While history has shown us that even mega-companies such as Arthur Andersen, Enron, Lehman Brothers and Nortel are not immune from sudden death, Oracle's downside risk is less about extinction and more about erosion.
Oracle's market and fiscal position is substantial. The most recent Forbes 2000 list shows Oracle as the largest software company in the world—notably ahead of competitors IBM, Microsoft and SAP. The company employs more than 108,000 staff, retains more than 380,000 customers, including all 100 of the Fortune 100, and counts global deployments in more than 145 countries. Other factors which suggest corporate longevity and staying power include the following.
- Oracle has succeeded over three decades by building good products first and foremost. As Larry Ellison succinctly states, "If we built the right products the right way, we […] win. That was my view of the world then, and that's my view of the world now."
- Oracle operates three segments—software, hardware systems and services—and each maintains category leadership in a number of hardware and software technology markets as espoused by a number of recognized analysts and market research firms.
- Within the category of CRM software, Oracle is a leader, but not the leader. Oracle and rival SAP trade barbs and competitive rankings depending upon the measurement metrics, analyst firm and period.
Even with its history, accomplishments and trajectory, Oracle faces increasingly stiff competition from both long-time rivals (SAP) and newer-comers (Salesforce.com). However, you don't have to follow Oracle long before you recognize the company's biggest challenges are internal.
- Oracle struggles in messaging more than one product at a time, and right now the metal and silicon products of Exalogic, Exadata, and Exalytics are consuming all the oxygen in the room – leaving both Fusion CRM and CRM on Demand jockeying for scarce attention. While not due to the quality or competitiveness of their CRM products, Oracle is not a thought leader in CRM.
- Since the January 2010 acquisition of Sun Microsystems, Oracle appears more splintered than ever before. The benefits of Engineered Systems are apparent, but a symbiotic strategy for how Oracle unifies its big data, big machines, feeds and speeds of the hardware side — with the business and top line revenue requirements for the apps, cloud and social software side remain elusive. If these two sides continue to diverge, Oracle's focus will stray as well.
- Few organizations can become category leaders without showing true innovation, however, Oracle may be an exception. Oracle is an acquirer of innovation and fast follower of market successes. The risk however is that this strategy normally only works when you're already a market leader, and does little more than maintain position. It's also susceptible to missing competitors until it's too late. Salesforce.com has shown that even a start-up that can innovate and bring disruptive change to an industry, while old guard category leaders dismiss or delay their fast following opportunity until it's too late.
- Oracle is a relatively closed, private and non-transparent company. It doesn't practice the social CRM strategies—such as the change from monologue to dialogue among customers and their suppliers—supported by its own social CRM products. Except for sales and marketing activities, the company doesn't engage with the broader community of customers, analysts, bloggers and media like competitors IBM, Microsoft, Salesforce.com and SAP do. While all companies have multiple stakeholders to satisfy, such as shareholders, employees and customers, Oracle has the reputation of a strongly lopsided preference for investors at the expense of customers. Many suggest that Oracle's appetite for acquisitions isn't matched by its desire to partner with customers. While a lack of customer-centricity, community engagement and true dialogue may not pose an immediate risk while things are steadily moving along, it incurs great risk if and when a crisis occurs. Or crisis aside, failing to grasp the voice of the customer and falling out of touch with what customers want can only lead to customer erosion.
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