Just Trying to Outflank IBM Should Not Be the Strategy

By Chris Preimesberger  |  Posted 2010-09-10 Print this article Print

Simply trying to be bigger than IBM or HP isn't going to be the right way to go, Crandell said.

"There's an awful lot more opportunity here than just trying to squash IBM," she said. "Oracle has an opportunity to create whatever the next-generation model is, in aggregate of where the enterprise tech industry is.

"We're clearly at a point in which the consolidation has been going on for a time. It reminds me so much of back when mainframes were thought to be dead, and up came client-server and open systems that everybody heralded as the new reality. We're at that same point again in history."

Oracle has a unique opportunity that few other companies have: to really stake out the shape of what that new business and technology model is going to look like, Crandell said.

"They have all the pieces. They've done it over their 60-whatever acquisitions they'd made over time. When I look at Mark Hurd and the many assets he brings to the table, the question that looms is: Can he, Larry and Safra make the sum of the parts greater than the whole?"

Will Hurd and Ellison agree on R&D approach?

Whether or not Hurd actually will be delving into Oracle's R&D remains to be seen. Ellison, though a close friend of Hurd's, may have a different view on R&D, so it's going to be interesting to see how this new relationship works, Crandell said.

"We're in something called the 'innovation economy,' in this recessionary period," Crandell said. "The rule of the game is: If you don't have a heavy pipeline of innovation-it doesn't have to be earthshaking innovation, incremental is OK-you're not going to be able to survive, to grow."

Crandell pointed out a pair of market reports, one by PRTM that said 50 percent of all R&D dollars never return a profit-ever. The other is from Gartner, which reported that 49 percent of product launches fail every year.

"The concern, keeping those 50 percent statistics in mind, is that this [cutting costs to the bone] strategy, while it works in the short term to manage the stock price and manage shareholder satisfaction, in the long term-if there isn't a mechanism in place internally to make sure that every dollar you spend in R&D produces a return ... can create quite a lot of problems," Crandell said.

You can cut R&D, Crandell said, but you must make optimal use of that good 50 percent of the R&D budget. The right kind of mechanism for this, she said, is one that makes use of every R&D dollar spent by making sure that the right products are brought to the right markets at exactly the right time in a systemized, transparent process.

So getting the R&D right is a business-critical factor, Crandell said. And she's not sure Hurd is the guy to do that.

"There has to be a real hard look at what innovation is brought to the table, and, 'How do I mix the pieces together so that the sum is greater than the whole?'" Crandell said.

Chris Preimesberger Chris Preimesberger was named Editor-in-Chief of Features & Analysis at eWEEK in November 2011. Previously he served eWEEK as Senior Writer, covering a range of IT sectors that include data center systems, cloud computing, storage, virtualization, green IT, e-discovery and IT governance. His blog, Storage Station, is considered a go-to information source. Chris won a national Folio Award for magazine writing in November 2011 for a cover story on Salesforce.com and CEO-founder Marc Benioff, and he has served as a judge for the SIIA Codie Awards since 2005. In previous IT journalism, Chris was a founding editor of both IT Manager's Journal and DevX.com and was managing editor of Software Development magazine. His diverse resume also includes: sportswriter for the Los Angeles Daily News, covering NCAA and NBA basketball, television critic for the Palo Alto Times Tribune, and Sports Information Director at Stanford University. He has served as a correspondent for The Associated Press, covering Stanford and NCAA tournament basketball, since 1983. He has covered a number of major events, including the 1984 Democratic National Convention, a Presidential press conference at the White House in 1993, the Emmy Awards (three times), two Rose Bowls, the Fiesta Bowl, several NCAA men's and women's basketball tournaments, a Formula One Grand Prix auto race, a heavyweight boxing championship bout (Ali vs. Spinks, 1978), and the 1985 Super Bowl. A 1975 graduate of Pepperdine University in Malibu, Calif., Chris has won more than a dozen regional and national awards for his work. He and his wife, Rebecca, have four children and reside in Redwood City, Calif.Follow on Twitter: editingwhiz

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