Business & Technology Nexus

Dave Stephens on technology and business trends

Oracle E-Business Suite – Chapter 4

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Previous "chapters" have introduced you to Oracle's E-Business Suite strategy, as articulated by Larry Ellison – an approach that placed engineering ERP & CRM to work as a single integrated engine above the needs of any one application. I've also discussed Oracle's discovery of the poor state of its own business infrastructure – due primarily to system fragmentation. Now I continue with its subsequent zealous pursuit of systems consolidation.

At Oracle, consolidation of enterprise applications began with email, but it sure didn't end there. A truly massive number of ERP instances were consolidated over a 5 year timeframe, until only 1 remained. Oracle saved a lot of money in simple ways – by closing data centers, reducing IT staff, etc. And when the work was done, and Larry asked how many employees worked at Oracle, or how much money we had spent with Dell YTD, he got an immediate and accurate answer. The Global Single Instance provided operational coordination Oracle (and I dare say most large companies) had never experienced. It was great.

But the Global Single Instance never quite lived up to Larry's idealistic vision. 1st, it was customized EXTENSIVELY (and remains so). 2nd, it required a group of 1,000 people to maintain. 3rd, and most importantly, agility was completely and utterly sacrificed.

What do I mean by agility? I mean the ability to adapt systems rapidly in a particular business function. Here's an example:

At one point, Oracle's Procurement business group wanted to get the latest code drop from the Advanced Procurement suite. It was production software; it was just not at the same release level as the rest of Oracle's colossal Global Single Instance. The newer version was required to achieve important operational objectives – you know, save money, improve efficiency, etc.

1st, the Procurement business group had to schedule a project with the IT department, and get that project approved (2 months go by). Then they had to schedule another project, with an overlay e-Business Suite team-centric IT group. And get that approved (another month).

Now, IT personnel assigned to Oracle's Global Single Instance were held immensely accountable for any downtime on the Global Single Instance, planned or otherwise. So from their viewpoint, the fewer changes & the slower the change, the better. It was just good common sense – change control on a vitally important corporate asset (which translated into 6 more months of "common sense" delay for our poor Procurement group).

It's plain to see the impact of the Global Single Instance on the Procurement organization was akin to shackles and chains. It took 9 months to get a simple patch installed on the system, one that only impacted Procurement, and only impacted it for Professional Buyers (and not the self-service audience). Now what if the Procurement VP's operational objectives for the year had depended on getting the system upgraded in time to achieve savings targets? Ouch. Not a good spot to be in.

Now I'll be the first to suggest if this project had been the number 1 priority at Oracle, it would have happened overnight. But large organizations can't do a single thing at a time, and can't possibly prioritize everything centrally. It's foolish to even try. Large organizations pay good money to have high-caliber independent management hierachies operating with objectives that are in line with the CEO's high level vision.

And in my view, it's examples like the one I've just offered that have bolstered business interest in SaaS, especially in key best-of-breed areas. Many of the Procurement leaders I've talked to are not on regular speaking terms with their IT department and will do just about anything to avoid dealing with them. They view IT as unresponsive to their needs, and often a group that prevents them from moving at all.

The ironic thing is that Oracle has a world-class IT department and Global Single Instance management team. Its team may best any customer's group I've encountered. The issue isn't people – it's prioritization. Global Single Instances for large organizations can embue a Soviet Union-style command and control mentality to enhancing your business' infrastructure. The advantage is in the integrated information and policy management. The disadvantage is the pace at which you are able to advance your forces along the many fronts of battle of "systems improvement."

As another example, I remember talking with Agilent about replacing Ariba or Freemarkets with Oracle Sourcing. Someone within the company had come across Oracle's latest datasheets & fell in love with our newest functionality. So I went to their offices in Sunnyvale, and presented what the software could do. But the Procurement department at Agilent, just like the Procurement department at Oracle, had absolutely no control over the pace of change in their Global Single Instance. "Tell me what your Sourcing functionality was in 11i8" they said. "You mean back in our 2002/2003 release?!" I said. That was the end of that. I was having to compete against best-of-breed vendors with a 2-3 year handicap. We were good but not that good! And you have to wonder what an optimization engine would conclude if companies had to accept a 3-5 year delay on the best business processes to keep the integration advantages they had acquired.

There's more to say about the E-Business Suite though this concludes my remarks on Oracle's own Global Single Instance. Perhaps sometime I will write a Chapter 5 focusing on why I believe Oracle's applications strategy & Larry's positioning of it, resulted in market share losses to SAP. I certainly believe what we built was highly differentiated in the market & bested SAP in too many ways to mention. It just wasn't in synch with what the market was asking for.

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Written by Dave Stephens

05/3/06 5:05 PM at 5:05 pm

Posted in Historical, Opinion

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