John Caulfield (pictured) might be a solutions director but it is unlikely that he has ever helped you solve your IT woes. Chances are you won’t ever come across him or his colleagues at Oracle unless a) yours is a large organisation and b) you have deep pockets.
But this is beginning to change. Although still primarily focussed on the enterprise market – consisting of large public and private organisations – Oracle has adopted a classic market segmentation strategy to help it reach down into the fast-growing mid-market sector.
Through introducing a number of new products such as its Standard Edition One database, which is priced at the lower end of the market, and its pared-down Special Edition E-business Suite, Oracle hopes to boost sales among SMEs without alienating its enterprise customer base.
“We are driving down towards mid-tier customers at the moment; that is our direction,” Caulfield confirms. “To some extent the enterprise market is saturated; most people have an ERP system, most people have a database, so if we want to grow as the market expects us to grow we need to find new markets and it’s the mid-market space that’s most attractive to us.”
As solutions director, Caulfield manages a team of business development executives and technical consultants. The former identify new sales opportunities; the latter then work with the new customer on providing the right Oracle solution.
These solutions have been growing in number in recent years. Best known for its databases, Oracle has introduced an application server to meet the demand for system integration or middleware tools, and has also an applications suite, Oracle E-business, which gives customers the tools to automate key business processes, from finance to manufacturing.
Caulfield claims that Oracle is unique in terms of being able to offer a “single technology stack” which includes both applications and the technology platform underneath.
Perhaps the single most important concept currently driving Oracle’s product development thinking is that of utility or grid computing – the concept that one day computing power will not be restricted to a particular PC or server box but that it will as flow as freely and transparently as electricity from the nearest socket.
Oracle took its first bold step towards grid computing last year when it launched its latest database – 10g (‘g’ standing for grid). At the time, the corporate pronouncements on 10g would have had you believe that the new dawn of grid computing had arrived but Caulfield is much more realistic about what the new product represents.
“The concept of utility computing is probably a bit away yet, but what we offer with 10g is the ability to start moving towards that by introducing resource management, automated storage management, load balancing and those types of things.”
Caulfield feels there are still a number of obstacles facing grid computing, most notably the lack of standards within organisations, where a hotchpotch of databases, operating systems and hardware is still the norm for many organisations, large and small. He makes a strong case for basing IT procurement strategies on industry standards so that over time companies end up with a single IT platform rather than a multitude of them.
The standards issue is also at play in relation to the growing market for web services – middleware that can hook different technologies together. The software industry has hailed web services as the way in which organisations can connect together disparate legacy systems and start to extract real value from them.
Some would argue that what has blunted the impact of web services to date is the lack of fully agreed open standards but Caulfield feels that the standards issue has reached such a degree of resolution that they are being now being deployed within real products. As an example, Oracle applications now come within built-in web services that allow them to ‘talk’ to other vendors’ products.
In Caulfield’s opinion, web services are now firmly on the radar of Oracle’s customer base. “Not everyone is implementing them yet but they are talking about them and they like the idea of open standards. They are faced with the issue of integration that web services will potentially solve in the future.”
He also makes the point that the IT services industry, whose mainstay is integration projects, may have to rethink its business model now that there are web services tools that promise to bring a higher degree of automation to the area. “It will push certainly push the service companies towards innovating in different ways. They should be saying to themselves: if the legwork is done for us, how do we better implement this system for the business; what value add will they get from it?”
Helping clients get better value from IT also presents a business opportunity for Oracle. Caulfield notes that where once customers were satisfied with ERP systems that would run their internal processes, more and more they are looking to extract some meaning – ‘business intelligence’ in industry parlance – from the masses of data held in the ERP system. He claims considerable interest for Daily Business Reporting, a business intelligence tool offered with Oracle’s Ebusiness Suite.
“We’re seeing a lot of interest in business intelligence. A lot of people want to roll out a lot of the information to senior managers. They want exception reporting, key performance indicators, revenue growth figures and so on.”
Looking ahead, Caulfield identifies some clear trends in the IT market, such as the commitment to open standards and further commoditisation of technology, both hardware and software. In these circumstances, he acknowledges, Oracle cannot afford to sit back and expect revenues to continue to flow from its existing installed base of ERP systems and databases. It must look for new markets and, above all, differentiate itself through innovation. “Companies will have to innovate an awful lot more if they are to stay alive and be able to compete in an ever more commoditised market,” he observes.
The other trend of course is consolidation in the marketplace, of which Oracle’s bid for software rival PeopleSoft is just the latest example. If the bid succeeds, Oracle and SAP will dominate the ERP market. But will it? On this subject, however, Caulfield is understandably tight-lipped.
“I honestly can’t comment but it’ll be interesting, it’ll be interesting…” he says with some understatement.
By Brian Skelly