Letters: Oracle's Gambit Undermines Strategy's Objectivity

I wanted to respond to your interview with Oracle CEO Larry Ellison, "Larry Ties the Knot" (July, p. 18), and say that inevitably both sides are right. However, Oracle's claim seems somewhat self-serving. Of course, they want to move out of being a consulting company and move to being a pervasive enterprise-wide product vendor — the margins are much higher. Also, the collaboration between companies like Oracle and Bain is suspect for the reason that it is self-serving and takes away the objectivity of the strategy company. The concept of the CEO being involved is a good idea. Technology is clearly moving into the senior executive's office. He or she can be involved with a separately employed strategy company (or their own management team) in deciding which businesses they want to pull together (use configurable software) and which businesses they want to innovate and differentiate.

One flaw in Oracle's position is that the Oracle product suite is not comprehensive enough to make the case for only configurable software. By far, they are the leader in the database market, but their penetration for their application servers is way behind. Even further behind are some of the more end-client-oriented tools such as collaboration software and personalization servers.

All business processes should be based around that "ultimate" or "end" client. What will be found is that some business processes cannot be changed. These are the key processes that the end client finds the most attractive and essential. These processes need "best-of-breed" technologies. They inevitably are the key differentiators for a company with their end client.

Another rule-of-thumb in this debate is that the closer you get to the end client, the more you will require custom coding. The further you are away, the easier you will be able to use configurable software and have the ability to change business processes. I would also argue against Ellison's claim that developers will "enjoy moving up the food chain" and move to adding business value instead of coding. I would suggest that 75 percent of programmers enjoy deep programming, and only 25 percent of them will enjoy the change of role. However, there is a whole group of ERP retreads who will move into this software configuration role, and more importantly, a new generation of business analysts who grew up putting business processes into place by configuring software.

Ellison's arguments do strike a chord when you put together the commodity systems, like the old ERP systems, internally-based systems or backbones to systems that don't touch the end client. The focus on these systems should be around cost-cutting and not building customizable software. In addition, there are so many business applications, which would see big savings by automation through the Internet, that either method — customization or software configuration — will see a good ROI. It ends up with the same key argument — look at the business fundamentals, see where you will save money, and act swiftly to realize that gain.

Raef Lee

Vice President & head of NY consulting

Destiny