• • •
Next stop is Fisher Island, Miami. The private resort is reachable only by boat. The island was owned by the Vanderbilts, and the centerpiece is still William’s former mansion, now converted into a hotel and surrounded by rather tacky guest bungalows that are reached by golf carts, the only form of transport allowed on the island. The following day’s roundtable is for the CEOs of eighteen of Oracle’s Latin American customers. It’s a sybaritic place but a boring meeting. There are language issues, and the guests are much more diffident about engaging Ellison in debate than their Yankee counterparts.
Perhaps it’s just as well. As we’re leaving, one of them, Paolo Bassetti, the president of Exiros, a big Internet exchange spun out of the Techint Group, an Italian-Argentine industrial conglomerate, starts telling me about the problems his company is having with Oracle’s procurement software. Bassetti’s company had opted for Oracle’s Exchange Marketplace Platform because it promised a high level of scalability and the ability to integrate with most known ERP systems. But Bassetti felt let down: his clients were finding it difficult to close transactions; California power outages were undermining Oracle’s hosting service; and the critical functionality that had been promised in subsequent releases was several months late in arriving.6 When I say that he should have mentioned some of this to Ellison during the roundtable, he says that his fellow guests would have thought him ill mannered.
On the way back to California with Ellison, I tell him about Bassetti’s complaints. It doesn’t come as a total surprise to him and he says he’ll look into it, but he looks a bit tired and fed up. I ask him if he doesn’t sometimes think it’s a little odd that at his time of life and with his kind of money, he’s still flying all over the country trying to sell software. He smiles wryly. “It’s not something I really enjoy. But right now, I have to do it.”
* * *
1. LE writes: The POSCO go-live went nearly flawlessly. It did a lot of planning and testing before moving the entire operation to the E-Business Suite.
2. LE writes: SAP has certified and started reselling Oracle Real Application Clusters, but SAP has not certified either IBM or Microsoft clusters. That says it all.
3. LE writes: When IBM bought PWC [in July 2002], they inherited a large Oracle applications implementation business. That gave us an opportunity to try to work more cooperatively with IBM in both application implementations and outsourcing. Early on the signs are very promising. I don’t agree with their best-of-breed strategy, but there is no denying the quality and professionalism of their people.
4. LE writes: To Be or not to be, that may have been the question (sorry), but it didn’t matter one way or the other. Microsoft killed both companies like a rogue rhinoceros trampling a couple of disoriented field mice. But the Linux-on-the-desktop idea lives on. If anything breaks Microsoft’s monopoly, it will be a desktop version of Linux. The ingredient still missing is a replacement for Microsoft Office. Once the open-source version of StarOffice matures a bit, Microsoft might actually have to compete for business. Watch what is going on in India and China for early signs of cracks in Microsoft’s desktop monopoly.
5. LE writes: Functional directors, aka department managers, do a good job of optimizing business processes inside their own functional areas: marketing, sales, service, manufacturing, accounting, HR, and the rest. Functional directors have no authority to optimize processes between and across functional areas. That’s why things break down between marketing and sales, manufacturing and service, manufacturing and sales, etc. Only the CEO is responsible for the business as a whole. If the CEO doesn’t connect the dots, the company will never operate efficiently.
6. LE writes: At the height of Internet mania, our B2B exchange business spread around the world faster than Asian flu. I’ve never seen anything like it. Unfortunately, every customer wanted its Exchange Web site to operate slightly differently. As the bubble began to deflate, all our commercial Exchange customers began to alter their business plans. It was simply impossible for us to keep up with their constantly changing requirements. Then, to make matters worse, the lights in our California data center started going out on a regular basis. We moved our B2B exchange customers to our Texas data center as fast as we could because California was running out of electricity. California is a strange place. A few years back we almost ran out of water.
14
THE LAST DATABASE
June 2001
I’m meeting Ellison by his hangar at tiny San Carlos airport, five minutes’ drive from Oracle’s headquarters. Ellison keeps four aircraft there: a couple of high-performance prop-driven stunt planes, one of which belongs to his son, David; an Italian Marchetti jet fighter that he acquired after the authorities told him what he could do with his plans to import a supersonic MiG-29 from Russia; and a Cessna Citation business jet, which is unquestionably the biggest and most sophisticated airplane that flies in and out of San Carlos. The Citation is more convenient than the San Jose–based Gulfstream V for trips of less than five hundred miles, and it’s the Citation that we’re flying to Las Vegas, a one-and-a-half-hour hop over the Sierra Nevada, for an Oracle sales conference.
Right on time at 4 P.M., we drop out of a cloudless sky over the famous strip that is home to the most incongruous set of buildings on the planet, including replicas of the Eiffel Tower and one of the Giza pyramids. As we emerge from the little white plane, a blast of heat hits us. On the taxiway are the inevitable black Lincoln limos and Ellison’s bodyguards, George and Rich. On the short ride to Caesar’s Palace, I ask Ellison whether he feels at all nervous. It’s not only a big audience but one that’s expecting to be inspired. Sales for the last two quarters of the year have been flat, and few, if any, of the 3,300 Oracle salespeople in the room will be taking home the bonuses that can bump their salaries up to more than a million dollars. Ellison says, “No, I’m not nervous. I just wish I didn’t have to do this. All these guys are going to want to talk about is comp.”
The Las Vegas bash is an annual event that takes place just after the close of the final quarter and costs Oracle the thick end of $10 million. It’s a perpetual mystery to Ellison why the field needs this kind of thing or the ridiculous awards they love handing out to one another. He says that when he holds a modest party each year for the developers before Christmas, half of them don’t turn up and those who do don’t stay for long. The team that built 9i might go out for a few drinks when the software ships, but they’re back at their desks the next morning, working on what will turn into the next release. When Ellison talks about the sales force, it’s as if it’s a strange, childlike tribe with odd customs and rituals that are impenetrable to anyone else (i.e., who’s grown up). Ellison is willing to concede that Oracle’s sales force is full of smart, intensely hardworking people—but the subtext is that most of them are emotionally immature and motivated only by money. It’s not contempt, more a kind of fastidiousness combined with intellectual snobbery. The idea that Ellison might spend the night in town striving to be “one of the boys,” as, say, Microsoft’s Steve Ballmer would, is ridiculous. “If I stayed, they’d hate me for it,” he says, “If I was around, they couldn’t enjoy themselves.”
We arrive at the rear entrance of Caesar’s Palace, where Judy Sim is ready to brief Ellison. She says the audience has had a long day and has been “PowerPointed out” with one presentation after another from other Oracle executives. The message is that they’re waiting impatiently for a bit of Ellison knockabout and he’d better not disappoint. As we pass one of the swimming pools on the way in, Sim points to what the hotel describes as its policy of allowing “European-style”—topless—sunbathing. The implication is clear: there are competing attractions.
The ballroom is jam-packed. It’s standing room only, and people seated in the wings of the giant hall are dependent on the huge screens that fill both sides of the room. As news of Ellison’s arrival ripples around the overwhelmingly male audience, all eyes swivel in our direction
. On the stage, Jay Nussbaum, Oracle’s vice president for service industries, has been presenting BellSouth’s Lowri Groves with an award for completing a large CRM implementation at the firm’s consumer broadband division. This is the same Lowri Groves whom we met three months earlier in the HealthSouth hangar, who had pleaded with Ellison to do what it took to make Ralph de la Vega, the division’s nervy boss, “whole again.” BellSouth appears so happy with de la Vega’s restored wholeness that it’s well on the way to a commitment to extend the Oracle system to its huge fixed-line residential business. Oh, and she’s got a prize for Ellison. As Ellison gets up to mount the stage, I whisper to him that she’s changed her tune. He whispers back, “Software implementations are like childbirth. You go through terrible pain, but once you get through it, you have a beautiful new baby.”
Nussbaum introduces Ellison—“We welcome our great leader”—who receives a hug from Groves and a piece of fragile-looking modernistic glass sculpture that stands as much chance of making it into Ellison’s office as a bust of Bill Gates. The applause subsides; Ellison grabs a microphone and begins to prowl up and down the stage. It’s curiously effective, giving the impression of pent-up energy, like a big cat restlessly pacing a cage that’s too small to hold it.
Ellison wants to get across the message that despite a tough second half of the year, Oracle has never been in better shape to take the battle to its competitors. “Let’s start with our products,” he says. “The 11i suite is a revolutionary idea. All the information in one place. All the pieces fitting together. There’s never been this breadth of functionality in an applications package before. After just one year we have more than four hundred customers running their businesses on it.” He then starts to reel off some names. High up the list, which as usual includes the likes of Ford and Alcoa, comes the story of GE Power Systems and how GE Power in Hungary was able to complete something that might have taken two years in little more than three months by mapping its processes to the software rather than the doing it the other way round—a method of implementation that was now being rolled out in Houston and thirty-seven other sites around the world. For a little light relief and to show that not only huge companies are turning to 11i, Ellison brings up Papa John’s Pizza and Pizza Hut: “We’re dominating the business of configured pizzas—pineapple and anchovies, whatever you want, our software can configure the pizza. The telecoms business is also pretty important, but it’s less familiar to me.” The line, which is unrehearsed, gets a big laugh.
But Ellison isn’t prepared to lighten up too much. He wants them to know how much more capable 11i is than the products of rival vendors: ERP and CRM combined . . . you can’t do business without it . . . SAP and Siebel don’t have it . . . Ariba can’t automate procurement . . . we’re the only ones who can automate whole business flows . . . don’t take the whole E-Business Suite all at once . . . take it one integrated flow at a time. And then something close to an admission, an acceptance that the birth of 11i has been far from easy for both Oracle and its customers: “11i has been the most complex product transition in application software history—building a complete suite of applications with Java and HTML front ends. PeopleSoft says we’re not as ‘pure Internet’ as they are because they have no Java, just HTML, in their user interface—but ninety-nine percent of their apps are written in PeopleTools! Is PeopleTools an Internet standard? It’s the same with Siebel, their apps are written in SiebelTools—Tom won’t sell any software that doesn’t have his name on it! Siebel got into the CRM market early, and they didn’t have any competitors for a long time. That time is over. The first year of selling the suite was the hardest year. It’s difficult to sell without customer references. Maybe we began to doubt whether we could pull it off. They said we couldn’t. But we did. We have four hundred references now, and next year there will be thousands. No one else is even trying to build what we’ve built.”
He’s brought with him the slides that will be used in two days’ time at 9i’s official launch. The idea is to see how the presentation goes down in Las Vegas and tweak it as necessary. At first, Ellison promises “no more PowerPoint,” remembering Sim’s warning on the way in. But just as suddenly he decides to use slides anyway because they’ll help him show just how “amazing” a database 9i really is. “Oh, put the slides up. And then afterwards we’ll talk about comp.”
One of the slides compares the transaction speed of Oracle running on IBM’s fastest UNIX computer compared with DB2; it’s based on an ad that Oracle is about to run. It shows a tall red column for Oracle and for IBM a blue stump that doesn’t extend much beyond the bottom of the chart. Ellison explains, “When IBM wanted to show how fast their fastest computer ran, they used Oracle. IBM won’t even say how fast DB2 runs on the same computer. There are two possibilities. The first is that DB2 is so fast that IBM doesn’t want to embarrass us. That’s one possibility. The second possibility is that they run like a snail. I think we’re dealing with escargot, folks.” In the testosterone-charged atmosphere that Ellison has carefully stoked, it brings the roof down.
An important part of Ellison’s argument is that IBM’s DB2 is actually two entirely different products: an excellent database that runs on mainframes and that is capable of running real-world applications across clusters, albeit slowly and expensively, and a vastly inferior product that has a completely different architecture and can run only (briefly) the TPC-C benchmark across different computers. Ellison jeers, “It’s like painting the word ‘Boeing’ on the side of a roller skate and calling it a 747. DB2 on mainframes is a fine product with real clustering capability. DB2 on Unix and Windows is a totally different product with clustering capability that’s only good for marketing. It’s totally useless for running real applications. You expect this kind of thing from the boys in Seattle [Microsoft]. They’re new to the database business. They might not even know their clustering is useless. But IBM should know better.” Ellison then explains the different architectures: “shared disk” for DB2 on mainframes and Oracle 9i on Unix, Windows, and Linux versus “shared nothing” for the other DB2, which he describes as a piece of garbage. “Who’s right?” he asks. “The mainframe DB2 guys at IBM or the UNIX DB2 guys? The products are totally different. They can’t both be right. It’s a difficult question for IBM to answer. So we’re going to keep asking it. DB2 on UNIX is an imposter. Its shared-nothing architecture is good for nothing. It doesn’t deserve the IBM logo. Oracle 9i is the last database.”
With that Ellison turns to sing the praises of the newly released 9iAS application server as being now the “fastest and cheapest middleware in the world.” A week earlier, Ellison made a rambunctious appearance at the Java One conference for Java developers at the Moscone Center in San Francisco. Despite the near hysterics of Sun’s PR people, who had wanted Java One to be an anodyne celebration of the Java community, Ellison used his time on stage to proclaim the superior performance of 9iAS over the rival product from cosponsor BEA Systems that currently dominates the Web application server market. Ellison had set out to demonstrate that while BEA was much better than IBM’s WebSphere—according to Oracle’s tests, twice as fast rather than half as fast, as IBM claimed (“It’s so easy to get those metrics confused,” joked Ellison), 9iAS was three times faster than the market leader. BEA’s boss, Bill Coleman, as Ellison now gleefully related to his troops in Las Vegas, had not been amused. “Bill liked the first slide showing how much faster BEA was than WebSphere, but he didn’t like the second slide. Major bummer. In fact, he said afterwards that ‘Larry had just made the numbers up onstage.’ He said I lied. Shocking. He really hurt my feelings. A bit later, when he found out that all my numbers were based on certified performance test results, do you know what he said then? Bill Coleman said, ‘Performance doesn’t matter.’ Performance doesn’t matter? Is that right? We’re going to feed those words right back to Bill in our next BEA comparison ad. Yes, folks, we are a kinder, gentler Oracle these days.” The audience roars its approval.
It’s time for questions from the floor. The first one’s easy. What’s Ellison’s take on Microsoft? Ellison replies: “The X-Box looks fabulous. They’ve finally found something they’re really good at. We don’t compete with Microsoft. SQL Server is a joke. We don’t make spreadsheets or word processors, so we don’t see much of Microsoft in the market. The only time I think about them is when my Windows machine blows up.” Having spent much of the second half of the 1990s appearing to fight a holy war with Microsoft over the direction of computing, Ellison’s approach now is to portray it as irrelevant to Oracle’s future. While Oracle is the leader in the serious world of supplying complete business information systems to companies, Microsoft is derided as a company that is increasingly focused on consumer markets, where its main rival is AOL Time Warner.
The next question is a little trickier, although it’s one that Ellison has been expecting. An intense-faced, clearly nervous young man, sitting near the back of the hall, asks Ellison about “comp.” He says that they’ve recently been told via a conference call that there will be no money for raises in the second half of the fiscal year just ended. Is this really true? The hall is suddenly completely silent. But by the time he’s through, the young man sounds more angry than frightened. And when he sits down he gets a big cheer for being bold enough to say what’s on everybody’s mind. Even though he’s been expecting the question, Ellison still looks slightly uncomfortable. “You obviously drew the short straw,” he jokes. “But the truth is that we’ve had a really crappy year, especially the last two quarters. We share the success, and we share the pain. When things are going well, we pay out huge raises and bonuses. When things aren’t going so well, we don’t give out raises and bonuses because there’s no money for them. The stock’s down to fifteen dollars. I’m sorry about that. But it’s a fact of life. We’re all suffering together. But because we’re watching every penny we spend, we’ve been able to avoid layoffs—Cisco laid off thousands. We’re watching every penny we spend so we can preserve our team intact—so you’re all here to fight again this year. We have a long tradition of paying people well at Oracle. You can make it all back and more this year, it just depends on how much you sell.” I wonder how the stuff about shared pain will go down. Most of the people in the ballroom know that Ellison cashed in $900 million worth of stock at the beginning of the year. Either they’re too polite/scared to mention it, or the juxtaposition doesn’t trouble them.
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