Lyle Ekdahl takes charge of Oracle’s JD Edwards franchise

Lyle Ekdahl can be serious when he needs to be as the photo here demonstrates.  He also loves a good sight gag and punch line.  Ekdahl was the obvious choice to oversee Oracle’s JD Edwards franchise when Lenley Hensarling left this summer in terms of experience and knowledge of our market segment.  His selection was also the popular one.  A significant percentage of those who have a strong interest in the JDE product line know him from the many entertaining presentations he has made in recent years.
 
There is not likely to be any radical shift in strategy or product direction under Ekdahl since he played a major role formulating the current game plan.  The biggest change might be one of style – Ekdahl is a more engaging, energetic and entertaining personality than Hensarling.   The wise old master craftsman has moved on leaving room for the talented and fun loving young apprentice to take over.  Fasten your belts and keep arms and legs inside the ride – this should be fun.
 
Lenley and Lyle worked together for six years.  During that time they steered the JDE product line through its most perilous era.  They began working together during the period when PeopleSoft was making something of a mess of the JDE franchise as it fought Oracle’s attempts to take over. After the acquisition took place, there was widespread speculation that Oracle would sell or spin off JDE. Instead, the product line prospered.  The way that Hensarling and Ekdahl leveraged each other’s strengths was a big reason behind the reversal of fortunes.  After a dramatic few years, JDE has settled into a nice niche within the Oracle applications portfolio.
 
Ekdahl does not have a very complicated mandate. His job is to keep the current installed base happy, profitable and inclined to buy more from Oracle. Adding new installations, especially in underserved markets is also a goal as is minimizing defections. The 6,000+ organizations that use JDE applications around the world generate hundreds of millions of dollars in revenue per year at a nice profit.  Job number one is simply to keep the franchise healthy.
 
There are practical limits on what can be spent enhancing the JDE applications themselves. This is not a serious problem since the product line is mature and has few important missing elements.  As a result, improvements are increasingly focused on the needs of narrow segments of the customer base.  Recently announced features targeted at the fashion industry are a good example.
 
The bulk of the investment in improvement is focused on integration with and leveraging other Oracle products and technologies.  Oracle’s total R&D budget exceeds $3 billion per year.  Ekdahl constantly looks for ways to bring the value of that investment to our community.  This is the big benefit that being part of something much larger brings.
 
Stay tuned for more musings on the next stage in the evolution of JDE that Lyle Ekdahl is now overseeing.  As usual, there is much more to report but I am out of time and space for one posting.

 

Business Intelligence – more observations from OpenWorld

An informative session I attended at OpenWorld was the roadmap for Oracle Business Intelligence Applications (OBIA).  I was only able to comment briefly on it in the October 22 posting.  This posting will expand on what I learned. 

OBIA is the unpronounceable acronym Oracle has chosen for a family of products that it first inherited when Siebel was acquired.  They each consist of a set of display screens and printed reports.  Each one summarizes, analyzes and presents data from one facet of an organizations operation such as the sales function.  The data being analyzed originates within an ERP or CRM application and is then transformed and connected to the analysis tool called Oracle Business Intelligence Enterprise Edition Plus or OBIEE+. 

OBIA originally was called Siebel Analytics and included individual applications for five CRM functions: Sales, Marketing, Loyalty, Price, and Service and Contact center.  The OBIA family is continuously being expanded.  In the ERP space it also includes Financials, Procurement and Spend, Supply Chain and Order Management, Projects, and Human Resources.  

OBI Applications take data extracted from ERP, CRM and other sources and help to make sense out of it by organizing and summarizing the data in useful and creative ways.  Much of this is done through the development of analytics – insightful numbers that are derived from data extracted from the source applications.  Analytics are often ratios such as Inventory Turns, Days Sales Outstanding or Revenue per Employee.  The presentation of results is highly graphical and often includes dashboards. 

At Collaborate in May Oracle announced the availability of connectors for E1 financial applications making it possible for those on release 8.12 or 9.0 to obtain the OBIA Financial application.  At OpenWorld a connector for World 9.0 financial modules was announced.  Connectors that will enable JDE customers to obtain the other OBIA applications will be emerge over time, but no schedule was offered. 

According to one of the executives I spoke to, no E1 customers have yet installed the OBIA Financial application.  We believe this is more due to current limitations in the offering than its potential usefulness.  The relatively high cost of the OBIA/OBIEE+ combination also appears to have limited sales opportunities in a tough market. 

At the moment, it is also necessary to obtain a limited use license for the Informatica ETL tool to use OBIA.  Support for Oracle’s own Data Integrator (ODI) ETL tool will eventually come but no schedule has been announced. 

OBIA also currently requires periodic refreshing of the data warehouse that serves it meaning that the data being analyzed is not always current.  Oracle recently acquired Golden Gate Software as a means of eventually adding a real-time updating capability to its BI product line.  Realistically, it will likely be 2011 before the resulting real-time updating capability is integrated within OBIA and OBIEE+. 

Oracle’s BI experts also admitted that the OBI applications usually represent a starting point.  Major customization of them is normally done before they are fully utilized.  Once complete, BI applications can become an important tool for interpreting the meaning of operational data and using the results to make better decisions. 

Some of the conclusions drawn from what I learned at OpenWorld were: 

• OBIA is an important component of Oracle’s BI strategy.
• The number and sophistication of OBIA applications will grow over time.
• One of the OBIA applications is now being offered to JDE customers on newer releases but none have yet installed it. Other applications will come over time.
• Oracle will add real time updating over time along with support for the ODI tool.
• In the near term, high overall cost will inhibit sales in our community.
• The functionality of OBIA will be built into Fusion.  Some customers may wait a few years to decide if switching to Fusion is the better path to full BI capability. 

There is much more of the Oracle BI story to cover.  Future postings will deal with its many other facets.  Over time, I hope to put all the pieces together coherently.  I ask those that follow this blog to be patient since assembling and presenting this complex story takes time.

 

EnterpriseOne 9.0 Update 1 now available

The first complete update to EnterpriseOne Release 9.0 is now officially available.  It comes approximately one year after the introduction of 9.0.  A number of features and reports have been added but most of them will only appeal to a small subset of our community.  In general, improvements to the base JDE modules are becoming increasingly narrowly focused due to the maturity of the product.  The big exciting new capabilities are increasingly arriving as add-on “edge” applications such as Oracle Transportation Manger or are part of the BI infrastructure that is implemented outside of JDE. 

To learn more of the details about 9.0 Update One go to https://support.oracle.com/CSP/ui/flash.html and search on 948962.1.  Note that this is the new My Oracle Support web site that went live for JDE customers in August. Update One to 9.0 could trigger another wave of upgrades but not because of any specific features it contains.  This is because some organizations follow an informal rule to avoid upgrading to a major new release until a full update comes out.  Such a practice is commonplace with Microsoft products because of the all too frequent high levels of bugs in major releases.  There was a time many years ago when the quality of JDE software was not predictably high.  JDE customers who follow the “wait for an update” rule are often those who were burned in the past. 

Since Oracle has taken over, the quality of JDE releases has improved significantly.  Concerns about early adoption of new releases will likely diminish over time as it becomes clear that they can be trusted.  We think that the capabilities provided by the release should be the key to deciding when to upgrade, not concerns about quality.

 

IBM’s Information On Demand conference

When IBM puts on a conference you can count on it to be well organized and informative.  Information On Demand (IOD) 2009 is following the classic IBM formula perfectly.  My only disappointment has been the lack of any dramatic news or the introduction of major new concepts.  Most of what I have heard so far is a repeat of the messages and jargon from last year. 

IBM always aspires to provide thought leadership and in the area of information management it continues to try harder than its competitors including Oracle.  IBM tells a more complete and compelling story than any other vendor.  The products and services which support the story are always sound but are not always at the leading edge. 

The IBM story line starts with the assertion that its mission is to help create a smarter planet – one that is more efficient, that better uses and conserves resource, and that is sustainable for generations to come.  Who could argue with such lofty goals?  The story goes on to point out that the world is becoming more instrumented, interconnected and intelligent.  This refers to the explosive growth in sensors, meters and other sources of data that in turn are increasingly connected to the internet and that frequently have a great deal of local processing capability. 

The vast and growing number of data sources and local intelligence is increasingly being used to monitor and influence events as they occur.  The real time data being generated is increasingly being combined with historical data to form powerful data warehouses.  Data modeling and analysis tools then come into play to turn the mountains of data into understandable information which can lead to more informed decisions.  Over time those decisions become the foundation for improved business process. 

IBM calls this chain of events “information-led transformation”.  Its philosophy is that organizations need to first plan an information agenda, build a technological platform to collect and organize all the data, and then use tools like its own Cognos and SPSS products to facilitate the analysis and decision-making. 

IBM is so convinced that information-led transformation is a “next big thing” that it has set up a new business unit within its services unit staffed with 4,000 consultants.  It should be no surprise that most of the success stories offered so far in support of these ideas are among very large organizations or ones in highly data intensive industries. 

We agree broadly with the IBM view of the way in which information technology will shift its focus from operational applications to more data analysis intensive uses.  These grand ideas will have increasing appeal to the JD Edwards community over time when it becomes ever easier to put them into practice quickly and at a reasonable cost.  Future postings will continue to report on what IBM, Oracle and many vendors are doing to make the vision IBM has done a nice job of articulating into concrete solutions that can be installed and put to use.

 

A bad week for IBM

IBM CEO Sam Palmisano’s horoscope for all of last week must have read “don’t leave the house”.  Perhaps the worst week during his tenure began Sunday night the 11^th when Sun founder Scott McNealy and Oracle CEO Larry Ellison kicked off OpenWorld with an all out assault on IBM.  The two of them were like a professional wrestling tag team as they found a variety of creative moves to slam IBM to the mat. 

Early this year IBM had carefully done its due diligence before making an offer to buy Sun.  When McNealy and the Sun board turned it down, Oracle rushed into the void and bought Sun for what appeared to be only a slightly higher price.  It seems safe to surmise that McNealy did not want the company he founded to fall into the hands of those who had done the most to subject Sun to the embarrassment of a forced fire sale. 

As reported here multiple times before, Oracle and IBM have been enjoying a long period of peaceful coexistence.  Watching Oracle succeed in buying Sun for essentially the same price that it bid must really gall IBM’s senior management team.  It responded with an all out attack on the increasingly vulnerable base of Sun customers.  The resulting campaign was obviously successful enough to really annoy Ellison since it diminished the value of Sun after the price had been set.  The ambush at OpenWorld was his response. 

Palmisano must now strongly regret not closing the Sun deal.  Oracle has been transformed from a sometimes friend and cordial competitor into the most serious threat IBM has faced in many years.  In an era when IBM continues to narrow its market focus by exiting lower margin businesses, Oracle has suddenly decided to make a run at becoming the kind of one stop shopping vendor that IBM was a few decades ago at the height of its power.  It is not yet certain that Oracle will succeed, but along the way an enormous amount of heartache for IBM is almost certain. 

If the Oracle attacks were not enough, the week ended with Bob Moffat, the executive that ran IBM’s hardware business being arrested for insider trading.  The allegation is that he passed information obtained during IBM’s abortive attempt to acquire Sun on to a hedge fund manager.  Moffat has been suspended from all duties at IBM. 

Moffat’s arrest was a huge shock to me personally.  I have had the opportunity to spend quite a bit of time with many IBM executives including Moffat over the past 20 years.  In almost every case the people I dealt with at IBM were impressive and conducted themselves admirably.  IBM impresses me as the least likely place where something like this would occur.  If the allegations are proven to be true, I have to believe that this was an aberration – one employee deciding for unfathomable reasons to ignore IBM’s strong cultural focus on ethical behavior. 

Financially, IBM is having a great year having announced strong Q3 results and followed up by projecting even better performance in Q4.  Instead of celebrating this great accomplishment, Palmisano now has to survey all the damage caused by the failed attempt to acquire Sun. 

This coming week I will be at IBM’s Information on Demand conference and will report on what I discover.  Hopefully, next week is a far better one for IBM than last week was.

 

Reflexite wins Oracle Enable the Eco-Enterprise Award

JD Edwards EnterpriseOne customer Reflexite Corporation of Avon Connecticut was one of 15 organizations that won Oracle’s “Enable the Eco-Enterprise” award at OpenWorld last week.  As the CEO of the firm that installed the software at Reflexite I had the honor of accepting the award on behalf of Reflixite, whose CIO was unable to attend.  Tom Hughes, CEO of WTS was also honored as the Oracle partner firm that provided hosting services for the JDE software that Reflexite uses to run its business.
 
This award is meant to recognize organizations that use Oracle products in ways that improve the environment.  As a company that offers a variety of reflective coatings and related products, Reflexite has always been sensitive to the environmental impact the materials it uses to produce its products.  This concern extends to making efforts, using information obtained from EnterpriseOne, to minimize its environmental impact through energy savings, reduced paper usage, and waist elimination.
 
The awards were presented by Oracle Board Chairman Jeff Henley as an indication of the importance Oracle places on being environmentally responsible.  A panel of executives provided a summary of some of the things Oracle was doing itself to enhance and protect the environment.

 

Fusion – Further reflections

OpenWorld is over, but the full notebook I brought back will take weeks to put into postings.  This one will expand on the first glimpse of Fusion Applications provided by CEO Larry Ellison himself.  First the basic facts. 

Fusion Applications is the first attempt by a major software vendor to create a complete suite of applications using Service Oriented Architecture (SOA) design principles.  It is the brainchild of Oracle software executive Steve Miranda who has overseen much of its development over more than four years.  The first wave of working applications will hit the market sometime in 2010 and will include financial, distribution and human capital management modules.  The family of applications will continuously be expanded over time to include manufacturing and much more.  It is not clear when or if special industries such as banking or retail will be included.  Fusion Applications are intended to be a next generation of ERP software and are targeted directly at SAP. 

Oracle has gone to great pains to assure users of its JDE, PeopleSoft, Siebel and eBusiness Suite applications that none of them will ever be forced to convert to Fusion if they do not care to.  The term “applications unlimited” was coined to capture this notion.  At the same time, Oracle clearly hopes that the new applications will prove so compelling that many current customers will one day decide to make a transition that Oracle promises will be an easy one. 

At OpenWorld a first glimpse of what is coming was provided, much as Hollywood producers create a trailer to get us to want to go to a film arriving months from now.  The little we saw was very enticing and, of course, far too little on which to form a solid opinion.  The handful of screens shown were visible for too little time to prove the claims made by the presenters.  We will assume for now that everything that was said is true.  The claims made were exciting: 

• The SOA foundation enables a level of integration never before achieved.
• Business Intelligence is seamlessly integrated into all of the applications.
• A new interface that focus user attention on exception processing. 

Ellison showed a chart with the names of around 50 well known businesses that have provided input on specifications.  From this I surmise that the first wave of customers for these applications has already been established and that few if any outside of this inner circle will get their hands on them until well into 2011.  It will thus be 2012 or beyond before we have answers to some fundamental questions: 

• Does the cool technology underneath translate into real user benefit?
• How hard will it be to get these applications up and running?
• Is built-in BI a killer feature or just something impressive in a demo? 

The starting point for the functional design was eBusiness Suite.  It seems safe to assume that the second wave of sales (after the pioneers already signed up) will come from this user base.  It is therefore hard to imagine a serious effort to convince current JDE customers to switch to Fusion Applications before 2013 at the very earliest. 

Oracle needs Fusion Applications installed and working at some prestigious accounts as soon as practical as a means of reversing SAP’s momentum in the applications market.  I suspect it will be quite successful in causing those businesses considering a new ERP platform to wait and take a careful look.  We are aware of a small number of businesses that have JDE within their application portfolios that are considering a move to SAP.  The news that Fusion is coming may put many such projects on hold for now. 

As in previous postings I remain skeptical about the impact Fusion Applications will have on the JDE customer set over the next 3 to 5 years.  At the same time, I am excited to see Oracle introducing a new generation of applications and see no reason why it won’t be successful. 

The greatest impact on our community will be indirect.  The SOA foundation means that Fusion Applications are being created out of re-usable software building blocks.  SOA connectors have already been built into the newer releases of EnterpriseOne so that elements of Fusion can be easily incorporated into it over time.  Most of you will therefore experience a gradual inclusion of an increasing amount of software developed for Fusion into your existing applications without experiencing anything more traumatic than a release upgrade.  For us, Fusion might better be named “infusion”. 

More thoughts on this important topic will come at time passes.

 

More Open World observations

Oracle finds a way to make each OpenWorld conference quite different from all the others.  This year the huge crowds were gone and little that was unexpected or all that dramatic was formally announced.  At the same time it became crystal clear that when complete, the Sun Microsystems acquisition will propel Oracle into a very different role in an industry that it now hopes to seriously disrupt. 

The conference opened with Sun Microsystems founder Scott McNealy recapping the glorious history of Sun (leaving out any explanation of why it was necessary to shop the business around).  When he brought Larry Ellison on the stage, an explanation of how the two businesses might fit together seemed likely.  Instead we got a detailed view of the first joint product offering along with promises not to dump any of the key technologies that Sun will bring to the combined entity.  The big surprise was a vitriolic attack on IBM that left no doubt as to who is now at the top of Ellison’s least favorite competitor list. 

Ellison returned to the stage Wednesday afternoon for his scheduled annual keynote and as noted in a previous posting he provided the first look at the long awaited Fusion Application suite.  Even that, however, had to wait until he spent more than 30 minutes once again hyping hardware – this time a second generation of a high-end storage and processing engine tuned to run Oracle’s database and anything that uses it at blinding speeds.  It was abundantly clear that at this instant in time Ellison is personally fascinated with the prospect of shaking up the hardware market and that other issues interest him less. 

The Fusion discussion was fascinating and will be the subject of a number of future postings after I do some more homework.  To net it out, the first production release of Fusion Applications will arrive next year, likely by summer.  Finance, Distribution, HCM and CRM will be included on day one but not Manufacturing.  The main selling points offered were: 

• As the first true SOA built app suite Fusion will be exceptionally easy to integrate.
• Business Intelligence will be built in and will not require an external infrastructure.
• A new user interface will focus the attention of users on dealing with problems and exceptions. 

None of the opinions I offered a few weeks ago about the impact of Fusion on the JDE community were changed by what Ellison presented this week.  I do not believe that Fusion will represent a viable alternative to JDE until 2012 for nearly the entire installed base. 

I have lots more information from OpenWorld to share so stay tuned.  It will take me a few weeks to get it all digested and turned into posting so please be patient.

 

Open World JDE news

 Lyle Ekdahl (Oracle’s new JDE development executive) kicked off the JD Edwards specific sessions Monday morning.  Sadly, now that he has been promoted he can’t bring the zaniness to these presentations that once was his trademark.  The best he could do was pass out little bags of candy.  There was no big news to be shared, but lots of tasty little tidbits (not counting the M&Ms). 

Little of general interest was formally announced.  For example, BI connectors for World 9.2 were introduced for Financial modules only.  Something of potential interest to a very small segment of the community.  Likewise, the items on the list of things under development for next year was largely items that, while cool, only appeal to niche segments.  For example a new JDE module will be introduced for the unique needs of apparel businesses featuring capabilities such as size, style and collections. 

About 200 of the faithful showed up leading me to guess that the total turnout of JDE partisans for all of OpenWorld could not be much over 1,000 since this was the most important JDE specific presentation. 

Gee whiz factoids offered included: 

• Net new license revenue continues to grow even in the face of recession.
• Japan has been a surprisingly strong market recently.
• 79% of E1 accounts are now on release 8.11 or above.
• 14% of E1 customers are on 9.0.
• 18% of World customers are on 9.1 or 9.2.
• 35 JDE people have come to OpenWorld (not counting a marketing dude). 

Privately, Lyle told me that not much will change as a result of the transition from Lenley Hensarling.  I ran into Lenley on the street.  He was there meeting a prospect for his new start up venture and not as an attendee.  Lenley seemed excited about his new challenge. 

No one from JDE land can or will comment on Ellison’s big Fusion news coming Wednesday afternoon.  I doubt if they know much yet anyway.  Stay tuned – more news coming.

 

Open World breaking news

 Larry Ellison customarily takes the OpenWorld stage on Wednesday afternoon.  Sometimes to promote something minor (once it was a new support offering for Linux), and occasionally to break some much bigger news.  I just learned that tomorrow’s keynote will fall into the big news category.  Readers of this blog know I have been skeptical about Fusion Applications in terms of when it might actually arrive, how dramatic a step forward it will be versus traditional ERP packages, and how many organizations will be ready to dump existing ERP suites to move to something new. 

Tomorrow, apparently Ellison hopes to convince cynics like me that something big and important is about to happen.  I sincerely hope he proves me wrong and comes out with something overwhelmingly wonderful.  Under the most optimistic assumptions about what it will be I cannot picture it having much impact on the JD Edwards community for many years.  I will welcome being wrong, since that would mean something compelling has become an option for us. 

Stay tuned for more news as I learn more.

 

Open World offered few fireworks in the Monday keynotes

Oracle co-presidents Charles Phillips and Safra Catz are frequently used to offset CEO Larry Ellison’s flamboyance with quiet competence.  The keynote they hosted Monday morning offered none of the passion, salesmanship or zany moments that the McNealy-Ellison show provided the night before. 

Following a bland summary of the strategy Oracle has been pursuing in recent years that provided no new insights, a series of product managers were given a chance to strut and fret their five minutes upon the stage.  Each used their time to promote their offerings, usually with a brief demo done too fast to make much sense of.   The recently acquired Primavera was featured along with Hyperion.  Almost no mention was made of JDE, PeopleSoft, eBusiness Suite, Siebel CRM or other products that have been in the stable for a while.  The practice of rarely mentioning Fusion in any context continued. 

It is true that not much of universal interest is happening with traditional ERP suites.  Oracle’s application suites all continue to quietly grind along churning out occasional new releases with features that increasingly appeal to niche sub-markets.  The real action at the moment lies in adding the specialized new applications that surround the core ERP suites.  Oracle has invented the broad term “edge” applications to refer to them.  The Monday keynotes featured a few of the newest of them. 

A big surprise to me was the lack of a strong focus on Business Intelligence and the related concepts of Enterprise Performance Management and Business Performance Optimization.  Earlier in the year it appeared obvious that Oracle’s Fiscal Year 2010 (which started in June) would feature these three themes.  The out of the blue Sun acquisition combined with delays in completing what Oracle will call BI 11g when ready have pushed these topics out of the main spotlight this OpenWorld. 

Last year OpenWorld attendance peaked at 43,000.  This year tight travel budgets and the lack of compelling news has pushed attendance down into the 35,000 range.  Selfishly, I am enjoying the shorter lines and easier access to the people to whom I want to talk.  I will try to use the lack of crowding to gather even more intelligence of use to our community.

 

Open World Opens with McNealy and Ellison poking fun at IBM

With the Sun Microsystems acquisition still in approval limbo I thought Oracle might be careful about what was said at OpenWorld.  I didn’t count on having Sun Microsystems founder Scott McNealy appear for what might have been his last high profile speech with Larry Ellison then joining him on stage for what morphed into an all out assault on IBM. 

Known for making extreme statements in an entertaining way McNealy did not disappoint.  He began with a melancholy recounting of all the good technical things Sun had done under his leadership.  After bragging about the continuing impact of Java, its inventor, James Gosling, made a brief appearance on the stage.  Gosling’s parting comment speculated about what it will be like for him to work for a software company.  McNealy’s retort was “When we are done with them, Oracle won’t be one anymore”.  The point of this unscripted, politically incorrect comment was that Oracle’s own vision of itself and its place in the industry has already changed dramatically. 

Ellison himself was in rare form as he effectively declared war on IBM.  Clearly the fact that IBM has chosen to launch a FUD (fear, uncertainty, doubt) campaign on the Sun customer base has really irritated Ellison.  In what sounded at times like a late night infomercial, Ellison and McNealy fought back by quoting the results of a recent benchmark test that showed Sun hardware trouncing IBM running an Oracle workload.  I have no way to assess the competing claims, but it is clear that the fight that has just begun will be highly entertaining to watch. 

On the surface, Oracle seems to be trying to retain some level of rapport with both HP and Dell even though its entry into the hardware space also represents a major attack on them as well.  Both HP and Dell will be making keynote speeches here at OpenWorld. 

Ellison left no room for doubt on many previously open questions:

• Oracle is in the hardware business to stay.
• Investments in Sun’s SPARC microprocessor will increase.
• Solaris will be pushed hard by Oracle as its preferred OS (sorry Linux).
• Java will be promoted aggressively.
• The mySQL open source database won’t be killed or sold off. 

It sure sounds like Oracle aspires to be the kind of one stop shopping vendor that IBM was decades ago, this time with a mix of open and proprietary offerings.  

A pattern has clearly been established.  Oracle established leadership in database, moved into middleware, expanded further into applications, and now is extending the empire outward into the hardware realm. 

Many questions have been answered while raising lots of others.  Will a major services acquisition such as Accenture or Deloitte be next?  Will Oracle’s new enemy IBM feel compelled to reverse its self imposed exile from the applications market and make a play for SAP?  Can Oracle’s long-standing friendship with HP last? 

Oracle has thrown the first cream pie in what could turn into a huge industry food fight.  It has many advantages as it tries to conquer the world, but its propensity to base marketing claims on deeply technical arguments may limit the ultimate level of success. 

Stay tuned for more fresh news and commentary from OpenWorld.  Others attending or following some of the presentations on-line are encouraged to add comments.

 

Improvement needed – from where will the leadership come?

Investment in improvement is one of the biggest casualties of the now year old economic crisis.  The mantra of too many decision makers has become “if it costs money, stop doing it”.  In more prosperous times IT departments had funding to invest in projects to carry out improvements that would pay off over time through cost reduction, revenue growth, risk avoidance or other worthwhile benefits. 

Among the organizations my company calls on, funding for non-essential improvement projects has largely dried up.  This is scary since such investments are the source of the productivity gains that underlie most economic growth. 

Ironically, the cutback in IT driven innovation has come at a time when a new source of dramatic improvement has just become ready for mass deployment.  Oracle calls this new capability “Business Performance Optimization”. IBM uses the term “Business Analytics Optimization” to describe the same phenomenon.  Unfortunately, neither of these giants (or the other major IT vendors) has yet done enough to help ordinary businesses understand what this is, how it can be applied, and why investing in optimization is one of the best ways to manage your way through tough times.  Once I have fully covered the news coming out of OpenWorld, I will turn my attention to reporting on this major development in our industry and how it impacts the JDE community. 

My September 23 posting described Oracle’s minimalist approach to advertising and market education.  Letting the market figure out on its own what it is selling has not prevented Oracle from becoming highly successful.  In the case of business optimization, Oracle is wasting a great opportunity to provide thought leadership.  Oracle is doing little that is visible to educate and inspire organizations to invest in optimization projects. 

Oracle executives have bragged that their company invests heavily during market downturns to improve its own internal environment.  This time, we have been told, much of that investment is centered around optimization using its own BI technologies as a foundation.  If this is true, lots of us would like to hear more.  We could all use more ammunition when confronting the spending police to help make the case for undertaking improvement projects. 

I am cautiously optimistic that Oracle will use OpenWorld next week to help us understand what business performance optimization is all about and what can be done to use it to get IT innovation projects moving again.

 

Oracle OpenWorld here I come

Open World starts next Sunday and I will be there with so many different hats to wear I may need to pay extra for checked luggage.  My first goal will be to collect useful intelligence and you can count on numerous postings based on what I uncover.  A larger than usual number of JDE experts from Oracle will be present and nearly 100 sessions of interest to our community will be presented, some in a shorter than an hour format as an experiment. 

My JDE contacts expect a decent turnout from our community but I suspect attendance will be down from last year.  For those who cannot go, send me a note if there is anything specific you are looking for news about.  I do know that the turnout of JDE centric vendors will be light this year. 

On Monday I will be in Moscone West room 2003 at 2:30PM local time to accept an award on behalf of one of my JDE clients.  I can’t disclose the details until after the presentation but any of you that are at the conference and free at that time might want to come and sit in to see one of your peers be recognized by Oracle. 

I will be wearing my vendor hat (actually it will be a blue shirt) on Tuesday night when the JDE and PeopleSoft attendees gather for a social hour at the end of the day.  Andrews Consulting Group will be introducing a PeopleSoft version of our very popular RapidDecision pre-built data warehouse.  We will have a vendor table in the PeopleSoft area.  If you are attending and want to say hello look me up there. 

Going in, some of the things I hope to learn more about include: 

• Will plans for JDE evolution change at all with Lyle Ekdahl now in charge?
• Are Fusion Applications really on the horizon (and should we care)?
• What will happen once Oracle actually takes over Sun?
• Are JDE customers buying Oracle’s many “edge” applications?
• Has the Oracle view of BI changed since last year? 

Suggestions to add to my list are always welcome.

 

Oracle and IBM: Can this unique relationship last?

Romances between high profile celebrities never seem to last.  Might the same thing be true for alliances between giant technology businesses?  For nearly five years IBM and Oracle have enjoyed a strange and wonderful relationship.   Executives have been quite complementary of each other, have invited their counterparts to speak at each other’s major selling events, and otherwise have showed many signs of true friendship.  Oracle has declared IBM to be its Partner of the Year multiple times.

A series of recent developments have the potential to erode this special relationship:

• The acquisition of Sun Microsystems by Oracle, after IBM made a low-ball bid to buy it, clearly got a lot of teeth grinding in Armonk.
• By acquiring BEA, Oracle threatens IBM’s critical WebSphere franchise.
• Competition is intensifying for Business Intelligence market share as each absorbs major acquisitions (Hyperion and Siebel for Oracle, Cognos and SPSS for IBM).

Oracle only exists because 30 years ago IBM foolishly delayed exploiting the relational database concept it invented. Larry Ellison had the vision to jump in and systematically take over that market.  It took IBM more than twenty years to get over the resulting anger, jealousy and sense of unfairness.

The acquisition of PeopleSoft early in 2005, one of IBM’s strongest ISV partners, shocked IBM into rethinking its attitude toward Oracle.  Suddenly, it made sense to at least appear friendly in front of thousands of mutual customers.  IBM swallowed its pride and sent a posse of peacemakers to Redwood Shores.  Once there, numerous common interests were uncovered:

• IBM’s service business was making a fortune installing, supporting, enhancing and running Oracle software products.
• Both shared a passionate belief in open standards including Linux.
• Neither cared for Microsoft’s technological bullying.

President Charles Phillips became Oracle’s designated driver for the new friendship.  So far he has kept the relationship remarkably strong.  His task gets harder every year since both are in a race to acquire software companies as fast as they can be absorbed.  It was thus inevitable that the mutual buying binge would eventually lead to conflict.

Surprisingly, IBM did not seem to mind too much last year when Oracle grabbed BEA even though it competes strongly with WebSphere – the crown jewel of IBM’s own software business.

Then at OpenWorld 2008 Oracle introduced a database appliance built with HP hardware.  Once again IBM shrugged it off after a polite call from Phillips to IBM CEO Sam Palmisano.  It seemed like no big deal since the market niche being targeted was small.  It helped that Oracle also reaffirmed its lack of interest in selling hardware.

The wild card came earlier this year when Sun put itself up for sale.  IBM took its usual very careful look and came up with an offer that the Sun board felt it could refuse.  Days later Oracle swaggered into the saloon and put a sack of gold nuggets on the table.  IBM was surprised along with most outside observers.  Regular readers of this blog know that we saw it coming (see our April 9, 2009 post).

The big question remains: What will Oracle do with Sun (assuming it will gain approval from the European Union)?  No one outside Oracle knows but that will not stop me from making a few guesses.

The obvious strategy is for Oracle/Sun to build integrated appliances that include hardware, databases, middleware and even applications.  Oracle has already announced what is likely the first of many appliance offerings.  This represents a far greater challenge to IBM than anything Oracle has previously done.  The hardware play is not what IBM cares about – margins in hardware have become miserable.  Integrated offerings strongly challenge IBM’s middleware franchise.  More importantly, they reduce IBM’s role providing associated services and even the demand for such services.  The current era of détente will likely come to an end if integrated Oracle appliances gain significant traction in the market.

The Sun acquisition goes beyond putting Oracle into the hardware and appliance business.  Oracle now has control of both Java and the mySQL open source database – the Sun assets IBM really cared about.  This seriously diminishes IBM’s dream of providing leadership in middleware, application development and the openness movement.

Independent of the Sun acquisition, competition between IBM and Oracle in the BI market continues to intensify.  A separate series of postings will explore this fascinating and important development and its implications for the JDE community.  BI adds one more growing source of intense competition and therefore friction between Oracle and IBM.

The option of openly declaring war on Oracle as a result of all these transgressions is not available to IBM given the continuing synergy of its services business.  In any case, it is not in the nature of the key executives involved to engage in old style vitriolic attacks.  Still, it is hard to picture the Oracle/IBM relationship being as cordial as it has been recently a year from now.

Since most of you have important vendor relationships with both Oracle and IBM we will continue to follow developments as they unfold.  At the very least, they will provide some entertainment.

Please, keep those comments, questions and opposing opinions coming!

 

The Understanding Oracle Series

Cold Fusion

 We live in times when good things to worry about range from “which steroid era players belong in the Hall of Fame?” to “can our species survive climate change?”  Given the range of real things to be concerned about, JD Edwards users do not need to spend any time worrying about Oracle Fusion Applications. 

When Fusion was first announced, SAP and other Oracle competitors started calling it Con-Fusion.  Three years later, a modest level of confusion about it still remains. The giant media event Oracle held at San Francisco city hall early in 2006 to explain Fusion left as many questions open as it answered.  It also left an impression that refuses to go away within the JD Edwards community that the day will come when Oracle will try to force all of its application customers to go through an expensive and painful conversion.  Countless attempts by Oracle executives to clarify what will really happen since then have not completely cleared the air. 

Without going into the subject in the depth required to have it make complete sense, I will try to briefly net out why Fusion Applications is a subject that is not worthy of your concern.  First, a clarification.  Fusion is three things – a technical architectural blueprint that Oracle is following (and that seems to be working out), a body of Oracle middleware products that are well respected and established, and a still under development set of new applications.  The discussion below applies only to these Fusion Applications. 

Fusion Applications were scheduled to start arriving in 2008.  They didn’t.  No one seemed to notice or care and Oracle management quietly adopted a policy of making minimal use of the F word.  For example, Charles Phillips in his recent keynote at Collaborate confined himself to one brief reference to Fusion Middleware.  This was the only time the F word crossed his lips.  By not mentioning Fusion out loud Oracle could be preparing us for the introduction of a new brand name.  Marketing people love to rename things, especially when the current name develops unwanted connotations. 

Ironically, the original grand vision behind Fusion is a good one that is actually working surprisingly well in practice.  One characteristic of big ideas is that time has a way of altering them in unpredictable ways.  In the case of Fusion, the big change has been the replacement of the application leg of the stool with a better idea.  Oracle introduced the nuanced concept of Applications Unlimited to explain it.  In overly simplistic terms, the notion is that Oracle’s customers can keep using whatever application suite they have (eBusiness Suite, JDE or PeopleSoft) and slowly add capability and functionality through a growing list of add-on applications.  Oracle Transportation Manager, based on the acquisition of G-Log is a good example. 

Instead of continuing to call the technological standards that glue together old applications and new functionality Fusion Architecture, Oracle has introduced another challenging term: Application Integration Architecture or AIA.  By doing so Oracle has indirectly admitted that the original Fusion strategy has changed in an important way.  Rather than just say that a better idea came along, Oracle is finessing the point. 

A project lives on within Oracle to build Fusion Applications.  Instinct tells us that its priority inside Oracle dropped significantly after John Wookie left in 2008.   He was the executive responsible for applications when the original Fusion Application concept emerged.  Wookie was replaced by Ed Abbo, a senior executive that came to Oracle as part of the Siebel acquisition.  Abbo left Oracle in mid-2009 and was not replaced. Instead, rising star Thomas Kurian now controls all Oracle product development including applications.  Under Kurian we expect Oracle’s acquired applications to evolve through the injection of Fusion technology rather than via replacement. 

During 2010 Oracle is likely to complete field-testing of at least a few Fusion Application modules.  An announcement of general availability will then follow.  Relatively little is likely to be invested in marketing in support of it. 

The net of our reading of the tea leafs is that Fusion Applications has morphed into more of a research effort than a serious attempt to invent a new ERP suite that will massively replace existing applications.  The main reason is more technological than political. 

The key technology behind Fusion Architecture is Service Oriented Architectures (SOA) – a sophisticated way to build software out of reusable building blocks.  As Oracle started to build Fusion Applications it dawned on them that these building blocks could also be incorporated into existing applications.  AIA was therefore created as the mechanism for making this happen.  If most Oracle customers can get the main benefits of Fusion without a painful conversion, what is the incentive to do so? 

A future posting will explain why we believe that only a modest number organizations will buy Fusion Applications in their pure form in the next few years.  In the meantime, you will have to trust me and spend whatever time you allocate to worrying (for me its usually 3-4AM) thinking about more important things. 

Please, keep those comments, questions and opposing opinions coming!

 

Understanding Oracle – Advertising

Many customers wonder why Oracle never invests in advertising JD Edwards software.  Is this a signal that our favorite product line is somehow out of favor?  We were concerned as well and poked around to find out why.  The answer both surprised us and provided some interesting insight into the strange and wonderful entity that is Oracle. 

It was a great relief to find out that JDE Edwards is not at all out of favor. It is not at the top of the list of Oracle’s most important products, but it gets more positive attention and recognition by Oracle senior management every year.  Oracle’s decision to not visibly promote JD Edwards is part of a broader policy to spend as little as possible in total on advertising.  The little that is spent (relative to competitors) is focused on the Oracle brand name and not on any specific offerings. 

Dislike of advertising is a personal quirk of Larry Ellison’s who takes great pride in spending far less as a percentage of revenue than competitors.  As long as he is CEO the policy is unlikely to change.  We have heard that debating this point with him can be a career limiting choice. 

When Ellison does open his wallet we have been told that he favors magazines and posters in places like airports. Ellison supposedly will often write the copy himself.  He apparently also insists on personally choosing the name for all new products.  This is a possible explanation for the strange decision to call the BI product Oracle obtained when it bought Siebel Oracle Business Intelligence Suite Enterprise Edition Plus or OBIEE+ for short (some clients pronounce it “obese”). 

The Ellison marketing mantra appears to be “if we build it, they will figure it out”.   It is not hard to guess how he might have developed that opinion.  During the two decades when Oracle was primarily a database vendor his approach made a great deal of sense.  We believe that the technicians who make most database buying decisions are largely immune to marketing hype.  It is in their nature to make detailed evaluations of the available choices and form options largely based on technical characteristics. 

Ellison learned early on that slick marketing and advertising is a waste of money when selling IT infrastructure software to deeply technical experts.  This principle held up well when Oracle got into the middleware business since similar buying dynamics are present.  The question in my mind is whether this logic also applies to applications and business intelligence.  In my experience, it does not because a different type of person controls the buying decision – one whose opinions can be shaped by the right kind of advertising. 

In my experience, good advertising educates buyers.  When attempting to sell something new and complex it is necessary to help potential buyers to understand what is being offered to them.  The cost of both applications and BI is high.  Approval requires the full support of both end users and non-technical executives.  It is thus my opinion that Oracle’s aversion to spending money on advertising tends to lead them to under-invest in the education of prospects. I believe that Oracle’s application business has succeeded in spite of this policy. 

Unfortunately, I have absolutely no influence over what Ellison thinks so my opinion does not matter.  You can therefore expect Oracle to continue to only advertise its brand name and to largely do so in print.  The JDE product line will not be advertised in any meaningful way but neither will any other specific products. 

Oracle’s overall product line will become more useful, valuable and capable over time.  As it does the names for new offerings will continue to be complex and confusing and too little help will be provided to potential buyers to makes sense of what they are and why they should be bought.  Oracle will continue to assume that buyers will figure out what it is offering and that its sale force will be capable of closing deals with very little educational air cover.  This will likely continue to work among larger enterprises but may continue to limit sales to more modestly sized organizations. 

The bottom line is that Oracle will keep forcing prospects to work harder to understand its offerings than some of its competitors.  Once understood, however, Oracle’s offerings will often be worth the effort.

 

Abbo and Hensarling – did they jump or were they pushed out?

 Since we broke the story of Lenely Hensarling leaving Oracle early this week there has been speculation elsewhere that both he and his former boss Ed Abbo must have been pushed aside.  If that indeed was the case it might imply that a major change in direction for Oracle’s application business was coming. 

All the intelligence I have been able to gather this week points in the opposite direction.  I believe that both of them decided to leave on their own.  Most importantly, I do not think that a major change in direction has been signaled by this.  The opposite is more likely: facing a short-term leadership vacuum, momentum will cause Oracle’s application business to remain on its previous course for now. 

Oracle has not responded to my requests for official comment so I am left to read the tea leaves on my own.  Here are the reasons behind my conclusion: 

• Oracle’s top management is consumed with acquiring Sun and is not focused on fine-tuning the internal organization, especially parts that are performing well.
• The “Applications Unlimited” unit Abbo was running was doing just fine under his leadership, especially in a very weak market. No reason to change horses.
• Oracle’s earnings announcement this week indicated that weakness was primarily being felt in data base sales and that applications were selling surprisingly well.
• When a senior executive is removed for poor performance there is almost always a replacement waiting in the wings.  A full quarter later the Abbo position has not been filled.
• Under Hensarling’s leadership the JDE unit has exceeded the modest expectations that Oracle had for it when PeopleSoft was bought.  His responsibilities within Oracle have been increasing recently.  For example, the unit developing data warehouse connectors for all Oracle applications reported to Hensarling.
• If Oracle management was unhappy with Hensarling they would not have promoted Lyle Ekdahl to replace him.  Ekdahl has been the power behind the scenes during the entire Hensarling tenure. 

Oracle’s executive ranks are already short on people that have a deep understanding of how to develop and sell applications.  Oracle’s core competency has always been technology and infrastructure software.  It needs more people like Abbo and Hensarling not less.  Even in a job market where talent is abundant Oracle will not fine it easy to obtain true experts on applications. 

Ekdahl will carry on the strategy now in place largely because he had a major role shaping it.  He will report directly to Tom Kurian who now has responsibility for all software development within Oracle.  With the de facto retirement of Chuck Rozwat, Kurian is now a virtual peer of co-presidents Safra Katz and Charles Phillips. 

More postings discussing Lyle Ekdahl, Tom Kurian and what all the musical chairs at Oracle means to the JD Edwards community will be coming soon.  Your comments will be most welcome.

 

Is the ERP Era Over? Reflections on IBM’s latest view of IT

Business Optimization is the new mantra that IBMers are all now chanting in unison.  The IBM chain of logic goes something like this:

• ERP and CRM applications (such as JD Edwards) did a good job of automating processes but a point of diminishing returns has been reached.
• Business Intelligence (BI) has enabled a much deeper understanding of how businesses really work.  It has largely been used so far to report on past activity.
• The next great leap forward will come from using the information BI provides to use predictive analytics to optimize decision-making and to react in real time. 

Business Optimization is a goal to achieve, is not something you buy.  Not surprisingly, many of the things that IBM sells are needed to achieve it such as Cognos, InfoSphere, DB2, servers, services and eventually SPSS.  Is IBM’s new view of the diminishing role of applications colored by the fact that it does not sell any of them?  While bias is certainly present, the core argument seems to be basically sound. 

Even though Oracle has become one of the world’s top two application vendors, it seems to buy into much of IBM’s logic.  Oracle uses the term Business Process Optimization to say essentially the same thing. 

Oracle is certainly not giving up on applications.  It is investing heavily in a next generation application suite called Fusion Applications.  When I have asked senior Oracle executives about what the essential difference will be between Fusion and existing applications the answer has netted down to “fully embedded BI”.  Exactly how Oracle plans to pull this off remains completely unclear compounded by the ever-receding date when the first Fusion Application modules will arrive. 

Our experience at Andrews Consulting Group seems to support the thought that opportunities for improvement through information technology are indeed shifting away from making incremental improvements in applications.  As a company that helps JD Edwards customers move up to new releases, this is a little painful to admit.  Sadly, it seems as if each wave of new features seems to offer less dramatic benefits and tends to appeal to a narrower segment of the community. 

We have therefore shifted our own business to focus on finding ways to make BI more affordable and useable.  Those curious about how we are doing this should visit our RapidDecision website. 

Future postings will explore further how Oracle, IBM and the other major IT vendors view the future of applications and the new phenomenon that most are calling Business Optimization.  A major shift is in progress in information technology.  We will do our part to help the JD Edwards community understand what it means to all of us.

 

Lenley Hensarling joins Ed Abbo and Tom Siebel at C3

Lenley Hensarling, the Group VP in charge of JD Edwards has been recruited away from Oracle to join a new venture with the working name C3.  I was told that it stands for something like Carbon Conscious Consumers.  Apparently C3 will focus on carbon reduction issues.  It is being led and financed by Tom Siebel, the founder of Siebel Systems which Oracle acquired in 2006. 

Hensarling was seemingly recruited by his old boss Ed Abbo, the former Siebel Systems CEO.  Abbo was running Oracle’s Applications business until he left earlier this summer.  From what we have pieced together so far, Abbo was enticed away from Oracle by Tom Siebel and then convinced Hensarling to join them. 

No details are available on what C3 hopes to become.  Its vision must be something extraordinary to attract executive talent like Abbo and Hensarling away from important roles within Oracle.  Tom Siebel appears to be joining the ranks of other wealthy businessmen who are using their fortunes to improve the world such as Bill Gates, Warren Buffet, Ted Turner, Pete Peterson, and Gordon Moore.  It will be fun to follow the impact that this interesting combination of money, vision and talent has over time. 

Abbo and Hensarling have left to join a cause in which they believe and to follow a charismatic leader.  Oracle apparently tried to entice them to stay and we understand that the departures were completely friendly.  The departures should not be read as a signal that wrenching changes in application strategy are coming or that anything is seriously wrong within Oracle. 

Lenley Hensarling did a great job steering the JDE product line through its most dramatic transition following the Oracle takeover.  Our community will miss his vibrant leadership.  I am glad to see him contributing to a cause that I personally strongly support and wish him and everyone at C3 great success. 

Hensarling will be replaced by Lyle Ekdahl, currently the top product planner for JDE and the person that did much of the heavy lifting during Hensarling’s tenure.  A more extensive posting on Ekdahl and the implications of his appointment will follow soon.