November 14, 2002 6:41 PM PST

Ellison pushes IT companies to simplify

SAN FRANCISCO--Oracle CEO Larry Ellison used his keynote speech at the company's annual convention to chide the information technology industry for making life difficult for corporate IT managers.

An industrywide lack of software interoperability, reliability and quality, as well as overly complex products have resulted in "a scarcity of information at the dawn of the information age," Ellison said Thursday. The flamboyant billionaire's OracleWorld address was beamed via satellite from Auckland, New Zealand, where he's competing in the America's Cup sailing race.

Ellison said information fragmentation, brought about by businesses installing ever-greater numbers of incompatible computer systems, is among the biggest problems facing companies today.

He urged companies, as Oracle itself has done, to consolidate their IT operations onto fewer databases and to quit customizing packaged business application software. Companies, Ellison said, have collectively wasted billions of dollars over the last decade on consultants and extra staff to maintain and integrate a hodgepodge of systems.

"It's a form of madness, all these separate systems," Ellison said.

Holding up his own company as his favorite example, Ellison said Oracle has managed to increase its profit margins during one of the most difficult markets for IT ever. He places credit for those results on the company's massive business-systems consolidation project, which has reduced IT spending at Oracle every year over the last few years. The company, for example, has reduced the number of e-mail servers it uses from 97 to one, he said.

"When you go from 97 to one database," Ellison said. "It can't ever break."

Oracle is a leading provider of database software, competing against IBM, Microsoft and Sybase. The company claims its database products are more reliable, secure and scalable than those of its competitors, making them the best choice for businesses looking to consolidate IT infrastructure.

During a question and answer period, however, one conference attendee challenged Ellison on his claim that Oracle products are simpler than others. The audience applauded when the attendee asked Ellison when Oracle would release a single version of its Enterprise Manager--a tool for tracking database performance--rather than the multiple versions customers must deal with today. Ellison said the company is working toward that goal.

But Ellison said consolidated systems demand even greater security and reliability. When all your data and systems are connected, he said, hackers can do more damage.

Ellison claimed it's been more than 10 years since someone has hacked into an Oracle database. Oracle invited the toughest hackers from China, Russia and all over the world to break into Oracle's system when it launched its "Unbreakable" advertising campaign last year, he said. Though hacking attempts on Oracle's Web site shot up to as many as 30,000 attacks per week during the campaign, no one managed to break into the system, Ellison said.

Ellison contrasted his company's record on security to that of Microsoft, Oracle's archrival. Hackers have exploited holes in Microsoft products to spread destructive viruses and worms, such as Code Red and Nimda.

"Bill Gates said he would devote the month of February to security," said Ellison, referring to an initiative at Microsoft earlier this year to improve the security of its software. "February's a short month. We've devoted 25 years to security."

Oracle also sells business applications--software that companies use to do bookkeeping, keep track of inventory, process orders and a multitude of other things.

Ellison contended that huge gaps in such packages, including earlier versions of Oracle's products, caused companies to spend 10 times more on consulting to set up the software than on the software itself. And the result has been incomplete automation, he said. The latest collection of Oracle's business applications, called 11i, fills in many of those gaps, he said.

Ellison said many of what he called one-product software companies would not survive in the long run because gaps in their products are just too big. He counted business application makers Ariba, Commerce One and Siebel Systems among such companies.

Mocking Ariba, Ellison said the company developed an application so simple that "two cats could have written it." Yet, the company, at its height, surpassed Daimler Benz in market value during the dot-com boom, he said.

Ellison went on to deride technology experts and securities analysts for going to extremes in their estimation of the IT industry.

"The experts said Webvan and Pets.com were going to be worth billions," Ellison said. "Then the bubble burst and the experts said, 'No one's ever going to use computers again and all IT companies are worthless.'"

Ellison ended his talk by telling IT workers, particularly ones skilled in helping companies get a solid return on their IT investments, to keep their chins up.

"The good news is this is the dawn of the information age," Ellison said. "Those skills will always be in demand."

 

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