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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
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