Oracle shapes up for ebusiness

It is a sign of the times when one of the most senior executives at Oracle announces that the company no longer wants its sales force to focus on selling software licences. As Oracle's success in the 1980s and 1990s was based on a philosophy of winning market share through the pursuit of a phenomenally aggressive sales strategy, the statement is all the more surprising.

But it is not a case of Oracle kicking off some act of rebellion, but of persuading end-users to rent applications and allow Oracle to host them.

Mark Jarvis, vice president of global marketing at Oracle, said: "We've changed the commission structure that our sales team work to."

On a stop-over in London as part of a 120 pan-European city tour evangelising Oracle's ebusiness vision last week, he said: "Our sales people will be better 'incentivised' to rent software rather than sell it. People will not buy software in five years' time. Within five years, half of the revenue of this company will come from rented software."

Shifting gears
The sales scheme kicks off immediately and represents a further shift in Oracle strategy concerning its Business Online application service provider (ASP) operation. Last year, Oracle chief executive Larry Ellison declared publicly that he would only allow other companies to rent Oracle applications "over his dead body".

Ellison is still alive and kicking, but that policy has been booted into touch and Oracle is now actively seeking to do deals with third-party companies that can ASP the Oracle portfolio.

"We got it wrong," says Jarvis. "Larry has said that. When he made that remark, we were still trying to work out what we were doing in the ASP space and what was the value of our applications.

"When Business Online started, we thought telcos would be the obvious people for us to partner with, but it turned out that their biggest asset was their networks. So we looked at the hardware vendors and their biggest asset was their hardware business. Then we decided that the best thing to do with Business Online was to do it all ourselves."

But Business Online has enjoyed limited success since its launch. There are 60 customers around the world, and only one, Fulcrum Solutions, in the UK.

"We need to talk to the SMEs [small and medium-sized enterprises]," admits Jarvis, arguably the most senior UK executive in Silicon Valley. "We need to work out how we can get to the corner shop in Leeds. Larry is overseeing the entire process of deciding with whom we partner."

It's all part of the company's move into new application areas with the slowdown in the back-office enterprise resource planning (ERP) market and the emergence of customer relationship management and e-procurement as the new growth areas. ERP is dead, insists Jarvis. "No one buys ERP today - that would be a career limiting move on anyone's part these days."

Overcoming scepticism
Business Online is part of Oracle's overall corporate drive to operate as an ebusiness outfit with its key applications hosted in a single data centre in California and accessed by the individual national operations - the same basic model on which Business Online works.

Part of Jarvis's remit on the ebusiness tour - upon which he has now embarked - is to put this message over to senior executives and end-user companies that are, on occasion, still highly sceptical.

"We have preconceived ideas about the state of web take-up in various countries. I thought Asia Pacific would be two years behind the US and Europe, but it is actually only about six months behind. Latin America is about two minutes behind the US. They are doing so much online. You can go online in Brazil and order your electricity and the providers bid to supply it for you," he says.

"As for Europe, the UK is clearly way ahead of mainland Europe, but there is still huge cynicism among UK chief executives because business people here still just don't get it. At the sessions we're hosting, you can feel the nervous tension in the air. The main message to UK chief executives is that this is not going to go away. If the UK is going to compete in Europe, then it has to come to terms with that."

In particular, one of the problems is the lack of willingness for the pioneering companies that have put internet-enabled business models in place to talk about what they have done and set an example to others.

"There's a real cultural barrier," admits Jarvis. "There's a real feeling of let's not talk about it among many of the companies. But there are exceptions, such as Barclays and Tesco, which set a lead and are seen to have done so. It may yet be that the PR-savvy companies are the ones that do best."

The trouble with client server
But the downside of this internet evangelism is the problem of going to those customers who were convinced to invest in client-server technology by the likes of Oracle and who are now being told that, in fact, client server has been a dreadful mistake and it is time to invest in a whole new infrastructure.

"The take-up of client server was always less in Europe than in the US, so that's an advantage for European businesses anyway," says Jarvis. "When it first emerged, client server was the best option for companies, but not now. We've piled more and more applications onto our PCs. It is completely the reverse of every other mature industry.

"If the electricity industry had followed the lead of the software industry, then we would have ended up with bigger and bigger light switches. The technology industry has moved in completely the wrong direction. It's time for everyone - suppliers and users - to bite the bullet. The only way we are going to get through this in Europe is to go through the pain companies went through in the US.

"Doing business on the internet will have the same issues as traditional businesses. About 20 per cent of them did not survive and the same will be true of dotcom businesses."