Is Larry right to stay On-demand focused?

I think Larry Ellison knows what he’s about.

 

I must admit, I’ve been thinking a bit about the commentary about oracle not getting into SaaS because there's more money to be made in on-premise. Because of this  I re-read Phil Waineright’s post about how Oracle was spurning SaaS for ERP easy pickings.

The thing I noticed second time around was that the quote wasn’t from Larry, it was in fact from the Information weeks reporter and was her interpretation of what Larry said.  So I went searching for another article and found this one which presents a channel centric, less sensationalist view of what Larry actually said.

The interesting thing is that the high points Larry mentions, are almost exactly the same as Steve Singh in his really insightful interview with Bob at Smoothspan.

 

“ Steve:  This is just one guy’s prediction.  I don’t believe large companies can make the conversion.  Forget their genetic code.  How many will take the pain?  Companies won’t reinvent themselves. 

Think of taking a $40B company to On-demand.  The value of the business will go through huge negative change.  It will get crushed.  Cash flow will get crushed.  You have to layoff.  The transition is really hard and its very sudden.

If you’re north of $100M its hard.  Over $1B its impossible.”

Overlay that with Larry’s points about building a new channel, marketing to new customers, and the cost of building an entirely new code set and you could call Larry’s statement that it would be “enormously challenging” the understatement of the year!  You could as a shareholder also say that it was good decision and correct corporate governance. 

The two largest software companies to try and do this are of course SAP and Microsoft. From what I can gather from press coverage , they haven’t exactly been successful todate.

So then (bearing in mind I am a SaaS advocate), why then is everyone bagging Larry? 

 

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