Oracle's Hurd: Businesses Must Adapt to New Consumers

By Jeffrey Burt  |  Posted 2014-03-25

Oracle's Hurd: Businesses Must Adapt to New Consumers

BOSTON—Oracle President Mark Hurd says the incoming generation of consumers—the Millennials—are not going to be like those of his generation, who grew up in an age when the power in a business relationship oftentimes rested with the vendor.

Instead, the new generation—which currently represents 18 percent of the United States' $17 trillion in gross domestic product (GDP), a percentage that will rise rapidly over the next few years—has more power and more knowledge, thanks in large part to the technology products like smartphones they can now leverage.

These consumers are less loyal to companies, less patient with bad service, more sophisticated, more mobile and more picky, according to Hurd. And if vendors of any size want to continue to stay in business, they will need to be able to navigate this changing business environment and meet the demands of the Millennials.

Hurd, speaking at the first Oracle Industry Connect event here March 25, said people of his generation—many of whom are helping to run these businesses—are used to poor service from vendors, from waiting on the phone for 20 minutes to deal with a company's call center to getting their call dropped.

"Now, when I get great service, it's a treat," he said during his keynote address. "Not my kids. When they get bad service, they leave. … You're chasing a much more sophisticated, mobile consumer. "

Technology is driving a lot of changing dynamics that are giving new shape and definition to the changing vendor-consumer relationship—as well as the evolving employer-employee relationship—and technology also can be leveraged by businesses to help them thrive in the new business environment, Hurd said. That includes everything from the cloud to big data analytics to the Internet of things, and industry-specific applications that can help organizations in these segments address their particular issues.

That last part is the focus of Oracle's two-day event here. The giant enterprise application vendor over the past several years has built up a business that focuses on several individual industries, including retail, utilities, communications, financial services and health sciences. The individual business units within the industry-focused strategy have their own consulting and sales staffs—more than 20,000 Oracle employees work in the industry units—and their own R&D budgets, and develop software to address industry-specific challenges.

Oracle is working on a two-pronged business model, Hurd said. The company continues to sell its database and other enterprise solutions to any organization that wants to buy them. However, by also focusing resources on individual industries, the company can develop specific solutions that can be replicated many times over throughout an industry. And if, for example, Oracle can solve a particular problem at a bank, it benefits all of Oracle, he said.

Oracle is doing this through both organic development and acquisitions of companies that develop industry-specific technology solutions.

The results have been good, according to Hurd: Since 2010, revenues in the industries have tripled.

"The commitment by us is huge," he said. "We've bet on this with our wallet. You will see us pick up the pace to take leadership [positions] in key industries. … The good news for us so far is that it's worked."

Oracle's Hurd: Businesses Must Adapt to New Consumers

At the Boston conference, Hurd's keynote was the only event that aimed to address all industries. The rest of the events—from keynotes to presentations to networking sessions—are dividing along six specific industries. In addition, Oracle officials at the show unveiled a number of industry-specific solutions.

In his address, Hurd stressed the importance of technology in helping drive business and the global economy. He noted that the global GDP is at more than $71 trillion, and that the IT sector is only about $2 trillion of that number. However, he noted that without that IT segment, it would be difficult to conduct business, such as buying a plane ticket.

"You really can't buy anything without that $2 trillion," he said. "Pretty much everything in the $71 trillion is enabled by the $2 trillion."

However, there has been a dramatic shift in what makes up that $2 trillion. Before, more than 80 percent came from companies. That is now shifting rapidly to consumers, which is nearing almost $1 trillion in spending, thanks to such devices as smartphones and tablets. Another problem: Most of the corporate IT spending—82 percent—is on the maintenance side, while 18 percent is used for innovation. In addition, the average age of applications being used by corporations is 20 years, making it even more difficult for businesses to address new consumers who are used to the latest technology trends.

"So I've got a lot of people innovating on the consumer side, and I've got a company side that's stuck," Hurd said.

With the continued growth of connected devices, the rapid rise in the amount of data being created and the trends toward such communications models as social networks, "the power has shifted to me, the consumer," he said. In addition, those consumers want businesses to meet their expectations, and to know and understand them. Businesses need to leverage new technologies to help them meet those demands if they are to survive.

That includes such technologies as data analytics, he said. There is a huge amount of data being created, but most of it is worthless, Hurd said. Businesses need products that can find the nuggets of data that are worthwhile, and then collect and analyze the data so that vendors can quickly make useful business decisions.

The changing consumer landscape will only continue to evolve, and if companies don't adjust, they'll fall by the wayside and be replaced, he said.

The new consumers "are going to get harder to deal with, not easier," Hurd said. "They're going to be less loyal, more mobile, more picky. … You're going to have to change how you work with them."


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