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Both antitrust enforcers and enterprise technology professionals must look toward the future, not the past. The U.S. District Court in San Francisco is looking in the wrong direction in its analysis of Oracles proposed acquisition of PeopleSoft; we urge enterprise IT buyers not to make the same mistake. Regardless of whether one sees the Oracle-PeopleSoft deal as good or bad, its important for IT pros to maintain a clear focus on where technology is going, not on where it has been.
We have previously urged Oracle to focus on its core business, the database platform, and on the fundamentals of innovation, service and value to earn and keep industry leadership. We have urged Oracle not to become merely a scavenger—to use the term that Oracles Larry Ellison once applied to Computer Associates. We persist in those views, but theres more to be said in response to the questions and controversies raised in the courtroom.
During closing arguments late last month in the U.S. Department of Justices suit to block Oracles PeopleSoft buyout, the court seemed interested in whether the DOJs unwieldy, 18-point definition of “high function enterprise software” had ever been used outside that litigation. Frankly, we dont care. We dont see the point of asking whether actions today will dominate markets, dubiously defined in the first place, that will likely be irrelevant tomorrow. We prefer these future-looking queries: First, what are the critical and fastest-growing enterprise needs for application function? And second, how will enterprise buyers prefer to meet such needs?
Enterprise applications demand system-level software skills to provide the scalability needed for small remote offices and massive central operations. They need craftsmanship to enable user access and minimize administrative costs with intuitive tools and self-service capabilities. They must have deep knowledge of industries and locales, serving specialized domains and conforming to global variations in currency, calendar and custom.
These are separate areas of expertise, the kind of one-stop shopping Oracle seems to be seeking is a benefit only if prepackaged integration of application components avoids awkward, costly custom work. The trend, though, is toward easing such integration so that enterprises need not settle for middling competence as the price of prepackaged convenience.
New application architectures are based on nonproprietary protocols and data formats, leveraged by development tools that are just as much portals for service integration as they are workbenches for crafting custom code. Future market power is not ensured, therefore, by buying the victors of the past. Indeed, it does look as if Oracle is scavenging the battlefield of the last war, the war of the SAPs and PeopleSofts. We dont see value for buyers in this strategy.
Future competitions will be won by focus and agility, not size. IT buyers, we hope, will understand this better than Oracle, the DOJ and the courts.
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