Benioff Vs. Ellison -- David Vs. Goliath Or Cloudwash Vs. Proven Solutions?

I was at Marc Benioff’s subversive non-keynote at Oracle OpenWorld yesterday, and while it was fun to see all the hoopla (employees holding posters of Benioff cast as a dissident, shouting, honking, donuts, cocktails), it was also cool to have the "I was there when" moment as Oracle’s future biggest competitor draws the lines of battle that are likely to shape the enterprise software industry for the next decade. Truth be told, I think that Benioff was a bit too caught up in the fuss and the cloudwash to make me think he’s a mature and credible competitor yet, but he is clearly getting his gumption up.

Benioff pointed a finger at Exadata as a new mainframe, locking customers into proprietary hardware and forcing them to buy over-expensive gear from an industry monolith. He described his own company as “open,” allowing customers to move to any platform or any cloud; "philanthropic," donating $24 million in grants and using their OOW booth as an engine for giving; and "social," leveraging their internal social media engine Chatter to coordinate their rapid mobilization to deliver the non-keynote within 16 hours of being cancelled by Larry. And all of that is cool, but I think he skewed to tech industry buzz rather than focus on the real competitive forces between Oracle and Salesforce.

Enterprise software is about paying the right amount for the right solution, delivered in the right way. Lock-in is inevitable if the company you buy from has the best recipe of those three aspects, and it evaporates when a competitor offers a better solution with a relatively painless migration strategy that can overcome the significant cost and complexity of moving away from the incumbent. Sure, incumbents sometimes use lock-in techniques to try to fend off competition from better products, but those are desperate measures that don’t last in the long run, and putting Exadata in that category is a gross underestimation of its value.

Exadata is a delivery model aimed at making life easier for companies that have already accepted lock-in to Oracle database and software packages -- it eliminates the complexity of many vendors' products fitting together in a customized solution and it puts the infrastructure control in the hands of the application which knows more about the context of data, and the purchase decision in the hands of the app team who knows more about the value of the data.  Sure, there’s some concern about being more locked in, but if you’ve already designed your business around the features and benefits of Oracle database and software -- NEWS FLASH -- you’re already locked in, and you just want it to work.

Cloud is also a delivery model, which can make life easier for deployers of enterprise software by eliminating the need to buy and run infrastructure altogether. It has the risk of creating more lock-in if it’s hard to move your data to another vendor, but if we’re talking about a cloud for the delivery of enterprise software, then the lock-in is more about the business process than the delivery model. So while Salesforce has embraced this new delivery model more rapidly and thoroughly than Oracle, the better delivery model only comes into play if the underlying solution is also better -- better at meeting business needs, rock-solid reliable, good long term economics. 

This is the real battleground, and it takes a great deal of effort, talent and understanding the market to build better enterprise software. Oracle has proven themselves extremely adept at understanding business needs and offering products that address them better than big competitors that have fallen by the wayside. The delivery model is important, but doesn’t get around the need for the extremely difficult task of building great enterprise software -- if all else was equal, you’d probably choose cloud over appliances, and appliances over complex custom solutions, but “all else is equal” is no small task. 

Benioff needs to spend more time convincing the market that his software is better, rather than succumbing to the temptation to focus on the cloud delivery model, which everybody likes to talk about these days. But, the foreshadowing of what may end up being a genuine threat to the most dominant player in the enterprise solution space, combined with the circus atmosphere, the grassroots protest vibe and the fact that he served bloody marys did make it worthwhile and memorable…