Could Integration Be Oracle's Achilles' Heel?

Loraine Lawson

Integration can definitely be a strategic differentiator, particularly in the ever-lucrative enterprise software space. The question is: Is integration Oracle's friend or foe?


The answer seems to depend on what you mean by integration. No, I'm not being pedantic. If you're talking about business integration after a merger and acquisition, then Oracle is the company to watch. But if you're talking about product integration, well .... some say that's a very different story.


In a recent analysis of Oracle's acquisition of Sun, Forrester analyst R. "Ray" Wang outlines why he thinks Oracle's acquisition will mean significant headway into the enterprise stack. In particular, he notes that Oracle is extremely successful at post-merger integration:


"With two former investment bankers at the helm, Oracle has one of the best post-merger integration teams in the business. Oracle's profit performance signals that it has been able to add new companies and their stream of revenues while keeping costs down. Sun will provide considerable synergies in the short and long run."


But Forbes' Dan Woods, aka the JargonSpy, sees a very different integration story at Oracle. In fact, he believes integration is Oracle's Achilles' heel-and SAP's secret weapon. In this week's column, Woods makes a pretty mean case against Oracle's expansion-by-acquisition approach:


"This strategy emphasizes a best-of-breed orientation, which implies that using Oracle products to solve end-to-end problems requires creating Web services and gluing them together. This view of the world abandons the idea that it is the vendor's responsibility to reconcile multiple versions of software and pave the way for easier implementation of end-to-end processes."


"Best-of-breed," Woods continues, "is another way of saying that the user, not the vendor, is responsible for integration."


He contrasts Oracle's approach with SAP's recently released Business Suite 7, which Woods says brings all the business applications into a unified form and exemplifies SAP's view that "customers are best served if end-to-end automation is simply configurable."


Acquisitions may nab headlines, but Woods believes SAP's integrated approach will ultimately win corporate customers:


"Companies implementing new applications or consolidating many companies must ask which foundation is best: a productized and unified platform for business automation or a collection of products that needs to be integrated. ... SAP's revenge will come as customers find that they are spending more time moving their business forward than struggling with integration issues, which should never be their responsibility in the first place."


Pretty tough words, and I can't help but think they'll carry more weight than the average tech opinion, given that they appear in Forbes-a magazine known for its CEO-level, business audience.

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