller, inefficient software companies under the razor-sharp cost-cutting eye of Safra Catz. There is certainly a fair amount of consideration about customer choice in the strategy as well – they have many truly best of breed apps in the portfolio – but that has increasingly fallen prey to the requirement for delivering more red meat – in the form of profit margins – to an extremely avaricious investor community hell-bent on looking out for number one.

That hunt for profit margins is now all the more acute because of the strain that the Sun acquisition has put on those margins. Safra Catz is now on the record for two quarters promising that the company will soon get back to its former, pre-Sun, margin glory, with little specific guidance on when that will actually happen. Hence the real focus of Open World, which was one big, fat commercial for Exa-everything. Sure, there were plenty of keynotes about things like clouds and apps, but there was no mistaking what Larry was really selling: engineered hardware  systems. And there is no mistaking the almost frantic urgency in the subtext to that message: we won’t make good on our promise to Wall Street if the customers don’t start buying more hardware.

The shame of it all is that the applications team and their products, the above notwithstanding, are some of the best of the best. The core products continue to evolve nicely, Fusion Apps like Distributed Order Orchestration and Talent Management are pretty cool. I even like what Larry is saying about the cloud and multi-tenancy (it’s not the be-all and end-all of cloud computing, despite the orthodoxy of the much of the SaaS market). But the way that Oracle has now slotted its applications strategy into the larger investor strategy, and effectively forced customers, particularly apps customers, to bear the financial and complexity burdens of a strategy designed primarily for the investors, is more than a shame.

Where does this all lead? There are definitely apps customers who could benefit from engineered systems, but I think a more agnostic, customer-choice hardware model fits the needs of modern businesses best. Meanwhile, Oracle’s acquisition of best of breed vendors will run into a more rapidly shifting mobility-based user experience revolution that is already under way, and already making new user experiences like those in Fusion Apps look old and tired by comparison.

And therein lies a big risk for Oracle’s investors and customers alike. SaaS and PaaS make it much easier to slot in best of breed than ever before, and new development environments make it easy to build new SaaS-based apps more quickly than ever before (Kenandy built its ERP apps using Salesforce’s APEX in months, not years.) Meanwhile, customers are under more and more pressure to genuinely lower costs in a demonstrable way, and that means more attention to TCO in software and hardware, even if their vendors try to hide the true cost of their systems and pretend that, as Oracle claims, it’s time for a hardware refresh because the vendor says so.

All this means that as Oracle is forced to carry this enormous legacy portfolio forward, and as its Fusion Apps continue to be hamstrung by a lack of vertical and geographical specificity, the risk that Safra won’t make good on her promise to Wall Street increases. Right now, Oracle’s case to its customers on the value of engineered systems looks too much like the case it’s making to Wall Street. Until that changes – if it can change – Oracle is headed down a path that at best lacks customer-centricity and at worst is genuinely customer hostile. Engineered systems can be useful, but only as long as they are engineered for the right reasons…..