Ellison: Oracle to rethink consulting

PALO ALTO, California--Oracle chief executive Larry Ellison said his company will boost spending on research, expand its sales force--and still cut $1 billion in expenses over the next 18 months.

Ellison, speaking at an Oracle press conference here, also disclosed that the database software giant is rethinking its approach to the consulting market to avoid head-to-head competition with Big Five firms, such as Andersen Consulting and PriceWaterhouseCoopers.

"One of the mistakes we made in the ERP business was that we had our consulting people aggressively competing with the Big Five," Ellison said, referring to the five major consulting firms that were once associated with accounting companies and that recommend enterprise software to clients.

"If we are perceived as a competitor to the Big Five, that makes it harder to sell software," Ellison said. "We need to be perceived as the best partner the Big Five ever had." To that end, Oracle will slow the growth of its consulting business.

"We have screwed it up in ERP and it cost us dearly," Ellison said. "We are not going to screw it up any more."

He also said Oracle's upcoming earnings report will make Oracle "the hottest company in town," but declined to give details because the company is in a prereporting "quiet period."

Ellison made his comments as part of an Oracle event here intended to showcase the company's role in enabling e-business, starting with detailing the major e-commerce Web sites that run on Oracle database software. The company plans to triple its ad budget to $150 million, executives said, hoping to grab mind share that IBM has snared by hitting the e-business theme in its ads.

Ellison reiterated his intention to pass Siebel Systems in customer relationship management software and took more shots at Microsoft.

"I think his strategy is very flawed," Ellison said of Microsoft chairman Bill Gates's decision to invest $5 billion in AT&T, plus more in smaller cable companies. Ellison suggested that rather than easing the way to use Microsoft software in next-generation products, those recipients might demonstrate their independence by not buying Microsoft software.

Ellison also talked of potential initial public stock offerings to several Oracle units, including the e-Travel business that provides travel management services. Oracle acquired eTravel in March for $35 million.

"It depends on whether the [stock] markets remain irrational," he said. Business Online, Oracle's application outsourcing business to rent Oracle software to customers, is another IPO candidate. Liberate, which creates software for small devices and was once called Network Computer Incorporated or NCI, filed for its IPO last month.

"You will see Oracle using Silicon Valley culture to its advantage to take companies public," Ellison said.