Hurd Should Bolster Oracle Services Arm

By Chris Preimesberger  |  Posted 2010-09-07

Oracle's Ellison Making a Statement by Hiring Hurd: Analysts

The addition of Mark Hurd to the top level of Oracle's corporate leadership is creating a lot of talk in many levels of business: in Silicon Valley, in Wall Street-and even in legal circles.

Only a day after CEO and co-founder Larry Ellison hired the former Hewlett-Packard CEO to be a co-president alongside incumbent co-President Safra Catz, HP announced that it begun a civil lawsuit against Hurd for joining one of its most powerful competitors so soon after taking a $40 million severance package.

Legal issues aside, analysts contacted by eWEEK agreed on this: Ellison is making a statement by immediately hiring Hurd after his Aug. 6 ouster at HP.

And that statement would be this: Oracle, by hiring the highly successful former CEO of the world's largest IT company, is deadly serious about competing with both HP and IBM at the highest levels for enterprise IT systems business.

"This shows that they [Oracle] are serious about being a more general systems vendor-the systems vendor they never have been," Mark Peters, storage and cloud computing analyst with Enterprise Strategy Group, told eWEEK. 

"It's what he brings by reputation and stature, more than anything else. I don't think he particularly brings anything from a storage and cloud perspective, because that's so much about having the right people around you."

It's about management, not technology

Hurd's whole "package"-despite his forced resignation Aug. 6 following a sexual harassment allegation by a former HP employee-is all about management, not necessarily technology, Peters said.

"The civil suit, in that respect, is kind of funny, because it's almost like a necessary step in the corporate tango," Peters said. "I don't think the civil suit is about a particular technology or market secrets; it's more about they don't want this smart manager going somewhere else."

After replacing Carly Fiorina as CEO in March 2005, Hurd immediately started building HP's presence in the storage and software businesses. Is the addition of Hurd a necessary step for Oracle when it comes to developing its storage and cloud computing businesses?

"Yes, it is," Vice President and Principal Analyst James Staten of Forrester Research told eWEEK. "If you take a look at what they [Oracle] acquired, they got a really nice portfolio of products, some pretty innovative technologies, but not a lot of management depth around how to manage that business.

"That's really what Mark will initially fill. Obviously, he'll have to build out a team and evaluate the talent that's already there. I suspect that, having come from a very successful hardware company, he's going to make some changes, for sure."

Hurd Should Bolster Oracle Services Arm


One of the things Hurd also understands very well is the professional services business, Staten said.

"Oracle really doesn't have the depth or experience [in services] to the degree that HP does," Staten said. "That's also what they inherited that was pretty good from Sun [Microsystems]. Sun had a very nice professional services business-albeit mostly around their own products. But a lot of professional services people they picked up from StorageTek [a 2005 Sun acquisition] had deep expertise in Windows storage management, and some of the higher-end, off-platform Unix [systems].

"So all of those things are things Mark should be able to help them [Oracle] leverage more effectively."

Regarding how Hurd will fit into the overall Oracle leadership team, Staten said that "there are some very big question marks there."

"The first question is this: It's highly likely that Charles [Phillips, Oracle co-president who announced his resignation Sept. 6] realized that he was never going to be CEO, and he wanted that next step in his career, which I think logically he should want. That would be reason to move on.

"Should their other executives be thinking the same way, if they have such ambitions? Yeah."

The other question that has to be raised is that Hurd has never had to work for another CEO, Staten said.

"He's been the CEO. How's this [working on the level with co-President Safra Catz] going to work? The dynamic historically has been Larry [Ellison] being extremely hands-on on things he feels are strategic. And that can go all the way down to pricing changes on individual products," Staten said.

"That degree of hands-on probably won't change. I'm not sure how Mark's going to adapt to that."

Hurd may get Oracle to open its wallet

Hurd's initial value to Oracle will be his ability to cut the fat of what has been acquired from Sun without cutting away at bone or muscle, Greg Richardson, an analyst with Technology Business Research, told eWEEK.

"After cleaning operations and making the best out of what is already on the table, Hurd will likely drive a similar strategy to what has been done at HP: spend the company's way into an integrated portfolio," Richardson said. "Much like HP's Converged Infrastructure strategy, Oracle will leverage Hurd's expertise to efficiently and effectively expand its portfolio into areas which it deems necessary to be able to offer integrated solutions."

As evidenced by HP's acquisition spending spree-including the large acquisitions of EDS, 3Com and, most recently, 3PAR-the company enacted a strategy of flexing its muscles and pushing its way into new markets where it can drive revenue and profit growth, Richardson said.

"Don't be surprised to see Oracle opening its wallet again once the dust settles from the Sun integration and the addition of Mark Hurd," Richardson said. "This is particularly true in the storage market, where Oracle can leverage attached storage offerings on its compute hardware, better supporting hardware profitability-a key concern for Oracle."

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