Bob Parker, Joe Barkai, Sheila Brennan, and I recently attended the Oracle Open World conference in San Francisco. We've pulled together our thoughts, with some of the more interesting word play coming from our very own Bob Parker, of course. At 45,000 attendees, this was the largest show ever although the energy was, at best, muted due largely to recent news on continued economic uncertainty. This malaise was magnified further by the passing of Apple's Steve Jobs on Wednesday.
In the past we have used the term "Ellison Island" to describe Open World, referring to the influx of employees and customers from acquisitions that came to the conference to be assimilated in Oracle Nation. Last year, with an emphasis on hardware, we talked about how Oracle was making "guns and butter" resource decisions when it came to hardware versus software.
Just to strain the metaphor to its limit, Oracle Nation appears to be at a crossroads as it seeks to maximize the intellectual power of its talented immigrants. For enterprise buyers, Oracle continues to represent the potential of being the highest order of strategic provider as no other company has its hardware and software portfolio. However, manufacturing IT organizations we speak with worry that too much Oracle may not be a good thing (true for any vendor not just Oracle). Regardless of how much Oracle a manufacturer buys, there is probably enough spending to justify a strategic relationship.
Weapons of Mass Computation
The first two days on the main stage were focused on hardware. In fact, attendees, many of whom were more interested in software applications, told us that it was "Exa overload" - a reference to the Exa hardware branding being used by Oracle. The extended emphasis on hardware may be because Oracle smells HP blood in the water, but the company has to be careful not to alienate its core customer constituency at events like this. And to be fair, Oracle prefers to think of the Exa products as "engineered systems" - a combination of hardware and software, not just hardware, but the point remains that attendees felt a slant in the conversation.
The good news for manufacturers who have built out infrastructure on Solaris is that their investment will be not only be protected but extended with new capabilities. If you are an HP infrastructure customer, there is no reason to panic despite recent events and there are probably better server alternatives to Solaris/Sun anyway. What deserves more immediate investigation are the Exadata appliances for big data projects as the benchmarks are quite good and Oracle has the relevant expertise in scaling information driven analysis. We would like to see more defined logical data models and analytic applications for specific industries to go with the hardware so that manufacturers would have a more turnkey proposition.
Mr. Ellison was in rare form in his keynote on Wednesday, extolling the fact that Oracle applications are built on open standards and referring to salesforce.com as the "roach motel" of cloud software because it uses proprietary development tools - customers check in but they can't check out. He also pointed to faults in multi-tenant approaches, largely security related.
Despite the somewhat dubious points about portability (it is really data portability not application portability) and security (some would argue that multi-tenancy is superior), Oracle must address some more pressing questions about its cloud offerings. First, will these applications be self-provisioned by customers and paid on a subscription basis (not license and maintenance)? Current Fusion Application pricing (HCM and CRM) is available but it is pegged to the traditional licensing model. If this pegging is the approach and provisioning is not automatic, then this is simply a hosting play deployed on modern hardware. Second, if this is also a Platform as a Service (PaaS) proposition as Oracle executives indicated, what is the plan to build out the application ecosystem of developers like is seen with Force.com or Microsoft Azure?
These questions need to be addressed before manufacturers proceed with investment. In the meantime, we also looked at developments in key application areas.
Oracle continues to emphasize its ability to support the information-driven value chain, with the integration of supply, demand, and product-focused components, and Fusion Applications for Distributed Order Orchestration, Fusion Global Order Promising, and Fusion Product Hub (Product Master Data Management). While much of the content about Fusion Applications is still coming from Oracle, a couple manufacturers did participate in a Fusion Early Adopter Panel, where they spoke about the value of Fusion applications in the terms of presenting a single face to the customer and allowing geographic or business unit autonomy for IT decisions (e.g. heterogeneous systems) with global management.
Oracle's strong supply chain application performance came through in a number of customer presentations for Oracle Warehouse Management (OWM), Oracle Transportation Management (OTM), and Oracle Global Trade Management (GTM), with common themes around 'scale for growth', 'improving efficiency', 'increased visibility', 'lowering risk", and 'managing costs'. One user of OWM talked about the ability to tighten its control on inventory and provide more operational stability, with one of the first steps being to receive goods more quickly to better support multiple outbound channels. The implementation is currently in 32 distribution centers (most with unique configurations) and is scaling up to 80+ by the end of 2012. The distributor's comments also echoed something we continue to hear from manufacturers – the system had to be flexible and as easy to use as possible to encourage adoption and accommodate a wide variety of skill levels in the supply chain. It's worth noting that Oracle's own supply chain (Sun hardware) is now using all Oracle products to manage its supply chain, with one of the biggest benefits being $90 million of savings in the first year.
We also spoke with an Oracle manufacturing customer about Rapid Planning (part of the Value Chain Planning Suite), with the manufacturer managing a build-to-order model. The software allows him to run "what-if" scenarios, to know if he can ship a specific product by a certain date. Based on the results, the company knows what orders would be impacted, what parts it needs, which buyers need to check with suppliers, and so on. Besides being able to respond to last minute order requests and engineering change orders, the information also allows the manufacturer to proactively identify when a customer should place an order to ensure available supply.
Product Lifecycle Management
As the next major release of PLM is scheduled later this year, we did not expect major news on the PLM front. Oracle continues to promote the Product Value Chain (PVC) theme, highlighting how giving users access to a range of product information from Agile PLM as well as other modules of EBS improves visibility and promotes effective decision-making. Customers, including Striker Medical, W.L. Gore and MasterLock reported significant benefits from applying a PVC-centric approach to managing product lifecycle.
What we find surprising is that while customer presentations at Open World highlighted comprehensive PLM perspective from concept to commercialization and showcased some impressive process improvements and cost savings, all too often Oracle's own presentations tended to remain confined to traditional product silos. Moreover, Oracle products fundamental to improving collaboration across the value chain such as AutoVue are discussed as a product category instead of a PVC-enabling capability. Oracle customers and, arguably, many marketing and sales personnel will benefit from further articulation and demonstration of the value of PVC and how to deploy it across CRM, Manufacturing and Service, and the role different products, with or without Oracle Fusion Applications, serve to realize its benefits.
While "engineered systems" was positioned to be the star, applications stole the show. Progress on Fusion Applications along with continued penetration in enterprise class manufacturing accounts positions Oracle well in the industry. Existing and potential customers must encourage continued commitment to increasing levels of functionality for enhanced business value while simultaneously improving the deployed cost proposition through cloud, big data appliances, and open standards. If Oracle can deliver on these dimensions than it will be all systems go and a larger share of the manufacturing IT budget.
Did you attend Open World? What did you think? What would you like to see from Oracle over the next year? Please let us know by joining the conversation.