We have had a lot of great reactions to our strategy over the last year or so. What has really changed is that customers not only understand what we are trying do but are totally aligned with it, he told a group of journalists in the UK yesterday.
A lot of customers have the same problem of complex systems built over the years that they have failed time and time again to integrate. They have tried different ways… but everyone has come to the same conclusion that standards-based integration is the primary way to solve this problem. Having as many applications as possible pre-integrated when they buy is the second aspect of that strategy. That happens to be exactly what we are doing. We are providing a standards-based platform for integration around a middleware stack and on top of that, pre-integrated applications.
It is also important to do it in a standards-based way so they can extend those integrations and not get locked into a proprietary integration platform, he added, in what has become the customary swipe at SAP.
In Phillips’ view, that strategy aligns with the SOA and web services-based concepts that companies have talked about for several years but are now able to start realizing. Our major differentiator is that not only can we talk about them but we can deliver the applications and the integration platform. Secondly we think customers believe our architecture has been adopted and we are not trying to conserve something from the 1970’s the way SAP is. [Customers] believe in us because [as] we were in the infrastructure business first, then the applications business, we understand it.
Obviously SAP would disagree with Oracle’s assertions that it is the only capable integration and application provider building to a new architecture. But Phillips’ remarks are insightful as they indicate that the company is still having to defend itself against the charges that its acquisition strategy is incoherent and unmanageable.
With the announcement of the Application Integration Architecture in April this year, Oracle started building some structure and cohesion around its in-house and acquired portfolio, and that is the key to understanding its overall strategy. Oracle’s integration platform plays a central part in enabling it to integrate its own portfolio — as well as providing a way for customers to do the same — and its efforts to define and innovate within the integration market.
We are defining the market now. The market is to solve the biggest problem of all which is the integration problem, said Phillips. It is the biggest problem most companies have to deal with and this is an innovative way to solve the problem but in a standards-based way. It is innovative in that it gives best of breed functionality with standards-based integration, which is what people have been asking for, for years. No-one argues about wanting best of breed functionality, no one argues about having elegant, loosely coupled, standards-based integration technology. With us you get both. We think that is innovative.
Oracle has been criticised for using acquisitions as a means of outsourcing its R&D work. But far from denying this, the company holds it up as a benefit, enabling it to get low-risk access to proven R&D. The companies we buy are good companies and companies where we can add value. We view that as successful R&D. The reason we buy is because they have something that is of value to our customers. It is R&D with no risk. You only have to buy it if it works, Phillips said. That is how our customers look at it — I, through Oracle, can have access to the industry’s R&D.
Our View
Oracle’s ambitious acquisition strategy is starting to pay off in terms of financial rewards, share price improvements and its standing among customers and the industry in general. Although as an Oracle insider Phillips’ perspective has a high gloss finish, the company is at the stage where it can spend less time defending itself and get on with laying out its future strategy.
It still has a mass of development work to do, but it has the building blocks in place. The challenge is to get customers to dig into their budgets and start investing, piloting and rolling out live implementations based on its integration platform and application portfolio, which is the same challenge facing SAP. SAP had a long technology and marketing lead over Oracle, but that lead appears to have shrunk.
