Highlights from Softwar

by Matthew Symonds

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Suite vs. Best of Breed

Ellison’s Application Software Philosophy

Ellison’s view is that best-of-breed software purchasing behavior creates data silos across the organization and prevents companies from realizing the full value of enterprise software. Oracle’s application software suite (“E-Business Suite”) would provide an opinionated end-to-end application suite — rather than require companies to stitch together their own solution.

Ellison’s advocacy of the E-Business Suite was not based on the belief that it had more features than rival products — in fact, he was ready to admit that in a straight features contest between Oracle’s suite and most best-of-breed assemblies, the E-Business Suite would come off second best. He said, “It may not have one hundred percent of what you want, but it has a hundred percent of what you need. The advantages of out-of-the-box integration more than make up for a few missing nice but not necessary to have features.”

The overwhelming reason, Ellison believed, for the failure of information technology to deliver on its overblown promises was the fragmentation of information that resulted from the computing industry’s addition to complexity.

His view is that the “obsession” with best-of-breed software has created complexity, expensive implementations, and, more importantly, fragmentation of data.

…bloody campaign to end the dominion of client/server is precisely the same as the one that has led him to his current battles with best-of-breed software vendors and powerful system integrators — namely, that the cardinal sin of the computing industry is the creation of complexity: a complexity that invariably results in information systems that don’t deliver timely and useful information because they use software architectures that result in chronic fragmentation of data.

One of the main drawbacks of multiple systems was that the APIs and database do not talk to each other in the same “language” since the underlying data schemas are different between each system.

Software from different vendors will have different semantics — even something as simple as defining what a “customer” is may differ — different underlying data schemas, which have to be coordinated but will scarcely ever be fully reconciled, and different user interfaces with conflicting design conventions and display elements.

Even if the consultants have a proven integration method to link two pieces of software, APIs still have to be specifically constructed to pass messages among distinct database schemas, limiting the amount of information that be extracted as well as duplicating storage requirements.

The way companies (still) get around this is to use ETL to move data from the application into a data warehouse (e.g., Snowflake), transform/model the data, and put the data to use with BI tools or, increasingly, with rETL products. There are also latency issues with trying to marry data across systems together like this, which matters for certain use cases more than others.

Ellison’s criticism was primarily directed at standalone enterprise software businesses (e.g., PeopleSoft), which often require custom implementations and expensive systems integrators (e.g., Accenture) to manage.

Ellison became convinced that the peculiar characteristics of the enterprise application industry — the need to glue together a kit of parts purchased from multiple vendors and the urge to customize still further in an effort to make the software fit the way customer companies did business — were responsible not just for the frequently expressed dissatisfaction with Oracle’s own application software but for the general and widespread conviction that long and costly ERP and CRM implementations often failed to deliver the expected return on very large investments.

Building an end-to-end software suite (ERP and CRM) with one data model was Ellison’s solution.

The answer to the problems that enterprise application customers were facing, Ellison concluded, lay in doing two things, which he cacluated Oracle alone was capable of. The first was for all of Oracle’s applications to be tightly integrated both with one another and with the database through an architecture based on a single shared-data model.

The second was to produce the first-ever complete suite of applications that would be capabale of automating every aspect of a company’s business, from the traditional ERP or back-office tasks, such as financials, manufacturing and HR, to the fancy new stuff that included customer relationship management (sales, marketing and customer support), the supply chain, procurement, and Web stores. Ellison calculated that Oracle’s advantage lay both in its genes as a database company and in the sheer size of its development teams.

In the client/server world, this was partly self-serving for Oracle and Ellison, who viewed the database as the center of the model.

The starting point was to see the database as the hub and the applications as the spokes. Ellison says, “We had been thinking about the problem upside down, and as a result we were building the wrong software. We had been building process automation systems. We needed to build information systems — with the process automation layered on top.

Traditional applications design focused on automating one particular process — like taking an order. Modern application design must focus on piece of information — customer orders — and then layer on all processes that touch the order information: taking the order, billing the customer, initiating customer service, marketing additional services to that customer, and so on. It’s not the process at the center, it’s the data.

Issues During Client/Server Era

The fixation to make the database the center of the stack proved to be Oracle’s undoing during the client/server era…

[Oracle] was creating tools to leverage the dabtase as it evolved from host-based computing to client/server, while the tools in applications were stuck withouth a migration path to the new platform. The consequence was that Oracle’s applications were not rewritten to run in client/server mode until 1993 and even then Oracle’s tools proved extremely difficult to adapt to the the kind of GUI that PeopleSOft was making populair and customers expected to find on their Windows desktop PCs.

What both of these costly mistakes showed was that Oracle’s technology development was being driven almost entirely by the requirements of the database rather than the applications business.

…and ultimately led to the company falling behind SAP and other best-of-breed tools during the client/server era. There were other decisions Oracle made that led to the company falling behind, including their decision to shun channel partners and build their own consulting business.

For many companies, choosing an ERP system, require board-level approval and so consulting firms and SIs assist in the decision marking.

SAP had carefully nurtured relationships within the Big Five consulting firms, especially with Andersen Consulting, the largest systems integrator in the world. When companies were deciding whether and how they were going to implement an ERP system, they rarely started off by talking directly to the software vendors. Instead, they would ask one of the consultancies, usually one with which they had an existing relationship, to evaluate their business process and then recommend the software that would best fit their requirements.

Although SAP’s suite was from from perfect — it was notoriously inflexible and hard to put in (not that that worried consultants too much, who were paid according to the lenght of the job)…

What’s more, a recommendation in favor of Oracle’s applications would run the risk of the customer then inviting Oracle Consulting to pitch for the work. It made choosing SAP a no-brainer. Jeff Henley says, “We totally screwed up partnerning by building this big consulting group. We totally pissed off our partners.”

Oracle’s inability to effectively deliver on Ellison’s product vision in the client/server era, channel conflicts, and organizational issues led to the company falling far behind on the application side to SAP, PeopleSoft, etc. At one point, the company’s growth devolved to being driven by re-selling 3rd party and consulting services.

The transition from client/server to internet presented an opportunity to effectively reset the company’s application suite.

Platform Shift

Ellison viewed the internet as the next wave of computing. The client/server architecture was a dead-end because it was complex, disaggregated, and further fragmented data across the enterprise.

His theme was the failure of the prevailing computer architecture of the day, known as client/server. He believed client/server was an “evolutionary dead end” that was “distributing complexity” with disastrous consequences…

It was a drum that Ellison had been beating for some time, and conceptually it was little different from Sun Microsystem’s famous slogan that “the network is the computer.”

The internet also presented an opportunity for Oracle to catch up to SAP on the application side…

For the first year, most of Ellison’s Internet evangelizing was confined to technology — the database and tools, the things that he knew and cared most about. 

But it began to dawn on him that the impact on Oracle’s struggling applications might be even more profound. Ron Wohl took only a little convincing. He says, “In the applications business, you can never catch and pass someone who has dominant market share unless something else changes. If you do the same thing as a competitor who’s ahead of you, you’ll never catch up.

…and Oracle had much less to lose because they had already fallen so behind in the client/server era.

Oracle had much less to lose by better everything on the Internet. If SAP had done the same and had failed to make the technology transition gracefully, it would have to destroy a wonderful business for no good reason; it’s the dilemma of all incumbents and the reason why the short history of the software business is littered with the bones of once successful firms that failed to adapt to new paradigms in time.

For Ellison, the internet also represented a growth vector for his database business, which analysts at the time thought was maturing.

Everytime one of those applications was used, there was a good chance that it would query the database that the application ran on…

In a client/server world, less sophisticated databases, such as Microsoft’s SQL Server, might have become “good enough” for many businesses, but with Internet computing came the need for databases that could support millions of users at once.

And for fun…

Ellison on Bill Gates and Microsoft

Bill began chanting Microsoft’s new mantra: ‘Please, please don’t take away our right to innovate’

Microsoft innovate! Give me a fucking break. The innovation for the Internet came from Netscape. All Microsoft did was copy Netscape’s browser and bundle a ‘free’ copy of the browser with Windows. But it wasn’t really ‘free’ at all. Microsoft got paid for its ‘free’ browser by raising the price of Windows. But Netscape couldn’t charge for its browser because Microsoft included a ‘free’ browser as a part of Windows. It was a brilliant business strategy. It killed Netscape. But it’s illegal.

Now Microsoft is trying to do the exact same thing to RealNetworks by bundling a ‘free’ media player with Windows. They’ll just keep doing it over and over gain until somebody penalizes them for doing it. You’ve got to give them credit for balls, but not for innovation. Even Bill’s business strategy is just a copy of Standard Oil’s strategy back in the 1870s…

”So what’s Microsoft’s single greatest innovation?” Take your time. It’s a trick question. There aren’t any. All that money Microsoft spends on research; what have they got to show for it? Nothing!