Oracle bets on the grid

9 Sep 2004

Oracle president Charles Phillips (pictured) must have felt like Sven Goran Eriksson as he sat down to face the press at this week’s Oracle OpenWorld in London. Phillips wanted to talk about one thing; the scribes wanted to ask him about something else entirely. No, not his love life, but Oracle’s troublesome and protracted courtship of PeopleSoft.

Phillips, as cool and measured as his CEO Larry Ellison is fiery and flamboyant, fielded the questions with good grace and humour. Was Oracle’s business suffering as the federal approval process dragged on? “No.” Was the drop in PeopleSoft’s share price a good thing for Oracle because its shareholders were getting restless? “Yes.”. Was Oracle on the lookout for other acquisition targets? “Yes.” Would the acquisition of Peoplesoft affect the ongoing development of the Oracle E-Business Suite? “No.” How will Oracle deal with JD Edwards (now PeopleSoft) customers? “Too early to say.” Have the difficulties with this acquisition made Oracle wary of undertaking more hostile takeovers? Phillips laughed: “There are certainly easier ways of buying a company.”

Phillips finally got round to talking about what he really wanted to discuss: grid computing. Put simply, grid or utility computing is about pooling computing resources between hardware devices so that computing power can be apportioned across an organisation when and where needed. While the blueprint has been around for a decade or more, the enabling technology has become commercially available only relatively recently.

Oracle’s 10g (g standing for grid) database, introduced last October, was its first product in that space. The CERN nuclear research lab in Switzerland, where over 1,000 computers are clustered together, is one of the best known examples of an early grid implementation. It is also a customer reference site that Oracle rarely hesitates to mention.

CERN is still an isolated case, however, and Phillips did not try to pretend that the market for this technology was in any way close to maturity. But he reflected that solid progress had been made in the past year.

“A year ago it was probably unclear to most people what grid computing meant and it was something people needed educating about. Now people understand it for sure. What’s more, Oracle has become identified with the concept. We’re very pleased with what has changed in a year but we’ve still a long way to go,” he said.

To find out precisely how long, Oracle has developed a new measurement tool, the Oracle Grid Index, which it unveiled at OpenWorld. The index, independently compiled by research house Quocirca, is based on a survey of more than 600 organisations across Europe and measures their adoption of grid-based technologies on a scale of one to 10.

The overall Oracle Grid Index for Europe in autumn 2004 is 3.1 – meaning that 31pc of European organisations are at least some way down the road to grid computing.

It would doubtless cause dismay within Oracle ranks if this index were to fall in the coming months, but Phillips explained why he believed exactly the opposite is likely to happen. Current trends in the user community – from the growing amount of data being generated, to the advent of computer clusters – are driving demand for technology that can distribute computing power across a number of servers.

Noting how in recent years storage area networks had allowed data to be shared across storage systems, Phillips pointed out that the same process of “virtualisation” was now being successfully applied by Oracle to its application and database server software.

The other big theme of Oracle OpenWorld this week was the small and medium-sized enterprise (SME) opportunity. Like other enterprise software vendors, Oracle is targeting smaller organisations as the top of the market gets ever more saturated and competitive.

SMEs account for a growing share of Oracle’s revenue worldwide – the company claims a figure of 40pc in the EMEA region. Sergio Giacoletto, who heads this region for Oracle, said this figure reflected the strong performance of products such as E-business Suite Special Edition and Oracle Database Standard Edition One, which are packaged for the SME sector.

In its last financial year, Oracle claims to have sold 3,500 of these products to SMEs in EMEA. In the current one, the company says database sales in this sector have risen by 300pc quarter on quarter and applications sales have jumped 150pc quarter on quarter. With SMEs accounting for 51pc of IT spending in Europe, Oracle feels it still has scope to increase its market share with the sector.

Oracle OpenWorld also saw a preview of the upcoming Oracle E-Business Suite 11i.10, which is due to ship in two months. The company said the applications suite would include better integration capabilities with third-party applications and enhanced reporting capability via its Daily Business Intelligence (DBA) tool.

Ron Wohl, Oracle’s executive vice-president of Applications Development, said for users DBA “was the equivalent of reading a daily newspaper for their business at the start of each working day”.

The suite will also incorporate new management tools that allow tighter integration with Oracle 10g and enable the full range of e-business applications to be monitored and managed through a single web portal. The suite will also include two new procurement applications: Oracle Procurement Contracts and Oracle Services Procurement. These are the latest additions to Oracle Advanced Procurement, a family of applications for supply management within the E-Business Suite.

All in all, Oracle OpenWorld contained few surprises. The world’s largest enterprise software vendor is still innovating, still appraising acquisition prospects, still determined to acquire PeopleSoft and still bullish about keeping its place in the software hierarchy. As Phillips remarked: “There are going to be a small number of very large suppliers and we are confident we are going to be one of them.”

By Brian Skelly