There's Something About Larry

While it's one thing to slap your competitors around, it's another thing to do the same to your customers.

More than three years ago, my former colleague Bob Evans (who now reports into Larry Ellison as senior VP communications for Oracle) wrote an open letter to Ellison imploring him to change what he called Oracle's "one-size-fits-all, non-negotiable" 22% annual software maintenance fees. Oracle uses those fees to invest in new products and features, not to mention making shareholders happy with fat profit margins. Evans' suggestion at the time: At least change the language to "innovation and development funds." In other words, communicate a vision to your customers, not something that sounds like ham-fisted profiteering.

It didn't help that Oracle President Safra Catz had told investors that Oracle was making so much money on its maintenance fee structure that the company was having trouble spending it all.

Now, more than ever, Oracle needs to articulate a customer-centric vision. The cloud seems like a great place to start.

--Oracle should strive to make every one of its applications run as a cloud service. If, for now, that means Fusion applications must act more like hosted applications, that's fine too, but Oracle executives have said that the company built Fusion from the ground up to be cloud ready, including the ability to offer multi-tenancy. Great! Let's see. Or if Oracle builds cloud apps under the umbrella of recently acquired Taleo, it must do so quickly, at least in areas such as HR, CRM, and marketing.

--Meanwhile, all of the cloud apps must be compatible with on-premises Fusion or legacy Oracle apps, so customers can make the migrations when they wish to, without resource constraints, and even in some hybrid cloud models. In that way, Oracle would be embracing the strategy Microsoft promises with its Dynamics software: one code base, deployable however the customer chooses, allowing some components to run on premises while others run in the cloud.

--Oracle should sort out where Taleo, Fusion in the cloud, and RightNow fit into this grand scheme, not to mention NetSuite (or Collective Intellect, a cloud-based social intelligence solution Oracle announced it is acquiring). Better yet, acquire the remainder of NetSuite, create a lineup of excellent small-to-medium business SaaS offerings from the back office to the front office (ERP and HR to CRM and customer enagement), and work to make a seamless customer migration from those mid-market cloud offerings to Fusion in the cloud.

--Oracle must offer a compelling reason for customers to move to its cloud. Oracle's software pricing has been, to date, inflexible. This is a chance to change that approach. Customers should be able to order the applications and features they want, have them monitored rather than audited, and pay for what they use (storage, requests, transactions, etc.). This will certainly put Oracle's fat margins at risk, but better to manage this process yourself than to let your competitors do it to you.

--Offering Java as a platform service may not be all that special, but Oracle has several advantages here. First, it has the back-end resources (read: data center infrastructure) to power enterprise-class Java applications, and to do so at scale. This could be a big opportunity to help companies cut application deployment costs. Oracle should also put other services on top, such as its messaging and database services--things that no other Java PaaS can easily provide. Of course, Oracle should run other stacks on its PaaS, but that's unlikely to happen.

--Offer the Oracle database as a service, but make pricing and migration simple. Put Exadata in the cloud as a service, and add Oracle Big Data Appliance services, including Hadoop and the Oracle NoSQL database. And what about making the on-premises Exadata appliance a front-end cache for the cloud data services?

And finally on the strategic side:

--Don't be offensive, but go on the offensive. Everywhere I turn it seems as if SAP is popping Oracle in the mouth. SAP is rallying around its Hana in-memory database, the cloud, and mobility, and by doing so it has garnered customer and industry attention. Never mind that HR software-as-a-service (its SuccessFactors acquisition) hardly makes SAP a cloud company. Or that Hana, for all of its great promise, is still a blip on the SAP revenue chart. Or that SAP hasn't done a great job of explaining what it has really brought to Sybase's mobile portfolio. The point is, SAP has a stated strategy. State yours.

This Ellison statement isn't a strategy: "IBM used to be No. 1 in database; now we’re No. 1. They used to be No. 1 in middleware, and we're now No. 1 in middleware. They're No. 1 in high-end servers; soon we’re going to be No. 1 in high-end servers." But this Ellison statement gets closer: "Long before we bought Sun, we decided to build this database machine. We thought data centers were unnecessarily complex. People were buying storage from EMC, networks from Cisco, and all these other separate parts together. I said let's do all of it. We'll sell one building block you can plug into your data center. We're trying to do for the data center what Apple did for the consumer." Say more of that, but with more details.

Ellison has two powerful weapons at his disposal: Mark Hurd, who runs the revenue side of Oracle's business as one company president; and Safra Catz, who oversees financial and legal matters as CFO. These three executives are as smart and entertaining and acerbic and witty as any you'll find. And they're all ruthless competitors. Every time Oracle puts any of them onto the speaking circuit, they draw attention. Oracle needs to do a bit more of that.

And while you're at, Larry, talk more about the Ellison Medical Foundation (fighting diseases related to aging) and the new company you’re backing that's getting involved in drug design. Philanthropic endeavors show a man isn't entirely consumed with enemies.