Ellison Tells OracleWorld: Spend Less

Oracle CEO points out IT industry problems, says his database and applications company has the solutions.

SAN FRANCISCO – Larry Ellison, part-time Oracle Corp. captain and full-time sailor, closed out the OracleWorld show here on Thursday by pointing out all the problems with the high-tech industry. Ever the salesman, as well as sailor, the Oracle chairman and CEO also said that Oracle has all the answers to a flagging economy as well as bloated IT departments.

Ellison delivered the OracleWorld keynote via video conference from Auckland, New Zealand, where he is competing in the World Cup Yachting event. During the address he lambasted in tongue-in-cheek style the software industry for creating too much software and thanked customers for finishing the work that the software industry should have provided in the first place.

"There were huge gaps" with software, and "you solved the problem for us by hiring Accenture or IBM Global Services" to fix the holes, he said. "We have to do a better job at finishing our applications."

Ellison laid out three problems with the industry: data fragmentation, the lack of software integration, and incomplete automation. He said Oracle spent 25 years getting it "wrong." But with Oracle 11i, the companys latest application suite, and a repackaging of the Oracle application server, fixes were coming, he promised.

Ellison answered a question about Oracles own fragmentation in the management space. "We are working on that," he said. "Internally we have a package called Mozart coming out at the end of the year. Its a management tool—a single console….Were constantly integrating the pieces, making the devices simpler and easier to manage."

Data fragmentation was the biggest issue Ellison saw: "The most serious problem I see in the dawn of the information age is data fragmentation. We are in the business of selling databases and you have bought too many of them… Its very very difficult to know where to look when youre trying to get information. Weve got lots and lots of little databases all over our organizations."

Ellison said the problem arose because "people see a specific automation problem and they tackle that specific automation problem."

He then joked that to get good information, "you have to be willing to spend less." Ellison said that Oracles own moves to consolidate servers have decreased costs and increased profit margins: "Were now in the process of moving all our customer databases to one. …. We will finish that job easily in the next 12 months. No I shouldnt say easily. It was not easy….

"Every year since we started on this process our IT budget has gone down. Every year our profit margins have gone up. Our IT budget has dropped by about half since we started this integration," Ellison said. He then repeated what became his mantra: "You have to be willing to spend less."

Ellison, echoing the thoughts of Siebel Systems Inc. CEO and founder Tom Siebel (a former Oracle executive) and Ray Lane (another former Oracle executive), said that theres too much complexity in the industry. Ellison said it was impossible to test software because there were too many permutations.

"We have turned to the other extreme," he said. "Everyone runs the same software configuration. Thats how you get quality." Then he joked "Why are TVs that cost a few hundred bucks more reliable than 500 million computer systems?...Every child should be unique. But not every software configuration."

Ellison joked that moving to a single clustered system has one downside—it has to be more secure. "Security was never so important," he said. "[Before the consolidation] most of our systems were so secure for the sole reason that our systems were so fragmented that no one knows where to find things…Hackers will be as lost as your senior management."

With a large part of the show designated as a Linux love fest, Ellison said Linux isnt ready for prime time, but that it doesnt need to be. "Is it ready for prime time?" he asked. "The answer is: it doesnt need to be. What I mean is that if you cluster these databases together… if one of these Linux systems fails, who cares? We have a fault tolerant system…. If two fail, so what? Your users never see an interruption."

Ellison spent the rest of the hour-long keynote ripping into Microsoft Corp. and predicting the demise of Commerce One, Ariba, and Veritas.

"Bill Gates is a genius. He said that e-mail belongs in the database. And by 2005 theyll get there. Why didnt we think of that,?" asked Ellison mockingly. Oracle itself has been trumpeting its Oracle 9i database as the best data store for e-mail.

Regarding management tools, Ellison ripped Veritas, which is headed by yet another former Oracle executive, Gray Bloom. "You wont need to have Veritas. You wont need to have a lot of the components. It will have its own file system. Its own backup. All of those features will be designed to work together. We dont know how to do that with lots of third-party software."

Ellison then ripped into Tom Siebel and his companys CRM (customer relationship management) software. "Theres no such thing as CRM," Ellison said, later adding: "I hear Siebel speaking about the 360-degree view of the customer. Unless you bill your customer… you cant get that from a Siebel system. You cant have a 360-degree view of CRM by just keeping track of customers. Theres an awful lot of data in the ERP side of the house thats not in the CRM space."

Ellison then predicted the demise of former business-to-business software darlings Ariba and CommerceOne, saying the two companies would not weather the economic climate. "At one time Ariba was worth more than Daimler Benz. Im picking on poor Ariba….[but] two cats could have written that whole application and it was worth more than Daimler Benz. Ariba will never come back. Commerce One will never come back."

The companies that succeed will "have a diversified product line….There will be far fewer companies. Think about the number of auto companies. The good news is this is just the dawn of the information age."