Without Larry Ellison Oracle faces its biggest challenge

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Poston Sat, 06 Jun 2015 5:09 pm

Redwood City-When Larry Ellison announced in September last year, his departure from the Chief Executive Officer of Oracle, a company he founded in 1977 and is today the largest enterprise software provider in the world, was the central message of a smooth transition.

Ellison, of 70 years, said he would remain involved in the company, but its focus would be only the technology (it also would follow as President of the Board of Directors). The Executive Director would be divided by two copresidentes: Mark Hurd from HP technology company, and Safra Catz, a career Executive from Oracle.

The stock fell more than 10% over the next few weeks, but then returned to climb and today are worth more than that on September 18. The market knew that Hurd and Catz already playing from day to day. To shareholders and analysts, the big question mark on the future of Oracle is another: a radical change in the technological environment, which represents the greatest risk faced by the company in its 38 years of life.

There is no land in the information technology sector. Dominant companies in an age run the risk of becoming irrelevant or even disappear when the environment in which they operate is shaken by great innovations. IBM, which ushered in the era of corporate computing, almost broke when the large computers called mainframes, began to be replaced by PCs.

Microsoft spent decades focused on defending the dominant position of Windows system and ignored the disruption represented by the iPhone and the mobility. Only in recent years has tried to make up for lost time.

A transformation of similar magnitude if Announces on the horizon. What hangs over the company, one of the most veteran and revered in Silicon Valley, is the cloud — the delivery of software over the internet, a very different model than made Ellison the fifth richest man in the world.

\"The cloud is everything,\" said Hurd, the company's co-President EXAMINATION. \"In the old days, the customer would buy a CD with software. He was the one who had to take care of the modifications and integration, or hire someone to do it. Now the client accesses the software via the internet and receive several upgrades per year, without having to worry about. \"

The initial expense is lower; and life, in General, much simpler. Two good examples are Gmail, Google's e-mail service, and the social network Facebook: both are programs that run on remote servers. They are updated all the time, but nobody cares about that, because everything happens behind the scenes — in the cloud.

The problem, for Oracle, is that that's not how she won 38.3 billion dollars last year. The company used to sell licenses to use per-user or per-machine on which the program is installed. Is the software used or not, the price does not change.

In addition to the burden of implementation, customers have to pay heavy taxes. In large companies — the typical customer of Oracle in most markets — the account is salty.

Internet-based startups offer more convenient and cheaper alternatives, which compete directly with Oracle products. The MongoDB offers a database system, the biggest Moneymaker of the Oracle, based on free software — free products developed by a community of programmers scattered around the world.

Customers pay as you go, as an account of water or light. Google, Amazon and Microsoft also compete aggressively in this new market space, especially in basic services such as storage and computing capacity. Netflix, for example, paid to Amazon a rent for the entire technological infrastructure that uses.

If the company provides a peak audience with the launch of a new series, can quickly hire a capacity increase. On the side of business applications — the systems that control sales, production and human resources, for example —, Oracle also faces major competitors operating in the services.

The Salesforce, specializes in management software for the areas of marketing, sales and customer service, was one of the first to provide software on subscription model — that for 16 years. According to the American press, the Salesforce would be for sale, and Oracle and Microsoft would be two of the largest stakeholders.

Oracle is not stopped. The company already offers many of its products in the service model. This is the fastest growing segment in the enterprise — and also in the corporate technology sector — but today accounts for only about 5% of the total turnover. Which somehow reassures the Oracle is the market of customers formed by large companies does not move quickly.

Corporations usually have extremely complex systems, with thousands of interdependent programs. Any change is parsed carefully for a long time. \"The big companies always arrive late,\" says Peter Magnusson, Oracle's Senior Vice President for development of technologies in the cloud.

In everyday life of the people, the cloud is already reality for some years. Keep the pictures of smartphone on the servers of the company Dropbox data storage or in iCloud, Apple no longer novelty long ago. But this piece of the global technology industry, digital media, moving around of 200 billion dollars.

The global account enterprise it is 3.7 trillion. So far, the greatest advances of cloud computing in the corporate world have been punctual. Critical systems for the operation of the business are still the traditional — and Oracle has a good slice of this market.

But the caution of large corporations is a competitive advantage with which Oracle won't be able to tell the time. As a aims the own co-President Hurd, half of the companies that were among the 500 largest American companies on the list of Fortune magazine in the year 2000 no longer exists or has fallen out of the rankings.

Magnusson is one of the key pieces in this turn of the Oracle to the cloud. Google's vet. and Snapchat — photos and Exchange service messages which is one of the most spoken of the moment —, he was hired to coordinate the development of the offer from Oracle in the cloud.

Your boss is Thomas Kurian, considered the natural successor to Ellison when the founder retired definitely. In Oracle, the transition to the world of computing in the cloud started about nine years ago. Currently, the company has invested 5 billion dollars annually in research and development.

Legacy Size does not necessarily mean a vulnerability when it comes to technological disruptions. What tips the established giants, as pointed out by Clay Christensen — professor of business administration at Harvard University and guru in the tech sector — in the book the dilemma of innovation, is to ignore or maintain an overly defensive posture in the face of innovation.

Oracle undoubtedly is on the offensive. The company has 135000 employees and keeps hiring (including some of the creators of Amazon Web Services, the extremely successful cloud computing service from Amazon). The company has had a better performance than that of competitors like SAP, IBM and HP. It helps in time to go shopping.

In the past three years, Oracle has acquired 26 companies to increase its product portfolio, including the Datalogix, specializing in digital marketing, and Micros Systems, which makes systems for hospitality and retail. Finally, Oracle believes its integrated model — the company makes everything from equipment and basic platforms to specialized applications — is a key differentiator for customers who want to avoid the complexity of dealing with multiple suppliers.

Larry Ellison was a friend of Steve Jobs and, together, they were enemies of Bill Gates. Are these three names that have made Silicon Valley a region admired worldwide. Jobs died in 2011 and left a huge legacy, the most recent of them the revolution of smartphones.

Gates turned into reality the idea of a computer on every desk and still works tirelessly, with its foundation in humanitarian causes in all corners of the world. Ellison, the least famous of the trio, begins to prepare his departure from the scene. His legacy is still open, but if the Oracle to achieve a successful transition to the new world of cloud, was not a small achievement.

Source: http://exame2.com.br/mobile/revista-exa ... or-desafio
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Poston Tue, 09 Jun 2015 11:09 am

The business model Software as a service (SaaS) is the Belle of the ball and Oracle already has adapted to this reality.
In the field of transactional relational databases Oracle will continue dominating the story seemed odd, compare Mongo DB (SQL) with Oracle Database, even because they are totally different products.
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Adriano Alves
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