"If It's Not Broken, Don't Fix It"

Over the years Oracle has made over 36 acquisitions in the applications area alone. John Hansen, Senior Director, Outbound Product Management and Strategy, APAC, Applications Development, Oracle, who has been with the company for almost 12 years has seen Oracle both before and after 2005, when it got into the acquisition mode. In conversation with Biztech2.com, John shares the experience and challenges involved in integrating the acquired applications portfolio and addressing the skepticism. John, who has been touring across Delhi, Mumbai and Bangalore talking to customers about Oracle’s applications strategy, also gives us a peek into this strategy as he also gets talking about his thoughts around cloud.

When you met your customers across the three cities, what were the big questions they had, especially in light of the upcoming release of your next generation Fusion applications?

Customers have made significant investments over a long period of time in particular products or applications and the question really now is – is our investment protected and what are you going to do with these products if you are going to bring out the next generation of applications, which is the Fusion applications.

And your answer to that?

In the past it was quite a big decision if you wanted to get to the capabilities of the new product. You had to move off the existing platform and version of the software and move to a totally new one. And, it’s not our strategy at all to do that. There is a very different opportunity for customers to take advantage of lots of new capabilities, new technologies and still have their existing investments protected, particularly if those investments in software are really providing significant value today. If it’s not broken, don’t fix it. A lot of them are very happy on the platform they have chosen and they want to stay on that platform.

How would you summarise your application strategy today?

The first key theme we define our strategy around is giving complete solutions around horizontal, vertical and platform. The horizontal enterprise level includes traditional ERP areas - Human Capital Management, Customer Relations, Supply Chain, Manufacturing, etc. Our strategy would be to be the most complete in that horizontal area, to have the most complete vertical or industry solutions and to use open standards based technology as the platform for all of that.

The second is to give our customers complete choice and it’s all about if the customer wants using the software they use today and we will support that as long as they want to use it, and we are going to continue to invest and support those products while we build the next generation applications as well. So, that choice is really about if you are getting value for what you use today continue to use it. We are going to continue to build new technologies and allow you to add them to what you use today. We are not going to ask you to replace ‘X’ with ‘Y’. You can have ‘X’ and ‘Y’.

With the considerable number of acquisitions how have you managed to service customers across the entire applications portfolio, including the acquired ones?

There have been lot of acquisitions and there was a lot of skepticism when Oracle started on the acquisition path around how it would continue to service and support those products. Because Oracle is a large organisation, it could take advantage of huge economies of scale. We have a world class support organisation and development organisation. And, we have been over the years the efficiencies in those groups and then global coverage to bring each application and each technology under that banner and take advantage of our capabilities in those areas.

We have also learnt quite a lot as far as consolidating business processes and activities is concerned. Years ago we had a billion dollar saving story for Oracle. That is where really we adopted our own technologies and saved billion dollars in savings in the first year from consolidating datacentres, standardising on software, etc. We learnt a lot in doing that internally and have been able to apply those learnings in consolidation and standardisation to our acquisitions as they come in.

Any challenges along the way?

It is not a seamless activity and there were a lot of challenges. The first is outreach to the customers that are using those solutions that have just been acquired. Really important to go out in front of the customers, communicate our strategy, what we are doing, and then we make commitments about what we are going to do with those products. We want to make sure that there is re-assurance there and the customers understand it would be crazy for us to buy an application, or a technology, or a company and kill it. For us, we are buying them because we see value in that particular application or technology. So, we need to communicate that and we need to sensibly articulate why that’s a valid part of the strategy.

And, then our internal challenge has been that we need to deliver on those commitments and that takes a lot of work. What that means we need to make sure that we retain key intellectual property from the company we acquired, we need to have the skillsets we need to do that and we need to work hard to integrate that company because there is different DNA, different culture, different geographic challenges, etc.

What are some of the key consideration for organisations before putting their applications on cloud?

There are aspects around data residency, data privacy and different legislations that exist in different countries that need to be understood. The consideration here will be where the hosting vendors for the software reside. Based on that as well as the conditions around those locations, CIOs need to check whether that is an appropriate strategy for a particular company keeping in mind their concerns about data privacy, and whether data needs to reside in the country, and so on.

These are all part of the evaluation activity that all companies will go through - is our privacy going to be met, can we segment our business applications appropriately, is it appropriate for some to be on premise and some to be on the cloud, and if that’s the case can we still integrate between those two, can we exchange our data, is there a sensible architecture for us to adopt.

So, once the CIOs are interested in the opportunity that cloud computing brings, then it brings the question of understanding the architecture for their enterprise, how will that look, whether its going to be a suitable architecture, and whether it can still meet their business needs.

Do you really see enterprises putting their ERP on the cloud?

I don’t think that will be the norm. The norm will be specific business functions and talent management is a great example of that, distributed order orchestration is another capability that will be cloud-based, some of the project functionality, project portfolio management area. These are very suitable for running in a cloud and adding that to an on premise implementation that already exists.

Implicit in cloud computing is how much control you have over that environment. If you are subscribing to an ERP application in a public cloud mode then you have limited capabilities to customise, personalise the usage of that because this is a public environment for multiple subscribers. So, that’s a clear constraint of a public cloud model. For some business applications that’s not a problem and that’s a perfectly appropriate way to use that application. But, when it comes to ERP implementations the mindset traditionally has been to customise and add lots of extra capabilities in reporting or personalisation of other capabilities added to that. Hence, this would be a challenge. An enterprise would really need to be sure that they can let go of the ability to customise and personalise for their organisation and run a very generic version of the software. So, ERP in that case will be one of the tougher parts of the suites to do that with.