The decisions by Oracle Corp. to split the chairman and CEO roles and name two top executives as president, announced late Monday, appear to be methodical steps, versus a castle takeover, according to industry observers.
Analysts and Oracle customers expect little immediate change in the direction of Oracle.
The split of the two top jobs keeps Larry Ellison, who founded the database and enterprise applications company, as CEO while making longtime Oracle Chief Financial Officer Jeff Henley the new chairman of the board, replacing Ellison.
However, there is some indication that there was more at work than just good planning. Henley, who has been at Oracle for 13 years, was anxious to leave the company. The promotion was a way for Ellison, who has lost key executives in the past, to keep him.
Steve Vandivier, former president of the Mid-Atlantic Associate of Oracle Professionals and current president and CEO of Avanco International Inc., in McClain, Va., applauded the move to put a great deal of responsibility on Henleys shoulders.
“[Henley] is widely credited for leading [Oracle] back from the financial problems and reporting problems they had in the early 90s, and he has generally given Oracle a lot of credibility in the Wall Street community,” said Vandivier. Many of his government clients still refuse to deal with Oracle because of the software makers early aggressive days, he added.
In addition, Vandivier sees Henleys promotion as a shrewd ploy by Ellison to retain a favorite lieutenant instead of joining the ranks of sharp minds that have departed, such as Ray Lane, Tom Siebel and Marc Benioff.
Oracles board also announced that executives Safra Catz and Chuck Phillips were both promoted to president positions, reporting directly to Ellison. Phillips has also joined Catz as a member of Oracles board. Its unclear whether the two will operate as co-presidents or as two separate presidents dividing the roles duties.
Oracle, one of the largest developers of database management systems and a top maker of business automation software for the enterprise, has not had a president since Lane resigned from that post in the summer of 2000.
Next page: What Catz and Phillips bring to the table.
Names on the Street
The choice of the two executives is also a departure of sorts for Oracle. Both Catz and Phillips are well-known on Wall Street, with Catz coming from the banking industry and Phillips a former Wall Street analyst. Neither has previous global operations management experience.
Catz and Phillips are also the two executives most vocal—and visible—in Oracles ongoing siege to buy enterprise applications rival PeopleSoft Inc. However, the naming of both will have little impact on the direction of the proposed $7.5 billion deal, according to analysts.
“We see it as having no impact on Oracles desire to acquire PeopleSoft,” said Jeff Comport, an analyst with Gartner Group, in Stamford, Conn. “The architects of the deal remain in place, and all indications are that Oracles intentions remain unchanged. If you had seen something with Chuck [Phillips] being sidelined, it would indicate management thought there were issues, but youre seeing the opposite.”
The naming of Catz and Phillips will likely have a greater impact on the overall direction of the company as it looks to fend off competition from the likes of Microsoft Corp. and IBM, and deal with issues like how open source will affect business. At least that seems to be a determining factor in why the board would choose technology outsiders to run the company in lieu of long-term Oracle executives like Ron Wohl, according to Bruce Richardson, an analyst with AMR Research Inc., in Boston.
“This could be the first company whose two presidents spent their formative years on Wall Street,” said Richardson. “[It points to a] great faith in their ability to read the Street, read the market and be able to figure out the right thing.”
Catzs role as head of global operations will change in title only; she will remain in the position she has held for the past five years. She has been a board member since 2001.
Phillips, on the other hand, will be in charge of field operations, a role that includes overseeing sales, marketing and consulting. This is a fast rise for Phillips, who was hired in May 2003 essentially to be the front man in Oracles very public bid to acquire PeopleSoft.
Paul Dorsey, president of the New York Oracle Users Group, said he believes the Oracle executive shakeup will re-invigorate Ellison with tighter tactical development upon the giant software maker.
“Ever since Ray Lane left, Ive been kind of wondering whos running the show,” said Dorsey.
Dorsey added that Oracle “is Larrys baby and I would suspect that this is what its about. Having these relatively inexperienced people he can direct, its pretty clear hes going to call the shots down to a more detailed level than weve seen for a while.”
Next page: Will Ellison still have the touch?
A Rusty Touch
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Toward that notion, Dorsey did express some concern that Ellisons hands-on touch could be quite rusty. Still, he said Oracle users are unlikely to be too affected by the executive management overhaul.
“When you go out and buy a car, do you care whos running [General Motors]? This is simply a strategic direction,” Dorsey remarked.
Some users, such as Lucas Lukasiak, president of the Connecticut Oracle Users Group in Hartford, said that the downfall of many high-profile IT vendors has been to take away the power of a charismatic leader, such as Apple Computer Inc. and Steve Jobs.
“This is the classic question of a technology company—do you let your leader be the charismatic founder whos best suited to choose your next major strategic change versus succumbing to the business operations and the financials of the company for short-term profits?” asked Lukasiak.
It remains be seen, he said, whether Oracles new leadership structure, featuring Phillips and Catz as co-presidents under Ellison and Henley, can pinpoint the best long-term strategic directions for Oracles products.
“If I were making a five- to 10-year investment in any new [Oracle] technology, I would want to see how this plays out a little first,” noted Lukasiak.
Vandivier said that many Oracle users will welcome Ellisons return to his familiar visionary role.
“User groups, particularly people who follow Oracle, look to Larry Ellison the way Microsoft people look to Bill Gates because hes the guru and the visionary, and people like that,” he said.
(Editors Note: This story has been updated since its original posting to include additional comments from customers and industry analysts.)
