IBM Exec Slams Oracle Over Customer Philosophy

Oracle's begun promoting the idea that the IT stack can become much more manageable, much less expensive, and much less complex if CIOs will simply go with all-Oracle stacks. While Oracle says this novel approach is starting to gain traction among customers, IBM senior VP Steve Mills says it's all a bunch of typical Oracle testosterone-driven blather.In an interview earlier this year with Global CIO, Oracle president Charles Phillips said that while he understands that the all-Oracle stack flies in the face of long-held concerns about vendor lock-in, the alternative approach of unrestrained heterogeneity doesn't seem to be working.

So let me offer a brief overview from Phillips on Oracle's proposition, and then I'll share Mills' rebuttal.

Here's Phillips on the CIO dilemma from that April interview: "The entertainment value or intellectual stimulation you get from tweaking every little thing up and down that stack is not the same as what it once was-they're kind of bored with doing that. And the expense of doing that is apparent now-and after going through the last two years of downturn, it kind of helped us in a way because people said, 'I've gotta find a way to change what I'm doing-this is not working,' " Phillips said.

"They're under pressure to reduce costs like everybody else, and the luxury of having unlimited flexibility and unlimited configuration and unlimited choice-well, it's expensive. So I tell them, 'We know you like that unlimited choice -- that's kinda how we all grew up -- but it just doesn't make any engineering sense anymore, and if you're gonna keep doing it that way, your costs are gonna always be higher than someone who doesn't do that, and if you want to be successful and keep your job, you're gonna have to do things differently and just accept that the industry's becoming more standardized. You don't need 18 different vendors and 2,000 configurations to have competition -- you've got to limit it some.'

"And I think we've convinced people that makes sense and beyond that we think the whole industry's just moving in that direction. And we can accelerate that by standardizing that entire stack and showing people how it's done -- people like that 'iPod for the enterprise' analogy."

But in a recent interview with Mills at IBM headquarters in Armonk, Mills expressed a dramatically view of the best approach for CIOs and their businesses:

"We have the world's largest Oracle integration practice in IBM Global Business Services, so it's not reflected in the amount of money that people spend in integrating Oracle products, which is many times the cost of the purchase of the Oracle products," Mills said. "The integration cost that the customer incurs-both in-house and their integrators-is many times that of the Oracle products, and there's been no diminishing of that labor requirement.

"And so although it's an interesting assertion, if you qualify the question, you're certain to get the answer you want. If everything worked together perfectly, would you buy from one vendor? Well, that's a big but, and it's one of those highly qualified questions where the customer is clearly now being baited into saying, 'Well, of course! If you could solve that problem for me-if you could make all this stuff work together, and if it came to me that way, and you significantly reduced my cost, then you have my attention.' So it's one of those fundamental truths-but of course it's a function of how you phrase the question in terms of the answer you'll get," Mills said.

"Customers will also tell you that they don't want to give Oracle pricing power-they don't view Oracle as a friendly company to do business with. They view their contracting and their licensing terms and their charging mechanisms and their up-charging and their embedded-feature charging, which is not always visible when you buy a product, and their maintenance policies and so on, all to be fairly onerous.

"For all of the rhetoric about how 'We'll make it simple for you'-and we'll certainly all hear a lot about that at the upcoming Oracle conference [Oracle Open World, Sept. 19-24]-there'll be a huge flow of testosterone coming from the stage as there always is from Oracle about how spectacular they are and all the great things that they will do in the future and so on and so on. But Fusion has yet to arrive-they use it as a brand, but nothing has fused; the traditional Oracle ERP code has not fused with the PeopleSoft code, has not fused with the JD Edwards code or the Siebel code or the Retek code, etc. Look at all the apps companies they've bought: they've not fused anything. The complexities are still there, and the challenges of dealing with all the different products and deploying them are still there-so I think this is all about Oracle presenting the image that Oracle wants to present, as opposed to the investments and actions Oracle is actually taking.

"So yes-customers want faster time to value. They find things that give them value quickly are appealing. But they're not going to sacrifice the business goals and objectives they have for what may be simple to deploy but ultimately doesn't meet their requirements, and doesn't satisfy what the business need is at the time. Those tradeoffs have to be taken into consideration."

I'm highlighting these two sets of comments from previously published columns (links below) because they encapsulate what's becoming a pretty significant battleground in the IT business: how do CIOs continue to strip out inefficient operating costs in order to support and accelerate their own companies' flexibility and capabilities and revenue? Oracle says the right approach is to simplify your infrastructure by going with one vendor (that would be Oracle) and relying on its engineering teams to deliver prepackaged integration and tuning and interoperability.

But IBM says that way madness lies.

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