Commentary
2/9/2011
06:58 PM
Bob Evans
Bob Evans
Commentary

Global CIO: Oracle's Mark Hurd Calls Out Deadly IT Strategies

Hurd outlined several world-shaking trends while speaking with some of Oracle's largest financial-services customers and prospects.



In a wide-ranging conversation with Oracle's financial-services customers and prospects yesterday, president Mark Hurd stressed that the next decade or two will bring profound changes in where wealth is created around the globe and in the ways technology can help—or hinder—companies seeking to exploit that opportunity.

Pointing to Indonesia, Mexico and Turkey as among the next wave of high-growth countries, Hurd predicted that those lands will lead the next great wave of wealth creation created by innovative companies whose products and services and ideas are consumed around the world.

"There's a big change in where wealth is going to be created," Hurd said. "If you were hanging around high income countries like this one for the past 20 to 25 years, you're probably in a good place. But in the future, if you want to be somewhere interesting, try" some of the emerging markets he highlighted.

Success in those rapidly evolving markets will require different skills, different outlooks, and different technological capabilities than those that underpinned the American century (my term, not his), Hurd said, and winners and losers will be determined in large part by how they view and deploy IT in ways that lets them keep pace with customers.

Hurd touted Oracle's belief that competitive advantage will accrue to those companies that can liberate increasing percentages of their IT spending from internal integrations and maintenance, and then plow those funds into innovation and growth-oriented opportunities. And Hurd predicted that companies unable or unwilling to climb out of the eternal-integration rut "will lose."

Those stuck-in-the-past enterprises will first lose their ability to keep up with and delight customers, Hurd said, and then they'll lose those customers, and then they'll lose in the marketplace because they simply can't move at the speed that a massively urbanized and mobilized economy will demand.

How mobilized? Exactly one year from now, Hurd said, the planet Earth will be populated by more mobile phones than people.

It was a fascinating exchange as Hurd, who spoke for about 15 minutes and then took questions from the audience, was making a case that must have seemed downright radical—if not heretical—to executives from some of the country's largest banks, insurance companies, and capital-markets firms.

Because, at the heart of his remarks, Hurd was suggesting to that very high-level audience that they need to begin stepping away from the vendor-arbitrage strategy that has been a mainstay of corporate IT buying for the past 20 or 30 years.

Those big financial-services companies have spent those last few decades assembling the Noah's Ark of technology:

Two of everything of every type of every species from every corner of the globe. And they've done that because their unshakable belief is that to do otherwise—to purchase from a significantly smaller set IT partners—would shift too much power and control and lock-in potential into the hands of those preferred vendors.

But meanwhile, Hurd said, the hidden and insidious cost of that policy has come in the form of massive IT teams forced to plow through endless integration, endless configuration, endless tuning, and endless testing.

The solution, argued Hurd, is a more homogeneous stack in which everything from servers to databases to middleware to applications to storage and more is optimized for ease of installation and configuration. "We take over ownership of that cost," Hurd said, allowing customers to refocus their people and time away from internal busywork and toward customer-facing growth initiatives and engagements.

In saying that, Hurd emphasized—repeatedly—that Oracle is as open as any IT company in the market and will happily work with other vendors as specified by customers. But he also gently noted that those heterogeneous configurations can't tap into the "secret sauce" of optimization that comes from having deep engineering-level integration at all levels of interaction.

Here are a few other compelling points made by Hurd in his opening remarks or during the Q&A session:

The customer-expectation gap: Hurd relayed a funny story about driving to the airport with his daughter and and being "impressed" that when he made a phone call to try to find out at what gate an incoming flight would be arriving, he was greeted by a voice-recognition system instead of having to wait interminably for a human being to answer. "I thought, wow, this is great—this is real progress," he said with a laugh. "Of course, the voice-recognition system didn't work at all—I'd say, 'San Francisco' and it would ask, 'San Diego?' over and over. But to me, even though it didn't work, that was progress because my generation was trained to expect and accept bad customer service. My daughter looked at me and said that I'm the only person in the world who would try to do that," and she then used her iPhone to get the gate information in a few seconds. So as this new always-on, always-connected generation comes of age, Hurd says, companies will have to find ways to rapidly and elegantly close that yawning expectation gap in customer service.

Vertical-market extensions of Exadata? Hurd said the Exadata phenomenon has been extraordinary and that Oracle is looking at a range of ways to further exploit the potential of the fastest-growing product in the company's history.

It's not always IT's fault: Hurd chuckled as he relayed some experiences in which CEOs are all too eager to their IT organizations for whatever is ailing the company. And as the pace of global business accelerates, he said, this misconnection or disconnection between what the business needs and what IT is being asked to deliver can be deadly.

The iPhone as optimized system: Hurd used Apple's hugely successful device as an example of a consumer-market analog to Exadata, describing how the software and hardware are engineered from the ground up to work together beautifully.

(For additional insights and more-extensive verbatim comments from Hurd, please check out this article from my colleagues at Insurance & Technology, and this article from my colleagues at Bank Systems & Technology.)

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Global CIO: Hewlett-Packard's Missing Link Is Analytics

Global CIO: Burying Mark Hurd: Hewlett-Packard And Its Future

Global CIO: Hewlett-Packard's CEO: The Top 10 Challenges

Global CIO: Has HP Found Its Next CEO?

Global CIO: Larry Ellison And Mark Hurd: The Job Interview

Global CIO: Resurrecting Mark Hurd: Larry Ellison's War With IBM

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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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