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5/19/2010
09:32 PM
Bob Evans
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Global CIO: Oracle Hammered By SAP For Stifling Customer Choice

Oracle says the all-Oracle stack cures IT complexity and cost, but SAP says that strategy leads to dead-end lock-in and dramatically less innovation.

The world's two largest enterprise software companies are placing massive bets on radically different approaches toward their customers' IT environments with SAP zealously promoting the power of its large and expanding partner ecosystem while Oracle bluntly contends that the only way for CIOs to slash IT costs and complexity is to standardize end to end on Oracle hardware and software.

At SAP's Sapphire global customer and partner conference in Orlando and Frankfurt this week, SAP execs hammered relentlessly on not only their own unconditional commitment to giving their customers unfettered choice and openness, but also the danger and short-sightedness of going the single-vendor route of "legacy lock-in," as SAP co-CEO Bill McDermott described it.

"We're not in this game to go it alone—we've the absolute antithesis of other competitors in our space who want to own the whole stack," McDermott said. "We're antithesis of others in our competitive space—we don't ever want to be like them—we want to work more closely than ever with our partners."

And SAP co-CEO Jim Snabe had this to say about the company's vastly different approaches: "We fundamentally don't believe we need to buy a hardware company to deliver world-class systems to our customers," pointing to SAP's partnership with HP and IBM to provide hardware for SAP's new High-Performance Analytic Appliance.

Such partnerships with the HP and IBM and other of the world's top IT companies offer CIOs "a better proposition than someone with single ownership of stack" and lets them "get far more value from ecosystems and partners as well as SAP."

That ecosystem-above-all philosophy—repeated dozens of times by various SAP execs during the two days I was at the event—stands in sharp contrast with Oracle's emerging strategy as laid out last month by president Charles Phillips, who said CIOs simply cannot afford to go on wasting precious time and money and focus on tedious integration and connectivity chores.

(For more analysis of Oracle's and SAP's unfolding strategies—including Phillips' all-Oracle model—please be sure to check out our "Recommended Reading" list at the end of this column.)

"The entertainment value or intellectual stimulation you get from tweaking every little thing up and down that stack is not the same as what it once was—they're kind of bored with doing that," Phillips said in an interview. "And the expense of doing that is apparent now—and after going through the last two years of downturn, it kind of helped us in a way because people said, 'I've gotta find a way to change what I'm doing—this is not working.' "

Phillips freely admitted that Oracle's one-stop-shopping strategy is jarring to many CIOs when run against their traditional ways of thinking and their long-held approaches to IT infrastructure, whose primary tenet always seemed to be that one-stop-shopping is the absolute worst of all possible scenarios.

"Right—and look where that philosophy's gotten us," Phillips said with a smile.

"Today, our strategy is doable only by us because we have the applications all the way down to the storage and so the question is, do people want that—and we're convinced that a large enough percentage of the market will change and say this makes sense, it's logical, it's an evolution of the industry, a maturation, and when you talk to CIO-levels, that's just a direction I think the industry's evolving toward," he said.

"It just makes sense—I mean, how long are we gonna keep piecing this stuff all together—it takes forever—and if you compare the cost of managing the environment we're creating to the old way of doing it—and we have some of both at Oracle and we've been able to measure it—we're probably about 10% of the management cost if you standardize and use the appliances we're talking about in our on-demand business than if we're doing it the old way because a lot of things are just automated and self-aware.

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"The cost difference," Phillips said, "is just gonna be huge if you use self-managing, pre-tested and pre-configured appliances because there's just less to manage and less potential for conflict."

But today, in describing SAP's new "unrelenting commitment" to "putting our customers at the center of every single thing we do," McDermott said that a large and active and engaged ecosystem is the key to innovation and customer success:

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