There are few IT vendors that have witnessed as many changes in 2005 than Oracle.

In the past year, the company has spent nearly $18bn (£10bn) acquiring 11 companies, including major rivals such as PeopleSoft and Siebel.

The difficulty of merging two organisations has been known to be enough to defeat many companies, let alone integrating so many disparate products.

But Oracle chief executive Larry Ellison has never been slow to take up a challenge.

Computing talked exclusively to Oracle UK managing director Ian Smith about the changes the company is going through and how these transformations will affect Oracle’s existing and newly acquired customers.

Why has Oracle embarked on such a major shopping spree?

You can say anything you like about Larry Ellison, but he has a vision of where the software industry is going.

Some years ago he recognised that as the industry matured, he would need the cash to buy market share, rather than grow it. Five years ago he drove costs out of our business, reducing the cost base by $1bn (£0.56bn), which helped him to build a war chest for this very moment. We complained about the pressure he was putting us under, but you can see the benefits of that now.

Previously, Oracle’s sales pitch emphasised the simplicity of a single integrated system against integrating rivals’ disparate products. But is that not what you are doing now?

We recognised that is what customers have already done.

We work with one of the leading retailers in the UK – it has Oracle databases, Oracle financials, PeopleSoft human resources, Retek retail systems and Siebel customer relationship management (CRM). The customer decided it wants a best-of-breed approach, so we now support that.

But the future is still a pre-integrated solution for applications, created through a service-oriented architecture. The vision is still of an open standards way of doing business, where a customer has the ability to have all the best-of-breed things they want, but from one company. That also means supporting other open standards vendors. If a customer is an IBM user and it has WebSphere as its application server, rather than Oracle, why would we fly in the face of that? You cannot push your products in that way.

But this is not just about integrating products. How do you successfully bring in the staff of all these former competitors?

I did not want people walking around this organisation a year on saying: ‘I’m really a PeopleSoft person.’ With different acquisitions we have done different things. With PeopleSoft it was a very similar product suite, so it was important that we integrated the people very early on.

If you look at my sales managers now, you will find a predominance in the applications business of former PeopleSoft sales managers. We made sure we took some of the best of PeopleSoft. Remember that we are both software companies, based in Silicon Valley – there is not really a lot of difference. You can say all these cultures are a threat, or you can look at the breadth of experience and opportunity they bring. The latter is the way we look at it.

Other companies have to be treated differently, such as Retek, which is industry focused. Taking that into the wider organisation would smother it. It needs to stay sufficiently independent to allow its expertise in that industry to be retained. It is not a one-size-fits-all approach.

Will customers be confused by Oracle selling so many products? For example, you sell at least four different CRM applications.

The best example to use is PeopleSoft. We have a dedicated PeopleSoft sales team, selling to existing users but also winning new business.

In most situations, the default is the Oracle ebusiness suite, but we still have cases where particular functionality of PeopleSoft or JD Edwards meets a customer’s needs.

Is that complicated? Not if you set out the ground rules properly. Customers often tell you what their choice will be. The key is the commitment to enhance support for each product while separately taking advantage of the development and strategy going on across the company.

Apart from the acquisitions, what are the business issues your customers are talking about?

There is still a fear about projects and capital investment, which is a shame. UK productivity is less than in the US; people are constantly talking about the widening gap in productivity in a globalised environment. But then you look at the greater capital investment in IT in the US compared with the UK, and it is no wonder US productivity is driving ahead.

As an IT supplier you would expect me to say that IT can fundamentally improve productivity – but it is a fact. The government has placed a bet on technology delivering public sector reform; that it can improve services in education and healthcare through the use of IT without increasing taxes. The government is being bolder than many businesses.

If UK plc was as bold you would see significant improvements in productivity that would begin to address some of the concerns about globalisation and offshoring.

How can this lack of investment be reversed?

The IT industry must get over the history of technology being complicated. IT is often outsourced because people do not have the confidence to manage the complexity.

We must make technology as uncomplicated as we can, so that companies can say IT has ‘got it’. There is a reluctance to invest because of the fear of not delivering and of hidden costs. Businesses need to be bolder, but this industry needs to reassure them.

I was recently invited to speak to the top 100 employees of a major UK bank to talk about technology and the future. I said to them: ‘I bet your chief information officer can only spend about 15 to 20 per cent of the budget on new innovations, because 80 per cent goes on business as usual.’ If a company has to cut budgets, the business units say: ‘You can’t touch us, we are delivering revenue’, so the cost is taken out of innovation.

Every operating unit wants to do things with IT the way they have always done. Leadership must say that the days of these fiefdoms are over. You have to standardise processes, use open standards, centralise IT. Why have 50 data centres around the world when you could have one? The money being spent on this complexity is incredible.