Will Oracle Listen To The External Keynoters At Oracle Openworld And Help Customers Cut Their Maintenance Costs?

I’ve just returned home from San Francisco where I was attending the Oracle Openworld 2011 (#OOW11) event. Overall it's a good event, although, as usual, a bit frustrating. Instead of examples of how customers are using its products to transform their businesses, the Oracle keynotes always descend into technical detail, with too little vision and too many unimpressive product demonstrations and ‘paid programming’ infomercials (if I had wanted to listen to Cisco, Dell, and EMC plugging their products, I’d have gone to their events).

When, a month ago, I accepted Oracle’s invitation to attend #OOW11, I thought I’d be able to escape the oncoming British autumn for some California sunshine and watch some Redsox playoffs games on TV. Well not only did the Sox’s form plummet in September like a stock market index, but Northern California turned out to be 20° colder than London. But despite that, and the all-day Sunday trip to get to the event, one can’t help being impressed by the attendee buzz and by the logistical achievement, with over 45,000 attendees accommodated around the Bay Area and bussed in and out every day to the conference location. Luckily, Oracle looks after its analyst guests very well, so we were within walking distance at the excellent Intercontinental Hotel.

My main goals were to catch up on Oracle’s general strategy, and its sourcing and procurement applications roadmaps in particular. In respect of the latter, the news is good: continuing investment guided by strong product management teams, early adopter Fusion customers talking about successful implementations that will go live later this year, and a good Supplier Risk & Performance Management roadmap. The latter combines existing products such as Oracle iSupplier Portal with a relatively new Supplier Lifecycle Management product and other tools based on Oracle technology, such as procurement analytics and supplier data management. It has the makings of a good solution and demonstrates Oracle’s ability to combine various technologies from across its portfolio to solve customers’ business problems.

On the overall strategy front, however, I have some concerns. It seems to me that Oracle execs are ignoring their customers’ economic reality. The external keynote speakers (Cisco’s John Chambers, Michael Dell, and EMC’s Stanley Tucci) all described CIOs’ need to cut IT maintenance and operations costs so they can free up budgets to invest more in new projects, and explained the vital role that their cloud-driven technology advances will play in enabling CIOs to do that. Chambers told #OOW11 attendees that technology vendors must be passionately committed to their customers’ success and should accept flat or declining revenues when the economic environment means that’s all their customers can afford. Yet Oracle continues to put obstacles in the way of customers trying to benefit from the cloud, such as its support and licensing policies for virtualized environments, and its refusal to let customers cut their maintenance costs if they manage to cut the number of cores needed to process their workloads.

Bottom line: Oracle continues to develop great technology, but its customers need it to do more to help them cut their overall IT maintenance and operations costs, even if that means the temporary flattening of Oracle revenue growth. Oracle risks driving customers away unless it listens to the advice of its external keynoters and modernizes its commercial approach. It could start by reconsidering the unpopular licensing policies that I described earlier this year in my report:Buyers Should Reject Unfair Licensing Rules , particularly the hated 'maintenance repricing' restriction.