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Oracle’s leadership reshuffle will have little impact customers in the short term, but the promotion of senior execs Safra Catz and Mark Hurd to co-CEO raises ongoing questions over the company's ability to adapt to the cloud, industry experts have claimed.

Oracle’s leadership reshuffle will have little impact customers in the short term, but the promotion of senior execs Safra Catz and Mark Hurd to co-CEO raises ongoing questions over the company's ability to adapt to the cloud, industry experts have claimed.

According to Gartner research VP Chad Eschinger, Friday’s announcement that Larry Ellison will step down as CEO - but remain as chief technology officer - means customers are unlikely to witness significant change in product roadmaps.

"With a passion for the company and technology, [Ellison] is not ready to relinquish direct involvement in the development and direction of the company he helped found," Eschinger said. 

“Clients can expect minimal to no changes in Oracle’s product strategy or technology direction given Larry Ellison is retaining product development."

UK Oracle User Group (UKOUG) president David Warburton-Broadhurst said that customers will welcome the stability and continuity of Ellison’s succession plans, with the company retaining its reporting structure as Catz and Hurd take over.

The three senior execs have been running the company together for a number of years, with Hurd taking charge of sales, marketing and strategy, while Catz focuses on finance, legal and manufacturing operations.

“They completely understand the business and have strong relationships with Oracle customers,” said Warburton-Broadhurst.

“UKOUG believes this succession will enable a successful transition and allow our members to be confident in their Oracle investments and future product roadmaps."  

He added: “We are looking forward to hearing more on these topics at Oracle OpenWorld next week.”

Holding back cloud transformation?

However Gartner's Eschinger noted that with Ellison retaining some control at the company, it could be difficult for Catz and Hurd to take new strategic directions: “What is unique is that the new Oracle CEO’s do not have product development which typically is a significant means of achieving the CEO’s objectives. How this will play out is going to be worth watching.”

Oracle’s Q1 results, released as the management changes were announced, highlighted flat revenues with hardware sales down and Saas - which saw double digit growth - still accounting for a small percentage of its business. 

A quick take by Forrester analysts John R. Rymer, Andrew Bartels, Duncan Jones claimed that the company needs “radical change” if it is to succeed in realigning its business for cloud-based growth, and convince customers it is not a legacy incumbent by providing the flexibility they need as they adopt next generation IT services.

“But radical change won't happen until Ellison severs ties with Oracle, leaving his successor with a free path to take the company in new directions,” the authors wrote. "Catz and Hurd are transitional figures, not visionary leaders."

"As the CEO of HP, Hurd earned criticism for his lack of vision and cut-your-way-to-growth mindset.”

Capgemini’s Head of Alliances, Application Services UK, Anne Cave-Penney, also questioned whether Ellison remaining at the company would enable the co-CEOs the freedom to overhaul the business as customers move workloads off-premise.

“[Ellison’s decision to step down] is a surprising move that will prompt some serious questions around the future of the business, not least will he be prepared to genuinely relinquish control to Hurd and Katz,” said Cave-Penney.

“Oracle’s traditional revenue streams, namely hardware and on premise enterprise software, are not performing as well as they once were, and so for the company to alter its current trajectory it will need to grow its cloud revenues quite aggressively.”

“Oracle is in need for some radical changes and if Ellison does truly hand over the reins to his co-CEOs, this could be just what the business has been looking for.”

Nevertheless, Forrester analysts said that the management changes will not require customers to rethink their strategy with the vendor in the short term, though they should continue to question how the company fits their own business plans.

"For Oracle's tens of thousands of clients, the change in executive leadership is a non-event. Oracle will double down on executing its current strategy — continuing to support and get revenues from on-premises software and hardware while expanding its cloud offerings through organic growth and acquisitions — more effectively," the analysts wrote.