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Dave Stephens on technology and business trends

Oracle’s E-Business Suite – Chapter 2

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Oracle, like many companies, operated in all practicality as a loose confederation of entities dispersed by geographic regions. I believe Larry referred to the managing heads in each region as his "feudal lords".

He said more than once that he finally figured out each different Oracle actually did have something in common – their tagline. In the US it was "Oracle, the internet changes everything" or something like that. Everywhere else in the world (according to Larry) it was "Oracle: Larry, you're not the boss of me!"

So Larry started setting up incentives to consolidate systems. He would eventually refer to the Global Instance he envisioned as his "global policy instance" – he was sure without it he would be unable to enforce global practices. But I'm getting ahead of myself.

He started with something simple – Email servers. Truth was, at Oracle email was horribly unreliable. Or at least it seemed that way. I can remember outages that lasted for days. And for a technology company that was just embarrassing. Well, part of the problem was that Oracle had over 100 different email servers. Now there is 1. Oracle saved a ton of money and improved email service with that work alone. It was just common sense applied to a very un-optimized, fly-by-the-seat-of-your-pants empowered Oracle culture.

To incent the regions, Larry offered the global single email instance free to the "feudal lords." They could pay extra for their own, more unreliable email, or they could use the central service for free.

From there, it was on to Applications.

And at Oracle, there was no shortage of work. Any given country in which Oracle operated was likely to have an instance of Financials, an instance for CRM, an instance for HR. So each operating country's ERP & CRM systems weren't integrated, let alone the region's!

Now if you look at a solution like Peoplesoft's, this was anticipated. In fact, it was as good as you could do. Peoplesoft Applications were in separate databases to begin with & could never be engineered to work together. Peoplesoft HR came in 1 database, Financials and SCM came in another database, and Peoplesoft CRM came in a 3rd database.

But with Oracle, you could run all this stuff in a single database: Financials, SCM, Procurement, HR, & CRM. And all of the applications were integrated not via XML or web services or insert-trendy-integration-glue-here, but at the schema level. Now this was true even before Larry got more involved in applications, but he took it to a whole new level.

Oracle proceeded on a Stalin-esque 5-year plan of consolidating instances in all its operating countries and regions, and eventually did get to a Global Single Instance for all ERP & CRM – for about a month. Then Peoplesoft crashed ashore. But fundamentally, Oracle had learned how to absorb disparate business with its instance and business process consolidation work – a skill that would start coming in quite handy as the M & A forces at the executive level won out & Oracle went on its buying rampage. And as always with Larry, there is method behind the madness. But that's for another time.

In the meantime, check out this great Financial Times interview. Page 2 contains Larry's assertions about instance consolidation and business operating practices. Well worth the free sign-up imho. 

– Chapter 3 on its way –

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Written by Dave Stephens

04/18/06 5:12 AM at 5:12 am

Posted in Opinion

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