If you can't beat them - buy them

Is Oracle the new Chelsea?

Written by Bryan Glick

It is becoming a familiar story.

Multi-billionaire entrepreneur wants to win everything and be the biggest and best in the world. He outbids all his rivals to get what he wants, and then just keeps on buying, determined to purchase only the highest-profile players, barely making a dent in his near-unlimited resources.

There can be no doubt: last week’s $5.8bn (£3.2bn) acquisition of customer relationship management (CRM) specialist Siebel proves that Oracle is the new Chelsea. If the software giant’s chief executive, Larry Ellison, recruited a Portuguese manager, the analogy would be complete.

But Ellison and Jose Mourinho face a similar challenge: how do you integrate such a disparate bunch of purchases and turn them into a single, coherent force?

Mourinho seems to be doing a pretty good job so far – Champions League semi-finals notwithstanding. But it is more difficult to judge how successfully the new Oracle is doing.

In the past 12 months, the database vendor has acquired nine companies or products; effectively 10, since JD Edwards came as a free gift with PeopleSoft. It now sells or supports four different CRM applications.

The integration of so many products, people and personalities into one organisation is an enormous challenge, as HP’s troubled restructurings following the purchase of Compaq show.

And then there are the users. There is anecdotal evidence to suggest that some of PeopleSoft’s biggest customers have already started to switch to SAP, and that others may follow. Oracle admits that it expects to lose a proportion of its newly acquired customer base – undoubtedly, many Siebel users are considering their options, too. SAP’s UK managing director, Graham Kingsmill, told Computing recently that SAP is rubbing its hands in glee at the consolidation of all its major rivals (Computing, 8 September).

But Oracle has a singular additional hurdle to overcome: its own culture.

This is a company that for years has delighted in telling prospective customers that its biggest strength is integration: all the functions you need, all wrapped up in one consistent package. Who would want to buy all those disparate, so-called best-of-breed applications and then stitch them all together? You must be stupid to try, said the sales pitch. You wouldn’t buy the components of a car and weld them together yourself, said Ellison on several occasions.

Oracle themed entire user conferences on the subject, to the extent of ridiculing the competition for all the expensive integration needed. Former chief marketing officer Mark Jarvis was fond of performing rather feeble skits pointing out the foolishness of buying all these incompatible software packages. The Rocky Horror Show-themed presentation left scars on all who witnessed it.

But now, all of a sudden – and several billion dollars worth of shopping later – Oracle is The Great Integrator. Perhaps SAP should borrow Ellison’s old script about the benefits of a single, integrated application.

Oracle does have a coherent plan, based on the Fusion middleware strategy to tie all its purchases into a common technology base. It is not that dissimilar to IBM’s middleware strategy – yet Oracle was always keen to point out how much money IBM Global Services made from all those lovely, expensive software integration projects. If you can’t beat them, join them, is the old mantra. For Oracle, add that if you can’t join them, buy them.

But if there is one person in IT who you would bet on to make it work, it is Ellison. He has shown in the past year that he is the ultimate pragmatist, discarding the simple sales message that sustained his company for years in recognition that the game has changed. This industry is going to consolidate, he said. And if that is going to happen, he wants to be the man to make it happen; the leader, not the follower.

Will there be the equivalent of a Liverpool Football Club out there to thwart his ambitions at the semi-final stage? He would probably buy them too.

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