Ellison: We want to sell you cars

February 15, 2001 —

LARRY Ellison, the famously outspoken chairman and chief executive officer of Oracle, wants to sell you a car.

"This industry is so immature that if it was the automobile industry, we'd sell you fuel injectors and windshields and tires, and . . . you'd put them together," he told a packed auditorium at the company's AppsWorld conference here Tuesday.

"Or rather, you wouldn't. You'd get IBM mechanics to do it. They'd build you a best-of-breed car," he said, taking the first of many jabs at IBM.

Ellison wants to see business software systems sold more like today's cars: "We've worked hard to be the first car company. We don't want to sell you parts and labor."

The analogy could be pushed further: Today's cars are sophisticated, highly integrated systems. Customization, or tuning, is problematic, and must be redone each time a standard component is replaced. Ellison sees business software systems in the same way: a sealed unit with an Oracle logo on the hood and "No user serviceable parts" stamped underneath.

"If you customize our software, when we bring out a new version you can't use it. You trap yourself in an old version," he said. Don't tweak that suspension system or the manufacturer's spare parts won't fit.

Ultimately, customizing software is futile because Oracle itself will soon add the functionality you are looking for, he said. "We will bring out a new version of the software before you can customize our old version."

This may mean accepting software that doesn't do everything you want. "In fact, [Oracle's] E-Business Suite doesn't do everything our customers want. We have an 80 percent or 85 percent solution," he said, a brave admission in an industry where the most-cited percentage is the famous five nines of 99.999 percent availability.

Ellison had much to say about the power generation division of General Electric, which placed an order last November for E-Business Suite. In just five months, GE will have redesigned the business processes at one of its manufacturing plants to work on the Internet with E-Business Suite, Ellison said. Twenty more plants will follow suit over the next 18 months. The company decided "an 85 percent solution in five months is better than a 100 percent solution in three years," he said.

In any case, Ellison said, no one has ever implemented a 100 percent solution for their business problems. And no matter how hard Oracle's engineers work, they will not be able to keep up with customers' demands for improvements to bridge the gap between the available and the desirable.

"Can our engineers keep up with our customers? No. We will always be trailing your ideas, and that's a good thing. That's the right model," he said.

Other suppliers promise they can construct such a 100 percent solution -- if only the customer can specify it -- but the costs of integrating such a system are enormous, Ellison warned. Bringing in a systems integrator is like getting married: You're tied for life, he said.

Ellison is down on systems integration. Oracle's revenue from systems integration is down, too, while its software revenue is up. At IBM, he said, the situation is reversed: Software revenues are falling, while systems integration plays an ever-larger part in IBM's business.

"IBM has 300,000 [systems integration] consultants who only want to help," he said. "They have alliances with 500 software partners and they have guys with glue guns who come and put it all together."

At least, that's what he thinks happens. Ellisoon went on to ask, "What is systems integration, anyway? What do those 300,000 people do all day?"

Customers, he said, should be asking themselves what they want to do with their money. Do they want to buy labor or do they want to buy cars?

InfoWorld