Oracle creates winners and losers with streamlining efforts

Ray Lane’s message to the masses gathered at the Oracle Applications User Group (OAUG) spring 2000 conference was short and sweet: it’s e-business or it’s out of business.

The president of Oracle Corp. wasted little time in delivering his slash and burn homily at the Pennsylvania Convention Centre in Philadelphia to about 4,000 delegates.

“We’re truly in the midst on an economic revolution; in fact, 30 per cent of leaders in the market today will disappear,” he predicted with a wave of his hand. “If you’re not working towards an e-business solution for your company you are taking risks with the entire future of your company.”

It’s difficult to dispute Lane’s predictions. Oracle is living proof of an enterprise in transition with its notorious consolidation efforts in recent months – 67 world wide data centres squeezed into two; 1,300 pink slips issued for Oracle’s Canadian employees alone – and Lane was the first to point out that unless Oracle’s cost-cutting measures continue, his company could face an uncertain future. Although Oracle has already accrued an impressive US$1 billion in savings from its human resourceless plan, Lane warned of impending changes that will see the software giant evolve into a service company.

“This economic revolution will change business, IT, society, and there’s no way back,” he continued. “You will see a world in less than five years where less than 50 per cent of a software company’s revenue will come from software (sales)…software deployment will die too.”

Lane’s speech was quick, crisp and painful to hear in part because he was over an hour late getting to the convention centre – a real problem for Oracle executives evidently.

Perhaps sensing the crowd’s indifference, he swiftly turned to talk of empowering the user, declaring the customer king, and spoke of an upcoming Oracle e-business interaction suite geared to connect the customer directly with the supply chain. All industries, Lane said – using the automotive manufacturers as an example – should adopt this methodology of cutting out the middle tier.

“Oracle is so intent on this…that’s $1 billion out of our cost structure…it’s important to prove it can be done and (to prove) the technology exists today,” he said. “If it (the technology) exists and it can’t get done then it’s the resistance within the company (that needs to be addressed)…make no mistake, this will create winners and losers.”

As Oracle positions itself as a potential winner and some of its staff as losers, Lane argued speed is the most crucial element driving the Internet economy today – “speed is more important than anything” – and it is the very race to the top that will ultimately alter the software business landscape.

“The future of business is to marry the customer to the supply chain,” he stated. “We need to remove the infrastructure in the middle to do so…we have to get [our] software company working as a network…we put so many people in the way and every company in the world does this, that you (as a customer) can’t get an accurate answer.”

Lane insisted there was no malicious intent behind the new model of business he was driving at, as he queried the audience as to why an individual can’t talk directly to a software product’s developers rather than going through a customer service call centre.

Lane turned up the heat and aimed his vision directly at the CEO; sounding suspiciously like actor Michael Douglas’ portrayal of the fabled business leader Gordon Gekko in the 1987 Oliver Stone film Wall Street – “Greed is good.”

“You need a CEO to say it’s going to go there and not take the time to study (the ramifications)…speed is your friend, speed and human beings do not go together,” he said, “Everything can be done at one-tenth of what you’re paying today…let the marketplace be your test.”

There is merit in Lane’s ‘let the customer call the shots’ delivery; ripe with aims to control the estimated US$240 billion in excess product that automakers accrue each year, for example. Lane challenged the current model of choice available to any potential buyer and criticized customer service call centres as a disadvantage.

“Anything innovative should come first,” he reasoned. “We (Oracle) will put that system out and a lot of features will be missing but we have to do it and there will be pain…it’s a simple, complete solution. We will cease to be a software company and become a service company, that is the endgame for us. I don’t know when it’ll come but it’s at least five years away.”

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Jim Love, Chief Content Officer, IT World Canada

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