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A Strategic View On Oracle: Creating Options

Frank Buytendijk

Vice President and Fellow, Oracle Corporation

www.oracle.com/thoughtleadership

Oracle Corporation

*Source: http://www.oracle.com/corporate/information-powers-profitability.pdfCopyright ©2009, Oracle. All rights reserved. Oracle Confidential

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What’s The Story Behind

Oracle’s Strategy?

• Market Evolution

• Modern IT Strategy• Modern IT Strategy

• The Oracle Strategy

Aristotle

How The World Develops…

ThesisAnti

thesis

Syn

thesis

Anti-

thesis

How Does That Apply to the World of IT?

Best of Breed … Support business automation(general ledger, order entry)

One Stop Shop

“Thesis”

“Antithesis”

… Business integration(ERP, CRM)

The New IT Paradigm

Single Middleware, Best Of Breed Applications

“Synthesis”

… Support value chain integration, and integration of performance, risk and operations

How Does That Apply to the World of IT?

Best of breed

(+) Flexibility(-) Integration burden

Work with many vendorsAge of Development

“Creating Flexibility”

One Stop Shop

(+) Industry best practice(-) Lock-in

Work with a single vendorAge of Application

“Creating efficiency”

“thesis” “antithesis”

“synthesis”

Fusion

(+) Flexible, no lock-in (+) Pre-integrated

Work within an ecosystemAge of Architecture

“Creating Options”

How Does That Apply to the World of IT?

Best of breed One Stop Shop

(+) Industry best practice(-) Lock-in

Work with a single vendorApplication focus

“Creating efficiency”

“thesis” “antithesis”

Fusion

“synthesis”

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Modern IT Strategy

Don’t judge whether the company has the right strategy or not, but how it adapts

White Paper: Business/IT Alignment, An Oracle View

www.oracle.com/thoughtleadership

White Paper: Business/IT Alignment, An Oracle View

www.oracle.com/thoughtleadership

strategy or not, but how it adapts to changing circumstances.

IT is crucial in providing that flexibility.

IT strategy can be seen as a portfolio of investment opportunities that can be delayed, expanded, switched or

abandoned when needed, called “real options”.

The Bottom Line

Traditional thinking

• Risk and uncertainty depress the value ofan investment

Options-based strategyOptions-based strategy

• The higher the uncertainty, the higher thevalue of agility

• If managing risk is a core competence, riskadds to the value of an investment (*)

(*) The discipline of making organizations smart, agile and aligned is called “management excellence”

Introducing “Technology Excellence”

A Complete, Open, Integrated IT Strategy

Complete Open Integrated

More BusinessOpportunitiesThrough IT Innovation

Drive TheCompleteValue Chain

AnticipateCurrentlyUnknownNeeds

CustomerCocreation

Crowdsourcing

Informationis the product

B2C integration

Complete – The IT Radar

Expand

IT BecomesCore

Business

Process

Information

Collaborativeprocesses

Managementprocesses

2.0

Sensortechnology

Augmented Reality

(Serious)Gaming

TraditionalIT

Expandfocus

Technology

1990s Today

processes

Mobilecomputing

Pervasivecomputing

InformationDemocracy

Businessprocesses

Servers,Applications,Security, etc.

MIS

Augmented Reality

RFID

Open – Dealing with Long Term and Short Term

•Fast pace of technology development, yet long-term investment cycles

•The need to anticipate currently unknown requirements and capabilities in both

hardware and softwarehardware and software

•Compose, decompose, recompose business processes

Integrated IT Strategy

Firm Infrastructure

Human Resource Management

Technology Development

Procurement

Firm Infrastructure

Human Resource Management

Technology Development

Procurement

Inbound Opera Outbound Marketing Service

Logistics tions Logistics Sales

Based on Michael E. Porter’s Value Chain

Integrated IT Strategy

Based on Michael E. Porter’s Value Chain

Web Channel

Customer Contact Center

Face to Face (Shops, Account Management)

Intermediaries

Integrated IT Strategy

Finance / HR

Marketing

ProductDevelopment

Employee

ServicesIT

Facility

Management

Operations

Inbound

Logistics

Channel

Sales

Marketing

ProcurementOperations

Operations

Inbound

Logistics

Logistics

Service

Outbound

Logistics

Flow of Goods

General Management

Flow of Information

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A Strategic View on Oracle

“We view acquisition as successful R&D without risk. Customers are actually getting access to a whole

More Speed, Less Risk: Creating Options

More Speed, Less Risk: Creating Options

Customers are actually getting access to a whole industry’s R&D.”

Charles Phillips, President, Oracle Corp.

Creating

Options•Higher growth, less risk

••Seek out the most effective technology

•Pace, switch, expand investments and acquisitions.

•Respond quickly to new and different requirements

•See trends across various industries.

•Combine operational excellence, product innovation and customer intimacy.

Creating Options

Being architected for

heterogeneous IT landscapes,

Oracle is effective in many

different markets.

The First Transformation

“The big theme the first time around was for cost efficiency, cost reduction, global consistency and how we run our business.”

– Jeff Henley,Chairman of the Board,Chairman of the Board,Oracle Corp.

Oracle’s First Global Transformation

1998 Today

52 application instances

70 HR databases

140 product pricing databases

1 application instance

1 database (plus backup)

1 database (plus backup)

40 data centers

97 email servers

2 data centers (backup included)

4 email servers (backup included)

Inconsistent Business Processes Global Standard ProcessesInconsistent Business Processes

27 Websites with Different Logos

Global Standard Processes

1 Consistent Brand Globally

Fragmented Data Consistent Data and

Global Business Intelligence

Decentralized Decision Making

• Geography

• Line of business

Centralized Decision Making

• Global process owner

• Divisional process owner

• Global application owner

Oracle IT as a % of Total Revenue

Copyright ©2009, Oracle. All rights reserved. Oracle Confidential

The Transformation Payoff

15%

Copyright ©2009, Oracle. All rights reserved. Oracle Confidential

OPERATING MARGIN %

Fiscal Year

The Second TransformationFrom Operational Excellence to Management Excellence

• Customer Intimacy–Global BI, 360 degree view of the customer

– Information for Everyone

• Operational Excellence 2.0–Post-merger integration: Peoplesoft acquisition took 6 Peoplesoft acquisition took 6 months, Siebel 5 months, Hyperion 3 months

• Product innovation: Oracle is an ecosystem

–Partners–User groups–Open Source community

APPLICATIONSAPPLICATIONS TECHNOLOGYTECHNOLOGY

Enterprise Deals

Business

Applications

Enterprise Deals

Middleware

Management

Performance

Management

Identity

Management

Oracle Acquisitions

Retail

Project-Intensive

Copyright © 2009, Oracle and/or its affiliates. All rights reserved.

Insurance

Manufacturing

Banking

Utilities

Content

Management &

Collaboration

Database

Systems

Management

Health Sciences (Pending*)

Communications

*Subject to closing conditions

(Pending*)

The Oracle Product Strategy

Complete Open Integrated

More Value Less Complexity

More Flexibility Less Cost

More Choice Less Risk

Comprehensive

Industry Portfolio

Standards-Based

Architecture

Designed to

Work Together

Hardware / Infrastrucutre

Database

Back

Office

Core

Business

Value Chain

Front

Office

Middleware

Management & Decision Support

Hardware / Infrastrucutre

Data Base

Back

Office

Core

Business

Value Chain

Front

Office

Middleware

Management & Decision Support

Complete

Hardware / Infrastrucutre

Database

Back

Office

Core

Business

Value Chain

Front

Office

Middleware

Management & Decision Support

Hardware / Infrastrucutre [OS]

Database

Back

Office

Core

Business

Value Chain

Front

Office

Middleware

Management & Decision Support

Unrivaled Leadership in Open Standards

BPEL

RBAC

Integrating Your Enterprise

Integrated business processes

Integrated user experience

Integrated business intelligence

Conclusion

• Judge your IT strategy based on its ability to adapt (not whether the strategy is right or wrong)

•To deliver on such a strategy, focus on architecture

•The most important decisions to make are about middleware and SOA-based applicationsmiddleware and SOA-based applications

•See www.oracle.com/thoughtleadership for more

August 23