Oracle may have to eat its words

Software leader Oracle Corp. has made a big deal about the US$1 billion it claims to have saved last year using its own software. The company was so excited, it promised to follow up with US$2 billion in savings this year.

Now it is finding that some promises are made to be broken.

The slowdown in the U.S. economy has cut into the database giant’s spending growth and, therefore, what is was able to trim from its expense line. It is now reassessing what its own software can do for it and a more realistic target is US$1.5 billion in savings, CEO Larry Ellison said in a recent question-and-answer session with reporters.

The final tally remains to be seen, he said, though he reiterated that the savings will be greater than last year’s.

The revision is significant for the Redwood Shores, California-based software developer. Oracle made last year’s US$1 billion in savings the central theme of its marketing message, implying that corporations installing its enterprise package of accounting, manufacturing sales force, procurement and customer-service software would see savings, too.

This year’s marketing message might have a more complicated delivery.

Oracle also used last year’s savings to bolster its bottom line. The US$1 billion in savings announced in June pushed its fiscal-year-operating margin to 40 per cent from 30 per cent a year earlier. Oracle had hoped for an additional 10- percentage-point margin improvement this year – a goal it will be forced to reassess.

Meanwhile, Oracle might have to continue its battle with naysayers who suggest that a good portion of last year’s savings came from cutting software consultants from its payroll.

In his comments to journalists, Ellison said a lot of uncertainty remains around the U.S. economy. In the software market, “it already feels like we’re in a recession” though the economy as a whole may avoid two quarters of negative growth, he said.

Although corporate customers continue to plan big software projects, it will be the end of the year or perhaps the end of the first quarter of 2002 before more-normal growth returns to the software business, he said.

That might increase the prospects for Oracle’s savings. Maybe then the software giant will have more savings to boast about.

Would you recommend this article?

Share

Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.


Jim Love, Chief Content Officer, IT World Canada

Featured Download

Featured Articles

Cybersecurity in 2024: Priorities and challenges for Canadian organizations 

By Derek Manky As predictions for 2024 point to the continued expansion...

Survey shows generative AI is a top priority for Canadian corporate leaders.

Leaders are devoting significant budget to generative AI for 2024 Canadian corporate...

Related Tech News

Tech Jobs

Our experienced team of journalists and bloggers bring you engaging in-depth interviews, videos and content targeted to IT professionals and line-of-business executives.

Tech Companies Hiring Right Now