Global CIO: Larry Ellison's New Acquisition Underscores Vertical Strategy - InformationWeek
Government // Enterprise Architecture
11:16 AM
Bob Evans
Bob Evans

Global CIO: Larry Ellison's New Acquisition Underscores Vertical Strategy

Ellison says Oracle can overtake SAP by providing more industry-specific functionality, and his latest deal underscores his belief.

About a month ago, Oracle CEO Larry Ellison vowed that his company will overtake SAP as the world leader in enterprise applications by virtue of what he said is Oracle's superiority in industry-specific functionality. And while we can set aside for now Ellison's quest for industry supremacy, his acquisition last week of a life-sciences software offers some interesting looks into that strategy of building out deep domain expertise as the best way forward.

During Oracle's earnings call with analysts last month, Ellison said his company will close the gap on and eventually overtake worldwide applications leader SAP because Oracle's applications allow its clients to handle more-advanced processes that in turn let those clients deliver higher-value offerings to their end-customers. Here are two comments Ellison made during that call that define what he sees as the strategic advantage his company has over SAP in applications (and you can read the full analysis in Global CIO: Oracle's Larry Ellison Declares War On IBM And SAP):

1) "The other thing that we're doing and 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."

Global CIO
Global CIOs: A Site Just For You
Visit InformationWeek's Global CIO -- our new online community and information resource for CIOs operating in the global economy.

2) "Our vertical strategy is working extremely well," Ellison said on the earnings call. "We're winning large deals in retail, large deals in banking, large deals in telecommunications, and that's dragging a lot of ERP and CRM applications with them. We're doing well in pharma—healthcare in general. There are a bunch of industries where we're very very strong and we have applications that SAP simply does not have. One of our strategies was to beat SAP in CRM, which we do, and then beat SAP in industry-specific vertical applications. For example, a telecommunications company has applications to provision: you call up AT&T and you turn on your iPhone and you want to turn on interactive TV—when you provision an application at a lot of telcos, that's Oracle software that's turning on those services for you. SAP has nothing like that. When you receive your (mobile-phone) bill, that's an Oracle application that's sending you the bill—SAP has nothing like that. When you deposit money in your saving account, that's an Oracle banking application that literally keeps track of that—SAP doesn't have that."

SAP, of course, objects to Ellison's disparagements of its industry-specific capabilities—but the larger point is that the two most-powerful enterprise software companies in the world are now engaged in very blunt competition to deliver to CIOs in every industry more power, more deep insight, more customer-centric features, and ultimately more business value.

And with both of those companies eager to prove their superiority, this is becoming a fine time for CIOs to consider doing some aggressive shopping for applications. Consider the level of granularity Oracle has gained in its acquisition last week of Phase Forward, which makes applications for life sciences companies and healthcare providers, in a cash deal worth around $685 million.

From a news-analysis piece on by my colleague Nicole Lewis:

1 of 2
Comment  | 
Print  | 
More Insights
Newest First  |  Oldest First  |  Threaded View
How Enterprises Are Attacking the IT Security Enterprise
How Enterprises Are Attacking the IT Security Enterprise
To learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Register for InformationWeek Newsletters
White Papers
Current Issue
Digital Transformation Myths & Truths
Transformation is on every IT organization's to-do list, but effectively transforming IT means a major shift in technology as well as business models and culture. In this IT Trend Report, we examine some of the misconceptions of digital transformation and look at steps you can take to succeed technically and culturally.
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Flash Poll