Ellison Answers Financial, Technical Questions - ' Learning from past mistakes ' (
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Ellison went on to detail two major Oracle failings during the 90s: creating a single sales force with one rep per company, and building a huge internal consulting and services organization that competed with the channel.
"One of the single worst mistakes Oracle ever made was thinking that the customer wants one person selling everything. I thought that was strange, because the customer doesnt have one person buying everything. I think the one-person sales force model was a tremendous mistake. We separated applications from the database sales force, which we should have done a long time ago.
"We are an infrastructure company. Eighty percent is infrastructure, and 20 percent is applications. But were unlike any other application company in the world. Were the only application company with a huge infrastructure business thats separate. Are customers forcing us into integration? People are talking a lot about doing different types of integration with message passing. That style of integration—passing data from one application to another—has been around for 25 years.
"Were talking about a different way to integrate, around a common data model and database, instead of around a message backbone. Large customers have always had a need to integrate, but Ive always thought that standard message passing technology was enormously expensive to use. I think IBM Global Services would agree with that. Gerstner said that for every dollar in product revenue, they brought in five dollars for services. We think that ratio is way out of line.
"Where IBM makes their money is in system integration. If one of the companies that begins with General—Motors, Electric—decides to build a customer data hub [with Oracle], the likelihood of choosing our consultants to do that is very small. General Electric would probably pick Tata Consultancy Services—one of the biggest Indian consulting and outsourcing companies—because they watch every penny.
"One of the most interesting things that happened last year, which I learned after the fact: GE Medical implemented our eBusiness suite without me knowing about it. Well who did this? Tata. An awful lot of this work will be done by third-party consultants. I dont see us ever having, nor do we want, the scale of consulting business to do these big projects. Our primary business: We are a software technology company.
"Seen over the past few years, Oracles been flat to down. But its our consulting and education business thats down. Software and licensing is a lucrative business. We dont want to compete with system integrators like we did in the 90s. Thats another big mistake we made. The big system integrators were recommending SAP and Seibel because they saw us as a competitor. We dont want to be a competitor."
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