Government // Enterprise Architecture
Commentary
3/29/2010
07:35 AM
Bob Evans
Bob Evans
Commentary
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Global CIO: Oracle's Larry Ellison Declares War On IBM And SAP

Ellison admits Oracle trails SAP in enterprise applications and IBM in high-end servers, but lays out plans for becoming #1 in each sector.

grab all the attention at the high end of the server market. I think we can expect HP to come out with some of its own high-end announcements in the near future to demonstrate its unflinching commitment to delivering cutting-edge technology in a business world of increasingly high volume and high velocity.

**Salesforce.com: Dinged by Ellison late last week as employing "kinda late-20th-century technology," Oracle's part-time partner and full-time competitor will have to continue to grow rapidly and expand its capabilities significantly as Ellison's pledge to offer cloud versions of Oracle's full line of software will chip away at one of Salesforce.com's core competitive advantages.

**EMC and NetApp: Oracle is promising that its integrated-systems approach of bundling Sun hardware optimized with Oracle software will shake up not only the high-end server business but also the storage business, and industry leaders EMC and NetApp will likely be forced to either refute Oracle's approach and describe why it's anything but optimal, or they'll have to accelerate their own internal engineering innovation and alliances to deliver superior solutions.

In addition, Oracle's forthcoming Fusion lineup will also stir up an already feisty marketplace for database as well as middleware technology and products—so we'll be sure to see Microsoft, IBM, Tibco and others step forward aggressively to articulate why their approaches are best for CIOs.

Against that broad industry-wide backdrop, let's now turn specifically to Ellison's views of why he feels he can oust SAP from the top spot in enterprise applications, and then we'll take a look at his latest claims for why Oracle-Sun optimized systems will outdo those from longtime leader IBM.

Ellison framed his company's assault on SAP around what he said are three key flaws in SAP's strategy: 1) SAP's aging and increasingly uncompetitive core technology; 2) its lack of industry-specific applications; and 3) its misguided attempt to rekindle growth by attempt to sell ERP software to small and midsize companies.

"In applications, SAP is the leader. But their technology that they use for applications is a proprietary technology—a German programming language called ABAP. That's a 25-year-old technology that's still the center of their architecture and strategy for applications going forward, this ABAP," Ellison said.

"The center of our strategy going forward is Java and a modern service-oriented architecture. And during this calendar year we will deliver our Fusion applications—we're been working on them for a while and we have rewritten, or written, in Java all of our accounting software, all of our supply chain software, all of our HR software, our sales automation, our service-automation software—has all been rewritten in Java with a modern service-oriented architecture. And we're gonna go compete with SAP's 25-year-old technology."

Ellison then described how Oracle's portfolio of applications with industry-specific functionality—some built internally, many acquired and integrated—allows Oracle to tap into new revenue streams unavailable to SAP.

"We think SAP is vulnerable and we can take them on in a variety of industries. The other thing that we're doing is SAP is not doing is emphasizing industry functionalities. So it's not just technology where we're competing with SAP—we're also competing with them on functionality," Ellison said.

"We think we have much more functionality for a telco—a phone company—a large-scale retail operation—and in insurance and in banking—we have industry-specific applications for a variety of industries—healthcare—I could go on—so our strategy is to have much better industry focus than SAP in terms of functionality, and a much more modern technology underlying all of that functionality. Again, it's a company that we think is vulnerable, and we think we have an excellent chance of becoming #1 in applications."

And that vertical-market expertise, Ellison said, gives Oracle "opportunities that are simply not available" to SAP. "We sell these applications a piece at a time rather than a big rip-and-replace strategy, so when people aren't doing big ERP buys—by the way, ERP's a rather mature market; we think we're competing very well in ERP but it is a mature market and SAP is to some degree saturated. SAP is not a diversified company in terms of their application suite," Ellison said, and as a result, must look for growth in other areas that he feels will not bear fruit.

"I'm sorry to go on for so long but their strategy right now is to try to sell ERP to customers with less than 100 employees—that's their new strategy, Business ByDesign, which has been, I guess, three years late—and by the way, if it's successful, you can't make a lot of money selling, y'know, ERP to companies with less than 100 people," he said.

SAP's problem, Ellison said, is that it has "a strategy that goes nowhere":

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