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ICON66 – Volume 6

ICON's IT Giants Series

RR: One of the hot themes that you have mentioned to me is 'agility in a changing world'. Clearly this is as important for large corporates as for smaller companies. What does agility mean to Oracle specifically?
CB: One of the things we have had to learn over the years is how to change with the market place and to understand how quickly it's changing. I joined Oracle eight and a half years ago. At the time our primary business was databases. Very few of the companies we were competing with at the time even exist today, they've been absorbed, and the same is starting to happen on the applications side. So we have had to learn how to be agile in the market place we work in.

We also recognise that IT is a fundamental part of most businesses today whether they are small, medium or large. IT infrastructure is fundamental to their existence and things are changing all the time, so it's about trying to work out how that change works for us. We are not focusing on trying to sell products to our customers, but taking much more of an advisory role.

RR: Does that mean that Oracle today is a collection of account managers trying to understand other businesses priorities, with an understanding of IT beneath that, or is it the IT will always be first?
CB: In the old days you sold the customer what they wanted. The truth today is that most customers don't know what they need and you have to educate them. So the agility issue is that we have to move from selling a product to becoming an adviser and it's a journey to do that.

RR: What is your perception of innovation today in: business, Oracle and the companies you work with?
CB: The first thing is that there is a big difference between invention and innovation. To me innovation is applied invention. There are a lot of companies that are good at inventing things, but not many are good at taking that and turning it into commercial reality.

The key is to make sure companies can put their skills and focus into the thing they are doing and not divert their skills into IT. This is why we are working increasingly with companies like ICON who are dealing with companies which need funding, but need funding to make the innovation come through in the business world. Our view is that we should be taking away a lot of the IT headaches that these companies have.

I am working with a company at the moment and they have a proposition that will go across the world. I can't say much more than that at present, but they need some very, very specialist security skills and architectural skills, but they only need them for about two or three months. So we said to them: "We know you're pre-funding, so you are running very lean, but we will do a deal with you so that we support you now and you can give us money back later as you grow."

The incentive for both of us makes sense. It's in my interest to promote that company and it's in its interest to work with us so that it can have access to the skills and products it couldn't normally afford. This spurs the innovation and it releases the company to get on and do what it's good at. I think IT companies have a huge part to play in both global and in UK businesses.

The thing that's going to make the difference in the western world is creativity and intellect. Tom Peters said "If you think you can sell it cheaper than Wal-Mart or produce it cheaper than China, you're wrong". There is no point even going there. You've got to be in the value curve, you've got to use that creativity and intellect, you've got to be at the value end, and I think the UK and Europe have the opportunity to really be very strong in that place.

RR: There is a sense that Oracle is one of these global goliaths and its scale means it doesn't have a direct perspective on the new emerging technologies in the IT space. How do you keep track of what's going on?
CB: We work with smaller companies much more than the market place believes. Very recently we held an innovation forum event where we brought together many pre-IPO companies, venture capitalists and corporate financiers like ICON. Part of the purpose of that forum was to have a discussion about how you turn innovation into something that makes sense. So the idea that Oracle is only interested in the big corporates is not true. Certainly it's where we made our profits that fund everything else, but we also invest a great deal of money to make sure that we work with the customers as they are coming through.

RR: Why is it that Europe, relative to its brain power, does not seem to generate the same amount of champions as the United States?
CB: We still have conservativism. The old adage that the US celebrates failure and we bury people is probably still true. A lot of people who have been successful have been through the mill a number of times and I think that's important. I think we should encourage people to learn from the things they've got wrong. I think it's incumbent on companies like Oracle to share, obviously not the commercial and confidential stuff, but the experience we have of people who are successful and some people who aren't.

RR: How do you view the emerging economies of China and India and the impact they are likely to have on innovation in the UK?
CB: China and India are the two countries that the western world has to be clear about. I work a great deal with India. In fact about 20% of my manpower is offshore in India and it makes me much more competitive in the UK market place. They are extremely competent people. However, when it comes to invention and innovation I'm not so sure. I think the UK has an opportunity now to dominate the design, invention and innovation side. But we need to remember that India generates 300,000 qualified engineering graduates every year, which is a pretty awesome number of people coming into the market place, and we should not ignore them. We need to recognise the fact that everyone said, before the dot com boom, Silicon Valley couldn't deliver!

RR: In terms of corporate finance activity in 2004/05 you've made multiple acquisitions. What is innovative about those companies that makes Oracle HQ want to get out its cheque book? CB: I would put it in these terms. Our strategy is a result of market conditions in an industry that is going through significant consolidation. Customers want to work with less suppliers but they also want strategic IT partners, who help them to turn IT systems into competitive business advantage. The companies Oracle acquires help to bring innovative talent into the Oracle Corporation so that we can explore niche areas and new markets on behalf of our customers.

RR: It can't be easy if you've made so many acquisitions to transport those values into the businesses you're digesting, so what's the process that Oracle applies to do that?
CB: The first answer to that is speed. We believe in integrating people we acquire very, very quickly. If you look at PeopleSoft, we acquired it on the 28th December 2004 and, in my region, it was fully integrated from a contractual and personal basis into my organisation by 1st March 2005. We also cross train people in whatever the acquisition is.

Every one makes mistakes but if you do things at speed, things don't fester. If you have problems then you deal with them immediately. Culturally it's always interesting for people who come from a small company, people can find it very refreshing that they don't have to do everything for themselves anymore and they have a huge market place to work in.

RR: Most SMEs dream of being bought by an Oracle with suitcases full of cash. Can you explain how UK companies get on your radar in terms of acquisitions?
CB: Acquisitions are driven by the president's office in the US. From Europe we may make recommendations referring the people we feel are important in our marketplace and those will be considered. It is about mutual self-interest; we want to make smaller companies successful because that's what makes us successful. My view is that if the smaller company and the larger company understand what the overall goal is then you may be able to achieve something together. If those goals aren't aligned, it doesn't mean either of them is wrong but it means they shouldn't waste any more time.

This interview formed part of ICON's IT Giants Series that also includes: Evenings with Alistair Baker, MD of Microsoft UK and John Woodget, MD of Intel UK amongst others.

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