Dell and Oracle are tightening their strategic alliance as x86 systems move closer to dominating the heart of the data center. Michael Dell, making his ninth appearance at Oracle OpenWorld, and hoping to come back next year, said software management of x86 systems was a key factor in the companies' ongoing relationship.
CEO Dell, paired with Oracle executive VP of hardware John Fowler in Oracle OpenWorld's second day keynote address, supplied ample testimony to how hard Oracle is trying to become a hardware company.
If Sun Microsystems was a hardware company that needed to become a software company, Oracle, since its acquisition of Sun, has been a software company trying to become a hardware company. This year's Oracle OpenWorld in San Francisco is dominated by Oracle hardware initiatives, with frequent references to the Exadata and Exalogic appliances, the new Exalytics Business Intelligence Machine, and new Big Data Appliance. Oracle's hardware returns so far, analysts say, are dwarfed by Oracle's continued dependence on its software sales.
Dell, in his own explanation of how the two companies are aligning, offered a rationale for what's going on. Dell is a large Oracle customer and reorganized its business processes, including its vaunted chain of 10,000 suppliers, around its own PowerEdge servers running Oracle ERP. It "standardized" all the business processes in its global order management process so that its $60 billion a year in revenue runs through a revamped, streamlined set of processes that allow a quarter to close two days earlier than before.
[Want to learn more on Oracle's emerging hardware? See Oracle In-Memory Analytics Appliance Debuts At OpenWorld.]
It also standardized on-core applications and organized around a services-oriented architecture, in place of a highly regionalized and heterogeneous set of 8,000 applications. It also put in place a consistent business analytics framework, based on Oracle, across the company, but Dell offered few details on that.
As a result, Dell claimed, it took "$300 million out of its IT budget; instead of spending 70% on maintenance and 30% on new development, we flipped the ratio to 48% and 52%," Dell said. The $300 million in savings occurred over several years, and includes the cost of a data center that ended up not needing to be built in 2009, according to additional information on the Dell website.
Nonetheless, Dell's revamp of its software infrastructure simplified and rationalized its business processes for savings to the underlying business. Michael Dell did not tout Oracle appliances in his keynote, but he did affirm the value of optimizing hardware to a software infrastructure to implement new business processes.
"The line between business and IT is simply disappearing. Technology is no longer a tool that enables the business. It's embedded in the business itself," and the nature of technology ends up dictating the nature of the business.
This is the "personal" or corporation-as-a-customer story Dell brings to Oracle's conversion from software company to combined hardware/software company. The real need for combining hardware and software, Dell predicted, will come with the next x86 hardware generation of microprocessors coming next year from Intel. The 12th generation of Dell servers will feature the new chip with up to 1,024 cores per server, 40 TBs of DRAM, and 40 TBs of flash memory, Dell said.
With such powerful, commodity hardware coming down the pike, Dell said, the companies that pull off a revamp of their business based on a fresh hardware/software infrastructure will have a decided advantage.
Shifting the IT spend toward new development in place of keeping the lights on and enabling more efficient business processes both were messages that the Oracle OpenWorld audience understood. In citing the power of future commodity hardware, however, Dell may have convinced them that Oracle appliances will become more powerful. Or he may have inadvertently given them a reason to bide their time and see what commodity hardware will do for their own Oracle software infrastructure next year.
He may even have given the expansion-minded executives inside Oracle a reason to consider buying Dell, something that Forbes writer Quentin Hardy suggested a year ago.