I have been a regular visitor to Merv Adrian’s excellent blog since just after its inception and have got to know Merv virtually via twitter (@merv) and other channels. I recently read his article : Oracle Ups EPM Ante, which covered Oracle’s latest progress in integrating its various in-house and acquired technologies in the Enterprise Performance Management and Business Intelligence arenas.
The article is clearly written and helpful, I recommend you take a look if these areas impinge upon you. One section caught my attention (my emphasis):
Finally, Oracle has long had a sizable base in government, and its new Hyperion Public Sector Planning and Budgeting app suite continues the integration theme, tapping its ERP apps (both Oracle E-Business Suite [EBS] and PeopleSoft ERP) for bidirectional feeds.
My current responsibilities include EPM, BI and the third Oracle ERP product, JD Edwards. I don’t work in the public sector, but was nevertheless interested in the concept of how and whether JDE fitted into the above scenario. I posted a comment and within a few hours Merv replied, having spoken to his senior Oracle contacts. The reply was from a vendor-neutral source, but based on information “straight from the horse’s mouth”. It is illuminating to ponder how I could have got a credible answer to this type of question any quicker.
To recap, my interactions with Merv are via the professional social media Holy Trinity of blogs, twitter.com and LinkedIn.com. The above is just one small example of how industry experts can leverage social media to get their message across, increase their network of influence and deliver very rapid value. I can only see these types of interactions increasing in the future. Sometimes social media can be over-hyped, but in the world of industry analysis it seems to be a marriage made in heaven.
Analyst and consultant Merv Adrian founded IT Market Strategy after three decades in the IT industry. During his tenure as Senior Vice President at Forrester Research, he was responsible for all of Forrester’s technology research, covered the software industry and launched Forrester’s well-regarded practice in Analyst Relations. Earlier, as Vice President at Giga Information Group, Merv focused on facilitating collaborative research and served as executive editor of the monthly Research Digest and weekly GigaFlash.
Prior to becoming an analyst, Merv was Senior Director, Strategic Marketing at Sybase, where he also held director positions in data warehouse marketing and analyst relations. Prior to Sybase, Merv served as a marketing manager at Information Builders, where he founded and edited a technical journal and a marketing quarterly, subsequently becoming involved in corporate and product marketing and launching a formal AR role.
This is a proverb with quite some history to it. Indeed its lineage has been traced to 13th Century France in: mauvés ovriers ne trovera ja bon hostill (les mauvais ouvriers ne trouveront jamais un bon outil being a rendition in more contemporary French). To me this timeless observation is applicable to present-day Business Intelligence projects. Browsing through on-line forums, it is all too typical to see discussions that start “What is the best BI software available on the market?”, “Who are the leaders in SaaS BI?” and (rather poignantly in my opinion) “Please help me to pick the best technology for a dashboard.” I feel that these are all rather missing the point. Before I explain why, I am going to offer another of my sporting analogies, which I believe is pertinent. Indeed sporting performace is an area to which the aphorism appearing in the title is frequently applied.
If you would like to skip the sporting analogy and cut to the chase, please click here.
The importance of having the right shoes
Rock climbing is a sport that certainly has its share of machismo; any climbing magazine or web-site will feature images of testosterone-infused youths whose improbable physiques (often displayed to full advantage by the de rigueur absence of any torso-encumbering clothing) propel them to the top of equally improbable climbs.
Given this, many commentators have noted the irony of climbing being conducted by people wearing the equivalent of rubber-covered ballet slippers. The fact that one of the most iconic rock climbing shoes of all time was a fetching shade of pink merely adds piquancy to this observation. Examples of these, the classic FiveTen Anasazi Lace-ups, are featured in the following photo of top British climber, Steve McClure (yes it is the right way up).
When I started rock climbing, my first pair of shoes were Zephyrs from Spanish climbing firm Boreal. They looked something like this:
The Zephyr by Boreal - $87 - £67
Although it might not be apparent from the above image, these are intended to be comfortable shoes. Ones to be worn by more experienced climbers on long mountain days, or suitable for beginners, like myself at the time, on shorter climbs. Although not exactly cheap, they are not prohibitively expensive and the rubber on the soles is quite hard-wearing as well.
The Zephyrs worked well for me, but inevitably over time you begin to notice the shoes worn by better climbers at the crag or at the wall. You also cannot fail to miss the much sexier shoes worn by professional climbers in films, climbing magazine articles and (no coincidence here) advertisements. These other shoes also cost more (again no coincidence) and promise better performance. When you are looking to get better at something, it is tempting to take any advantage that you can get. Also, perhaps especially when you are looking to break into a new area, there is some pressure to conform, to look like the “in-crowd”, maybe even simply to distance yourself from the beginner that you were only a few months previously.
This is very shallow behaviour of course, but it is also the rock on which the advertising industry is founded. I wanted to get better as a climber, but would have to admit that other, less noble, motives also drove me to wanting to purchase new rock shoes.
The Galileo by FiveTen - $130 - £85
The Galileos shown above are made by US company FiveTen and are representative of the type of shoes that I have worn for most my climbing career. FiveTen shoes have been worn by many top climbers over the years (though there have recently been some quite high-profile defections to start-up brand Evolv, who can never seem to decide whether to append a final ‘e’ to their name or not).
Amongst other things, FiveTens are noted for the stickiness of their rubber, which is provided by an organisation called Stealth Rubber and appears on no other rock climbing shoes. Generally the greater the adhesion between your foot and the rock, the greater the force that you can bring to bear on it to drive yourself upwards. Also it helps to have confidence that your foot has a good chance of staying in place, no matter how glassy the rock may be (and no matter how long the fall may be should this not happen). I have worn FiveTen shoes on all of my hardest climbs (none of which have actually been very hard in the grand scheme of things sad to say).
The Solution by La Sportiva - $155 - £120 (the link loads a Flash page on the Sportiva site)
Nevertheless, with what I admit was rather a sense of guilt, I have recently embarked on a dalliance with another rock shoe manufacturer, La Sportiva of Italy. The Sportiva Solutions which are shown above are both the most expensive rock shoes I have ever owned and the most technical. If NASA made a rock shoe, they would probably not be a million miles away from the Solutions. The radical nature of their design can perhaps best be appreciated in three dimensions and you can do this by clicking on the above image.
The Solutions are very, very good rock shoes. I recently had the opportunity to carry out a before and after comparison on the following climb, A Miller’s Tale:
My partner, who appears in the photo (incidentally sporting FiveTen shoes), climbed this on her second go. By contrast, I had many fruitless attempts wearing my own pair of FiveTens (that, to be fair to FiveTen, were much less technical than the Galileo’s above and were also probably past the end of their useful life). I frequently found my feet skittering off of the highly polished limestone, which resulted in me rapidly returning to terra firma.
A couple of weeks later, equipped with my shiny new Sportivas, my feet did not slip once. Of course the perfect end to this story would have been to say that I then climbed the problem (for an explanation of why some types of climbs are called problems see my earlier article Perseverance). Sadly, though I made much more progress during my second session, I need to go back to finally tick it off of my list.
So here surely is an example of the tool making a difference, or is it? My partner had climbed A Miller’s Tale quite happily without having the advantage of my new footwear. She is 5’3″ (160cm) compared to my 5’11” (180cm) and the taller you are the easier it is to reach the next hold. Strength is a factor in climbing and I am also stronger in absolute terms than she is. The reason that she succeeded where I failed is simply that she is a better climber than I am. It is an oft-repeated truism in the climbing world that many females have better techniques than men. This, together with the “unfair” advantage of smaller fingers, is the excuse often offered by muscle-bound men who fail to complete a climb that a female then dances her way up. However in my partner’s case, she is also very strong, with her power-to-weight ratio being the key factor. You don’t need to lift massive weights in climbing, just your own body.
So I didn’t really need better rock shoes to prevent my feet from slipping. If I got my body into a better balanced position, then this would have had the same impact. Equally, if my abdominal muscles were stronger, I could have squeezed my feet harder onto the rock, increasing their adhesion (this type of strength, known as core strength for obvious reasons, is crucial to progressing in many types of climbing). What the Solutions did was not to make me a better climber, but to make up for some of my inadequacies. In this way, by allowing me the luxury of not focussing on increasing my strength or improving my technique, you could even argue that they might be bad for my climbing in the long run. I probably protest too much in this last comment, but hopefully the reader can appreciate the point that I am trying to make.
In order to become a better climber I need to do lots of things. I need to strengthen the tendons in my fingers (or at least in nine of them as I ruptured the tendon in my right ring finger playing rugby years ago) so that I can hold on to smaller edges and grasp larger ones for longer. I need to develop my abdominal muscles to hold me onto the rock face better and put more pressure on my feet; particularly when the climb is overhanging. I need to build up muscles in my back, shoulders and arms to be able to move more assuredly between holds that are widely spaced. I must work on my endurance, so that I do not fail climbs because I am worn out by a long series of lower moves. Finally I need to improve my technique: making my footwork more precise; paying more attention to the shape of my body and how this affects my centre of gravity and the purchase I have on holds; getting more comfortable with the tricks of the trade such as heel- and toe-hooks; learning when to be aggressive in my climbing and when to be slow and deliberate; and finally better visualising how my body fits against the rock and the best way to flow economically from one position to the next.
If I can get better in all of these areas, then maybe I will have earned my new technical rock shoes and I will be able to take advantage of the benefits that they offer. Having the right shoes can undoubtedly improve your climbing, but it is no substitute for focussing on the long list in the previous paragraph. There is no real short-cut to becoming a better climber, it just takes an awful lot of work.
A final thing to add in this section is that the Solutions offer advantages to the climber on certain types of climbs. On any overhanging, pocketed rock, they are brilliant. But the way that they shape your foot into a down-turned claw would be a positive disadvantage when trying to pad up a slab. In this second scenario, something like my worn out FiveTens (now sadly consigned to the rubbish tip) would be the tool of choice. It is important to realise that the right tool is often dictated by the task in hand and one that excels in area A may be an also-ran in area B.
Notes:
Lest it be thought that the above manufacturers play only in narrow niches, I should explain that each of Boreal, FiveTen and La Sportiva produce a wide range of rock shoes catering to virtuially every type of climber from the neophyte to the world’s best.
If you think that the pound dollar rates are rather strange in the above exhibits, then a few things are at play. Some are genuine differences, but others are because they are historical rates. for example, I struggled to find a US web-site that still sells Boreal Zephyrs.
If you are interested in finding out more about my adventures in rock climbing, then take a look at my partner’s blog.
The role of technology in Business Intelligence
I hope that I have established that at least in the world of rock climbing, the technology that you have at your disposal is only one of many factors necessary for success; indeed it is some way from being the most important factor.
Having really poor, or worn out, rock shoes can dent your confidence and even get you into bad habits (such as not using your feet enough). Having really good rock shoes can bring some incremental benefits, but these are not as great as those to be gained by training and experience. Most of the technologically-related benefits will be realised by having reasonably good and reasonably new shoes.
While the level of a professional rock climber’s performance will be undoubtedly be improved by using the best equipment available, a bad climber with $150 rock shoes will still be a bad climber (note this is not intended to be a self-referential comment).
Requirements - Data Analysis - Information - Manage Change
Determine what information is necessary to drive key business decisions.
Understand the various data sources that are available and how they relate to each other.
Transform the data to meet the information needs.
Manage the embedding of BI in the corporate culture.
Obviously good BI technology has a role to play across all of these areas, but it is not the primary concern in any of them. Let us consider what is often one of the most difficult areas to get right, embedding BI in an organisation’s DNA. What is the role of the BI tool here?
Well if you want people to actually use the BI system, it helps if the way that the BI technology operates is not a hindrance to this. Ideally the ease-of-use and intuitiveness of the BI technology deployed should be a plus point for you. However, if you have the ultimate in BI technology, but your BI system does not highlight areas that business people are interested in, does not provide information that influences actual decision-making, or contains numbers that are inaccurate, out-of-date, or unreconciled, then it will not be used. I put this a little more succinctly in a recent article: Using multiple business intelligence tools in an implementation – Part II (an inspired title I realise), which I finished by saying:
If your systems do not have credibility with your users, then all is already lost and no amount of flashy functionality will save you.
Similar points can be made about all of the other pillars. Great BI technology should be the icing on your BI cake, not one of the main ingredients.
The historical perspective
Ajay Ohri from the DecisionStats web-site recently interviewed me in some depth about a range of issues. He specifically asked me about what differentiated the various BI tools and I reproduce my reply here:
The really important question in BI is not which tool is best, but how to make BI projects successful. While many an unsuccessful BI manager may blame the tool or its vendor, this is not where the real issues lie. I firmly believe that successful BI rests on four mutually reinforcing pillars: understand the questions the business needs to answer, understand the data available, transform the data to meet the business needs and embed the use of BI in the organisation’s culture. If you get these things right then you can be successful with almost any of the excellent BI tools available in the marketplace. If you get any one of them wrong, then using the paragon of BI tools is not going to offer you salvation.
I think about BI tools in the same way as I do the car market. Not so many years ago there were major differences between manufacturers. The Japanese offered ultimate reliability, but maybe didn’t often engage the spirit. The Germans prided themselves on engineering excellence, slanted either in the direction of performance or luxury, but were not quite as dependable as the Japanese. The Italians offered out-and-out romance and theatre, with mechanical integrity an afterthought. The French seemed to think that bizarrely shaped cars with wheels as thin as dinner plates were the way forward, but at least they were distinctive. The Swedes majored on a mixture of safety and aerospace cachet, but sometimes struggled to shift their image of being boring. The Americans were still in the middle of their love affair with the large and the rugged, at the expense of convenience and value-for-money. Stereotypically, my fellow-countrymen majored on agricultural charm, or wooden-panelled nostalgia, but struggled with the demands of electronics.
Nowadays, the quality and reliability of cars are much closer to each other. Most manufacturers have products with similar features and performance and economy ratings. If we take financial issues to one side, differences are more likely to related to design, or how people perceive a brand. Today the quality of a Ford is not far behind that of a Toyota. The styling of a Honda can be as dramatic as an Alfa Romeo. Lexus and Audi are playing in areas previously the preserve of BMW and Mercedes and so on. To me this is also where the market for BI tools is at present. It is relatively mature and the differences between product sets are less than before.
Of course this doesn’t mean that the BI field will not be shaken up by some new technology or approach (in-memory BI or SaaS come to mind). This would be the equivalent of the impact that the first hybrid cars had on the auto market. However, from the point of view of implementations, most BI tools will do at least an adequate job and picking one should not be your primary concern in a BI project.
If you are interested, you can read the full interview here.
The current reality
As my comments to Ajay suggest, maybe in past times there were greater differences between BI vendors and the tools that they supplied. One benefit of the massive consolidation that has occurred in recent years is that the five biggest players: IBM/Cognos, Oracle/Hyperion, SAP/BusinessObjects, Microsoft and (the as yet still independent) SAS all have product portfolios that are both wide and deep. If there is something that you want your BI tool to do, it is likely that any of these organisations can provide you with the software; assuming that your wallet allows it. Both the functionality and scope of offerings from smaller vendors operating in the BI arena have also increased greatly in recent times. Finding a technology that fits your specific needs for functionality, ease-of-use, scalability and reliability should not be a problem.
This general landscape is one against which it is interesting to view the recent acquisition of business analytics firm SPSS by IBM. According to Reuters, IBM’s motivations are as follows:
IBM plans to buy business analytics company SPSS Inc for $1.2 billion in cash to better compete with Oracle Corp and SAP AG in the growing field of business intelligence
As an aside, should both Microsoft and SAS be worried that they are omitted from this list?
Whatever the corporate logic for IBM, to me this is simply more evidence that BI technology is becoming a utility (it should however be noted that this is not the same as BI itself becoming a utility). I believe that this trend will lead to a greater focus on the use of BI technology as part of broad-based BI programmes that drive business value. Though BI has the potential of releasing massive benefits for organisations, the track record has been somewhat patchy. Hopefully as people start to worry less about BI technology and more about the factors that really drive success in BI programmes, this will begin to change.
As with any technical innovation over the centuries, it is only when the technology itself becomes invisible that the real benefits flow.
I recently came across a record of my first ever foray into the world of Business Intelligence, which dates back to 1997. This was when I was still predominantly an ERP person and was considering options for getting information out of such systems. The piece in question is a brief memo to my boss (the CFO of the organisation I was working at then) about what I described as the OLAP market.
This was a time of innocence, when Google had not even been incorporated, when no one yet owned an iPod and when, if you tried to talk to someone about social media, they would have assumed that you meant friendly journalists. All this is attested to by the fact that this was a paper memo that was printed and circulated in the internal mail – remember that sort of thing?
Given that the document has just had its twelfth birthday, I don’t think I am breeching any confidences in publishing it, though I have removed the names of the recipients for obvious reasons.
INTERNAL MEMORANDUM
To:
European CFO
cc:
Various interested parties
From:
Peter Thomas
Date:
16th June 1997
Subject:
What is OLAP?
On-Line Analytical Processing (OLAP) is a category of software technology that enables analysts, managers and executives to gain insight into data. This is achieved by providing fast, consistent, interactive access to a wide variety of possible views of information. This has generally been transformed from raw data to reflect the real dimensionality of the enterprise.
There are around 30 vendors claiming to offer OLAP products. A helpful report by Business Intelligence[1] (an independent research company) estimates the market share of these . As many of these companies sell other products, the following cannot be viewed as 100% accurate. However the figures do provide some interesting reading.
Vendor
1996
1995
Market Position
Share (%)
Market Position
Share (%)
Oracle
1
19.0%
1
20.0%
Hyperion Software
2
18.0%
2
19.0%
Comshare
3
12.0%
3
16.0%
Cognos
4
9.0%
4
5.0%
Arbor Software
5
4.8%
7
2.9%
Holistic Systems
6
4.3%
6
4.7%
Pilot Software
7
4.0%
5
4.8%
MircoStrategy
8
3.5%
9
2.1%
Planning Sciences
9
2.6%
8
2.3%
Information Advantage
10
1.8%
10
1.4%
In this group, some companies (Hyperion, Comshare, Holistic, Pilot Software and Planning Services) provide either complete products or extensive toolkits. In contrast some vendors (such as Arbor and – outside the top ten – Applix) only sell specialist multi-dimensional databases. Others (e.g. Cognos and – outside the top ten – BusinessObjects and Brio Technology), offer client based OLAP tools which are basically sophisticated report writers. The final group (including MicroStrategy and Information Advantage) offer a mixed relational / dimensional approach called Relational OLAP or ROLAP.
If we restrict ourselves to the “one-stop solution” vendors in the above list, it is helpful to consider the relative financial position of the top three.
Gavin quotes Steve Ballmer, Microsoft CEO, as saying that his corporation will be “sticking to the knitting” in response to Oracle‘s swoop on Sun. He goes on to cover some aspects of the Oracle / Sun link-up; specifically referring to the idea of “BI in a box” that seems to be gaining credence as one rationale for the deal. In his words, this trend is about:
storing, serving, and understanding information […]: the trend for getting fast access to huge quantities of data on massive networks and making sense of it.
However mention is then made of co-offerings that Oracle and HP have teamed up to make in this space – surely something that would be potentially jeopardised by the Sun acquisition:
Oracle last year announced the HP Oracle Exadata Storage Server and HP Oracle Database Machine, a box from Hewlett-Packard featuring a stack of pre-configured Exadata Storage Servers all running Oracle’s database and its Enterprise Linux.
Returning to Microsoft’s response, the article stresses their modus operandi of focussing on software components and then collaborating with others on hardware. Refernce is also made to Kilimanjaro, Microsoft’s forthcoming SQL Server version that will further emphasise business intelligence capabilities.
In closing Gavin states that:
Acquisition of a hardware company would break the DNA sequence and fundamentally change Microsoft in the way that owning Sun’s hardware business will change Oracle.
It’s tempting to note that DNA is broken (and then recombined) millions of times by RNA Polymerase, that is after all how proteins are synthesised in cells; one characteristic of Microsoft’s success (notwithstanding its recent announcement of its first ever dip in sales) has been a willingness to reinvent parts of its business (else where did the XBox come from), while relying on a steady income stream from others. When it comes to the idea of Microsoft acquiring a major hardware vendor, I agree it seems far-fetched at present, but never say never.
The Register is the one of the world’s biggest online tech publications and is headquartered in London and San Francisco. It has more than five million unique users worldwide. The US and the UK account for more than 1.5 million readers each a month.Most Register readers are IT professionals – software engineers, database administrators, sysadmins, networking managers and so on, all the way up to CIOs. The Register covers the issues they face at work every day – in software, hardware, networking and IT security. The Register is also known for its “off-duty” articles, on science, tech culture, and cult columnists such as BOFH and Verity Stob, which reflect our readers’ many personal interests.
Also, earlier my initial reaction to the news was also featured in Computing.co.uk coverage. I have had a long relationship with Computing and VNUNet in general. Other Computing articles referencing my work and opinions may be viewed on the Press Case Studies and Interviews page of the Public Presence section of this site.
Computerworld, the world’s most successful media brand for IT managers, was originally launched in the US in 1969. Since then it has earned a world-class reputation by maintaining a sharp focus on IT management. Today there are 57 editions of Computerworld around the globe serving a combined audience of over 14 million IT professionals.Computerworld and Computerworld.com and the respective logos are trademarks of International Data Group Inc.
Computing and Computing.co.uk are published in the UK by Incisive Media and provide insight for IT leaders. Computing editor Bryan Glick tweets at http://twitter.com/bryanglick.
Some of the furore following on from the announcement of the proposed acquisition of Sun Microsystems by Oracle appears to have died down today. However, taking a look round the blogosphere and various on-line discussion forums1, there does not seem to be much of a consensus about Oracle’s motivations, or future plans for Sun. There are a number of moving parts to this:
Sun’s hardware platforms
Solaris
Java
MySQL
OpenOffice.org
One area that people seem agreed upon is the importance of Java to Oracle’s application strategy, so it makes sense – as a defensive move if nothing else – for them to seek to prevent influence over its future direction falling into the hands of a competitor (which in turn raises the question of when exactly Oracle and Sun started talking and how much overlap there was with the IBM negotiations).
The future of MySQL seems less clear. Some commentators feel that Oracle will support it and allow it to continue to thrive as one of their products. At the other extreme, I have seen suggestions that it will be killed off. Of course as an open source database, this might be easier said than done. There seems to have been a steady trickle of MySQL people out of Sun, pre-acquisition and I would have thought that there is enough expertise and ownership outside of Oracle/Sun for MySQL to have some sort of future regardless of Oracle’s strategy for it.
A bit of a dark horse is OpenOffice.org. A lot of commentary has focused on Oracle positioning themselves to compete with IBM via the acquisition. Perhaps OpenOffice.org offers Larry Ellison another chance to cross swords with his old adversaries at Microsoft.
Moving from software to operating systems, Sun’s Solaris has probably suffered more than most from the rise of Linux, but there have been rumours about Solaris offering Oracle a better route to the current technology Nirvana of cloud computing. Whether this is really the case, I’ll leave to more technically competent authorities to discuss.
But beneath Solaris beats the SPARC chips and other components of Sun’s hardware. Is Oracle’s real aim to offer a complete solution: ERP, CRM, BI and DW in a box? Sun’s hardware has not exactly been flying off the shelf in recent months, but perhaps the sales team at Oracle have other ideas. Maybe their feeling is that all that Sun’s boxes need is to be part of a more alluring overall package. Leveraging Sun’s hardware and operating system is what many people assume is behind Oracle’s strategy. This is certainly the path that would lead to challenging IBM as a company that can meet many of an organisation’s needs as a one-stop-shop.
However, this segues into another observation. If Oracle really has IBM in its sights, then it lacks one crucial piece of ammunition, a global services organisation; the sort of outfit that IBM acquired from the hiving off of PwC’s consulting arm. Maybe now is a good time to but stock in CSC?
But to return to some of the points I made earlier, there is a further possibility. Perhaps Oracle don’t want to move into the fiercely competitive and low-margin arena of hardware sales after all. Perhaps it was Sun’s software assets that were the real goal. Does Oracle really want to position itself as a hardware vendor, no doubt poisoning strong relationships with people such as HP in the process? Maybe not. If this is indeed the case then maybe there will be a spin-off of Sun’s hardware assets, or indeed a sale to someone like HP – assuming that they wanted them.
One of the most intriguing aspects of Oracle’s proposed acquisition of Sun is just how many balls have been thrown up into the air by it. It will be really interesting to see how they fall over the next few months.
1.
Some of the blogs that I have read on this subject are acknowledged at the end of my earlier article.
Today’s big news is of course that Oracle and Sun Microsystems “have entered into a definitive agreement under which Oracle will acquire Sun common stock for $9.50 per share in cash.”
As Sun’s press release goes on to say, “the transaction is valued at approximately $7.4 billion”. At the time of writing, Sun’s stock was up nearly 36% and Oracle‘s was down just over 1%. The price Oracle is paying represents a 42% premium over Sun’s closing stock price on Friday – that’s a big premium.
What is interesting is that the previous mooted IBM / Sun deal appears to have foundered at least partly on issues of price (though potential antitrust issues were also a concern). IBM was rumoured to have offered a price identical to what Oracle will now be paying. So what, taking Larry Ellison’s deep pockets to one side, was the difference?
Well while there seemed to be some synergies for IBM in the earlier deal (a big say in the future of Java obviously being one that would have attracted both suitors), the acquisition of Sun is unarguably a much more transformational event for Oracle. Despite Sun’s recent problems in shifting big iron (funny how UNIX platforms are now viewed that way isn’t it?), Oracle post-acquisition will have a product set ,matched by few companies. In fact it will probably be matched by only one: IBM. So, while buying Sun might have made business sense for IBM, it would not have changed the nature of the organisation overnight. Oracle’s announcement today would appear to have done just that, positioning them as the other big beast in the “buy everything from us” jungle. Whether this deal proves successful for all concerned (and not just Sun’s shareholders) is a question whose answer will probably not be clear for a long time.
A comparisson of Oracle and Sun's positions with key competitors in the Forbes Global 2000
Stepping back from all this IT fervour for a moment, it is perhaps instructive to compare the merger madness that seems to have taken over the sector with trends outside the technology industry. Here the picture is very different. Over the last 10 years the majority of sprawling conglomerates have been split up; previously cherished businesses have been spun off, or sold to competitors. This has all been in homage to the business school orthodoxy of focus and core competencies. Many an internationally renowned name now sells just a fifth of its previous product set, with other assets now owned by those who can presumably generate greater profit from them and who feel that they are more compatible with their own core strategy. Deals where two similar companies have swapped assets and businesses to create two more distinctive entities have been common. While it is always notoriously difficult to assess the impact of such trends, general opinion seems to be that this phenomenon has generated greater value (or at least destroyed less value) than the previous focus on mergers and acquisitions.
So where does this leave IT with its rash of mega mergers over the last couple of years? Well it could of course be argued that IT itself is a single sector (and thus an area of focus and core competency) and that mergers within the technology sector are not the same as say a consumer electronics firm taking over a Hollywood studio (Sony / Colombia TriStar) or old media taking over new (TimeWarner / AOL). But many elements of Sun and Oracle’s businesses are quite different from each other. Ellison must believe that he can run a more diverse stable and still breed winners. The track record of Oracle successfully managing acquisitions is mostly impressive, so he may have a point. Perhaps bucking the trend towards being highly focussed is a masterstroke. The merger may prove to be a Waterloo for the world’s third biggest software and services firm; but whether they are playing the role of Wellingtion or Napoleon remains to be seen.
UPDATE: The above chart reflects: “According to the recent JoinVision study ‘Open Source in the Fast Lane’, IT specialists indicated they deploy MySQL 30% more frequently than Oracle, SQL Server or DB2.” Not quite the same thing as market share.
Nigel speaks about issues that he sees related to the consolidation of BI vendors. In his opinion this has led to the big players paying more attention to integrating acquisitions and rationalising product lines instead of focusing on customer needs. In one passage, he says:
Within product development, the main theme moved from innovation to integration. So, instead of delivering previously promised product enhancements to existing customers, product releases came out late and the highlights were the new connections to other products owned by the vendor, but which were probably not used by the existing customers. In other words, product development was driven by the priorities of the vendor, not the customer.
Whilst there is undoubtedly truth in Nigel’s observations, I have a slightly different slant on them, which I offered in my comments:
It is my very strong opinion that what the users of BI need to derive value is not the BI vendors “delivering previously promised product enhancements” but using the already enormously extensive capabilities of their existing BI tools better. BI should not be a technology-driven area, the biggest benefits come from BI departments getting to know their users’ needs better and focusing on these rather than the latest snazzy tool.
If this does happen, it may mean less than brilliant news for the BI vendors’ sales in the short-term, but successful BI implementations are going to be a better advert for them than some snazzy BI n.0 feature. The former is more likely to drive revenues for them in the medium term as companies build on successes and expand the scope of their existing BI systems.
While some people see large potential downsides in the acquisition of such companies as BusinessObjects, Hyperion and Cognos by large, non-BI companies, you could argue that their new owners are the sort of organisations that will aim to use BI to drive real-world business success. Who knows whether they will be successful, but if they are and this is at the expense of technological innovation, then I think that this is a reasonable sacrifice.
As to whose vision of the future is right, I guess only time will tell.
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