Q: When does halfway not really equal halfway?
A) When you're running a marathon [it's NOT all downhill after the first 13.1]
B) When someone calls himself "middle aged" at 50 years old [stats say 40 is really middle aged]
C) When you're an Oracle executive describing the state of Project Fusion
D) ALL OF THE ABOVE
This week, Oracle hosted an event for media, customers and analysts to discuss the progress and future road map for Project Fusion, or simply Fusion as Oracle now wants it to be known. For the uninitiated, Fusion is Oracle's road map toward a unified code base stemming from the acquisitions of Peoplesoft, J.D. Edwards [via Peoplesoft], Siebel, Retek and several other companies.
I'll leave the general observations on the event to others. Here are a few of the better writeups I've seen on the event if you're so inclined:
- AMR briefing on Fusion [AMR Research]
- Oracle details post-merger plans [ZDNet]
- Is Oracle's Fusion coming together? [BusinessWeek]
- Oracle's from Mars, salesforce.com's from Venus [CNet News]
In the opening minutes of the Fusion briefing, Oracle co-President [and former Morgan Stanley software analyst] Chuck Phillips declared, "A year later [after the PSFT merger], we're 50 percent done and that's the tough half." Lest you think that was a momentary bout of hyperbole, I invite you to visit the Oracle website...smack dab in the middle of the home page is the same declaration, Halfway to Fusion.
I've stated openly that I'm a shareholder of Oracle [as are the funds I maintain discretionary control over] and so understand that my criticisms are driven from that perspective [i.e., is Oracle doing everything it should for its shareholders?].
Getting back to Phillips declaration...under what kind of fuzzy math does the current state of the Oracle code migration equate to halfway? Last time I checked, halfway = 50% = the midpoint. Even if one applies some artistic license, saying you're "halfway home" usually implies that the hard part of a task is behind you. Can either be true for Oracle and Fusion at this point?
- Oracle has made 15 "strategic acquisitions" in the last 13 months...and the close of the Siebel purchase is still pending. Unless Oracle plans to have Fusion complete [i.e., a completely unified code base and product suite] 13 months from now, they're not halfway
- Oracle has to integrate four massive code bases into one...combining the 2nd, 3rd and 4th largest ERP suites along with the largest existing CRM suite [a combined 1,000+ modules between the four if memory serves] is a Herculean task, one that Oracle couldn't have even officially begun because the Siebel acquisition isn't officially closed yet. I realize Phillips contends Fusion is not simply about merging code, but the bottom line is they have four very large customer bases that need assurances about the migration path of their already purchased and installed applications, and that, at a minimum, requires a deep level of code cleansing and integration
- Oracle has promised initial Fusion code in 2008...If Oracle is successful on delivering on its stated time line, Fusion applications will be shipping at a minimum of two years from now [January 2008], how does that equate to halfway when the project was first announced in January 2005?
- Oracle Fusion middleware already being deployed...One area where Oracle truly has market momentum and strength is middleware, where its application servers have been gaining share at the margin. But beyond a re-branding it's difficult even for the most ardent Oracle supporter to see how Oracle's Fusion Middleware materially differs from the path it was taking on that front without the M&A spree. What will be more important is how/when Oracle gets the Peoplesoft, J.D. Edwards and Siebel apps migrated onto the Fusion middleware platform, a milestone Oracle acknowledged at the event but gave no definitive time line
While Oracle is making strides on Fusion and has dramatically increased the disclosures relating to its planned road map over the next three years, I'm sure I'm not alone in questioning the logic of "we're halfway there" as a mantra when it so plainly begs to be refuted. Ultimately, Oracle and every other software company is best served by embracing the customer perspective. By declaring Fusion "halfway done" just a year after Peoplesoft was acquired and before Siebel is officially under the Oracle umbrella has to have a lot of customers wondering whether Oracle really understands their perspective. If we polled a representative sampling of Oracle, Peoplesoft, J.D. Edwards, Retek & Siebel customers, what percentage would agree that Oracle is "halfway" to Fusion? A lot less than half, that's for sure.
Note: At the time of this writing I and/or funds I maintain discretionary control over maintained a long equity position in ORCL and may have maintained a long equity position in other companies mentioned. We did not maintain a short position in any company mentioned.