06:40 PM
Bob Evans
Bob Evans

Global CIO: In Database Wars, Microsoft Says It Gets No Respect

Microsoft's gaining on Oracle and IBM in database revenue but can the company truly scale to help CIOs attack the deadly 80/20 IT-spending ratio?

Quick: enterprise sales made up what percentage of Microsoft's total fiscal-year revenue of $62.48 billion: (a) 24%; (b) 36%; (c) 51%; or (d) 62%?

The answer's 36%, according to Microsoft, or about $22.5 billion. Is that more or less than you thought?

The reason for the pop quiz is that Microsoft seems to feel it's not getting the recognition it deserves for its enterprise-level products and devoted a 40-minute phone conversation this week to touting its big-business achievements via some numbers and customer references and hints at future plans.

I find this interesting because it's become something of a theme at Microsoft over the past year as the company has begun swinging back—sometimes quite aggressively—at what it believes are unfair swipes at its overarching enterprise strategy, its product roster, and its perception in the marketplace.

And according to the Microsoft exec who says he's the one responsible for marketing and articulating the positions and successes of Microsoft's highest-end products, those big revenue numbers noted above are among the world's best-kept secrets.

"With our enterprise business, it's really a matter of perception and reality," said Microsoft's Eugene Saburi, general manager of product marketing for the company's Business Platform Division. "I don't think we get our due credit for all the work we do and the successes we've had—almost a quarter of the company's total revenue comes from the Servers and Tools Business [$14.9 billion for the year, or 23.8% of total revenue] and overall enterprise customers make up 36% of our revenues.

"But the perception of that is a challenge we'll have to work on," Saburi said, having noted previously that Microsoft's enterprise business is only 10 years old. "We've made a lot of progress, but we clearly need to do a better job of sharing that news and getting credit for it."

I always wince a little when I hear tech companies talk about not getting their fair share of "credit" because the ultimate proof of value and relevance is the degree to which CIOs are—or are not—voting with their wallets.

So we nudged the conversation toward the fundamental value propositions that Microsoft's enterprise business offer to its corporate customers, and Saburi related an approach that's dead-center consistent with what all of today's top IT companies are taking: helping CIOs lower the cost of infrastructure and liberate precious IT dollars to apply toward growth initiatives.

"This whole 80/20 problem—we've even seen some companies where it's 85/15—is a big priority for our customers and for us and we're trying to help them flip that ratio," Saburi said, referring to the crushing percentage of IT budgets that have to be devoted to maintaining and servicing low-value systems and old, creaky infrastructure.

And then, in what's either an intriguing paradox or perhaps simply a reflection of the emergence of The One True Way for all IT vendors to take, Saburi's overview of how Microsoft will try to help CIOs make that huge adjustment sounded almost exactly like the strategy that longtime rival Oracle is championing:

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"CIOs shouldn't be burdening themselves with spending all of their time worrying about infrastructure, and how they can scale it up and down, but instead on stay focused business and operational problems. They shouldn't be in the business of gluing and stitching pieces together, doing patches," Saburi said.

"That's the computing model of the last decade."

Compare that with this diagnosis of the CIOs' dilemma from Oracle CEO Larry Ellison, per our column yesterday called Global CIO: Larry Ellison & The New Oracle Rock The Tech World:

"We think that makes it much easier for the customer. They don't have to buy all the individual parts and glue them together, but instead they buy the boxes: a high-margin product for us and a high-value purchase for them because they don't have to spend a lot of money on systems integration," said Ellison.

"We think that's the way customers are gonna go forward as they build their data centers: not buying components but buying systems like Exadata."

So if Microsoft's and Oracle's strategic approaches are similar—and by these descriptions, they certainly are—then the keys to success in this rapidly changing marketplace for both companies will be a combination of commodity hardware running powerful and flexible software in a combination of settings: traditional on-premise systems, private clouds, SaaS applications, and the increasingly frothy world of highly optimized and integrated systems.

Although Microsoft's only been deeply focused on the enterprise for just 10 years, Saburi said, he believes that the marketplace is demonstrating that Microsoft's products are up to the challenge. And in describing the wildly complex infrastructures from which many CIOs are now desperately trying to escape to begin their journey to that more-flexible and less-expensive future, Saburi used a great metaphor:

"Big-company CIOs built IT systems that were like Formula One racing cars and their IT organizations were like the Formula One pit crews," Saburi said. "Extremely knowledgeable and powerful, but also extremely expensive and limited in how they're able to do things and in what tools they could use. And that just doesn't match the budget or strategic focus of IT organizations today—our customers today require IT infrastructure that's highly elastic and highly efficient."

So Microsoft's leveraging new chipsets from Intel and AMD that can scale up to truly mission critical apps via today's 8-way servers and 64 logical cores, Saburi, and getting ready for the 16-way and 32-way devices that are coming. "All that power used to be extremely expensive, and now or pretty soon it'll be running on x64 plus Windows with SQL Server."

Ah yes, SQL Server—something of a sore spot for Saburi, who, along with Microsoft's PR agency, leaned hard on recent reports from both Gartner and IDC showing that Microsoft has narrowed the gap with IBM and Oracle in enterprise-database revenue and now holds third place with an 18.6% share.

In fact, Saburi said, Gartner's recent database roundup showed that Microsoft's 2009 database revenue grew 3.2% while revenues at both Oracle (-1.8%) and IBM (-2.0%) actually declined.

"Customers today have many clusters of information throughout their businesses and they're trying to make more sense out of those islands of information," he said. "They want—they need—to make better use of their data, whether for something like SarBox requirements or complying with local regulatory issues, or to make faster decisions.

"We think part of our advantage is that a common theme we're hearing from customers is that they need not only a fully robust database but also along with that a fully compatible composite app like SharePoint to help them architect the future solutions they'll need."

And pointing to that strong performance in databases versus Oracle and IBM, Saburi insisted that Microsoft has mastered the ability to deliver whatever its enterprise customers will need in moving from the old IT model to the new."

"For at least the short term and maybe longer, there's strong demand for data warehousing appliances, and we think there'll always be a time and a place for them so we'll participate," he said. "And there will always be Formula One cars, the big systems—if there's enough demand, we'll deliver on that as well.What I can say is that the data warehousing appliance will be first, and that there will be more after that.

"At the same time, we know we need to be in a position to help our customers make the journey to the cloud," Saburi said, "to having a highly elastic infrastructure that lets them shift their IT operations model from 24/7 to 9-to-5. So we're fully prepared to continue investing in not only the traditional Formula One stuff those CIOs need, but also cloud-type stuff, particularly as we're finding that the ability to have a centralized database running in the cloud is a very attractive proposition for many companies."

If Microsoft's able to (a) deliver on all those promises, and (b) continue offering "very attractive propositions" with SQL Server across all the types of platforms its CIO customers are demanding, and (c) continue adding database share while Oracle and IBM decline, then it's likely that Saburi and his colleagues will begin getting that hard-earned respect they feel has been lacking.


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GlobalCIO Bob Evans is senior VP and director of InformationWeek's Global CIO unit.

To find out more about Bob Evans, please visit his page.

For more Global CIO perspectives, check out Global CIO,
or write to Bob at [email protected].

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