In part I, I considered the journey Oracle has taken in its Fusion development. However, previously described as ‘gibberish’ by Larry Ellison, the cloud was about to make its mark.
Oracle has changed their stance on cloud. Two years ago, cloud was arrogantly dismissed whereas at this year’s Oracle OpenWorld, they stated their intention to embrace it fully! This has raised many questions for the Oracle application business as Fusion foundation components were never originally engineered for cloud or social media enablement unlike the new wave of application leaders such as Salesforce.com and Success Factors, whose applications were engineered from day one as true cloud offerings.
Oracle’s problem therefore is that Larry’s outbursts about cloud have failed to slow its market adoption in order for it to catch up with the cloud movement, and as such, Fusion is looking increasingly archaic, even before it is released. Hence, Oracle’s acquisition strategy (part two) is to acquire thought leadership and innovation. This means that it is playing catch-up by acquiring market leaders, such as RightNow and Endeca even though their contribution to short term earnings is negligible.
In doing so Oracle has in essence acknowledged that Salesforce.com and Workday are leading the field and Fusion is unable to compete through innovation. Thus it is using its significant financial leverage and market position to acquire its way into the cloud.
This strategy has three benefits for Oracle:
- Its commercial integration capability will almost certainly ensure that acquisitions are earnings accretive
- It eliminates the competition
- It thwarts its surviving competitors such as Salesforce.com
For clients however (although Oracle will suggest otherwise, we actually speak to them daily) it creates questions:
- What will the product roadmap actually be for these acquired products?
- Will it ever be healthy for clients to rely so heavily on one vendor?
So what is Fusion’s future? Oracle’s success path may be to continue acquiring truly innovative market players such as Right Now and Endeca, however how are those applications going to be integrated into Fusion and will Oracle extinguish the innovation or as it once did, lead it?
As Larry Ellison once said: "If an innovative piece of software comes along, Microsoft copies it and makes it part of Windows... This is not innovation. This is the end of innovation."
Larry must choke when he sees Tom Siebel, Dave Duffield and Mark Benioff; he knows that he can acquire them, but that he can’t buy innovation values. Acquisition is the death of innovation culture.
So what is the answer? Is it to believe that Oracle will be innovative as it once was? Should clients trust that their investment in this vendor will give them a stable platform and continuous innovation across cloud, platform, storage and core technologies without a coherent roadmap? Oracle certainly has the financial clout to keep it going or will clients want to find true innovators in the market place and hope that Oracle won’t acquire them?
After all is said and done, Oracle will enjoy basking in its continued near-term success. I would anticipate that when clients review their position on migrating to a cloud offering, many of them will choose the path to Fusion even if it leads them to perpetual mediocrity.
Business success will never come from the safety of yesterday’s technology bundled by a giant that suppresses innovation but can’t stop it. Because for every Duffield, Siebel and Benioff that Ellison spawns then acquires, there will be an emergence of true innovation based on truly listening to client’s real needs.