Oracle’s takeover of Sun is giving customers better products that are cheaper and easier to manage, says Fadi Abdulkhalek, cluster leader, Gulf States
Oracle’s Fadi Abdulkhalek: Engineered systems equal quicker deployment and easier management
Published Sunday, 27 May 2012
When Oracle, famous for its databases and ERP software, announced its intention to acquire Sun Microsytems in 2009, the move was a surprise to many in the industry. A leading software company accustomed to high margins and consistent growth was getting into the lower growth, lower margin hardware business.
By David Ingham
For Oracle, however, the objective was clear. By combining software and hardware, the company could offer customers a tightly integrated platform that would be more straightforward to manage and maintain than multiple vendor offerings.
“Oracle has internalised the challenge of optimising the bits that have to work together and not offloading that to the customer,” explains Fadi Abdulkhalek, VP and cluster leader, Gulf States, Oracle. “If they choose the Oracle on Oracle story, the customer can focus on how they provide better services to their customers as opposed to worrying about how to integrate all these components together.”
Now, just over two years since the merger went through, Abdulkhalek insists that regional customers have been receptive to the idea of Oracle software running on Oracle hardware, what the company refers to as ‘Oracle on Oracle’. “Customers always want to simplify the management process,” he says.
“Our approach enables us to address some basic issues, which are improving operational costs and the way IT is run and managed. It’s overall a positive thing; customers that are adopting the Oracle on Oracle story are finding the rewards.”
Data from Gartner suggests that local customers have bought fewer Oracle systems recently, but they are spending more each time they buy. The company sold 1214 server units in the MEA region in the fourth quarter of 2011, according to the analyst, a year on year decline of 16.4%. Revenue from those units, however, rose 3.2% year on year to reach US $21.5 million over the period.
Those numbers cover sales of new systems. Acquiring Sun means that Oracle has also picked up a large installed base of hardware customers. Many of these would have been running Oracle software on Sun platforms, but there will be still be an installed base not necessarily running the two together. “The strategy is not to force customers to put everything on one platform; obviously that’s what we’d like and what we’d push for, but the customer has a choice,” Abdulkhalek explains.
Oracle’s message to customers is that they will find Oracle on Oracle systems more straightforward and cheaper to manage going forward than systems based on software and hardware from different vendors. “The trend in IT is to simplify management and to provide software as a service,” says Abdulkhalek. “There will be more focus on having a unified environment where you’re able to not only manage but control your costs over a period of time.”
Oracle on Oracle systems may cost more to acquire than Oracle on something else, but Abdulkhalek says there are ways of controlling even the initial cost of acquisition. “With the latest database appliance, which enables customers to put in a ready made server with the storage and the database, they pay as they go based on the usage,” says Abdulkhalek. “So this machine not only addresses the simplification of running such an environment but also they will pay for it as they grow with it.”
Merging two companies requires putting together two sets of employees and two channel networks. Employees in Dubai are still in different locations, but a plan is afoot to put everything in the same location.
As far as the channel is concerned, Oracle has continued with its longstanding strategy of helping channel partners specialise. The company says it devotes thousands of man days each year to channel training.
“We invest in specialisation,” says Abdukhalek. “Some decide to go with multiple products, some decide to go on specific products.” The specialisations tend to revolve around specific software products that are part of the Oracle portfolio, rather than being vertical in nature.
For partners that may have previously been focused on hardware and those that may have been focused on software, there are rigorous training programmes that focus on building skills in those other areas. “Every year, we spend thousands of man days training the channel,” says Abdulkhalek. “We invest in the channel programme and we don’t charge for it.” Avnet, one of its major regional distributors, has recently established a competence centre in Dubai that hosts an ExaData database platform and an ExaLogic middleware system (see box above). This allows partners to test the engineered machines and demonstrate their capabilities to customers.
Abdulkhalek reports continued growth and increasing competition in the ERP applications market, along with growing interest in software as a service. Software as a service, which allows ERP applications to be offered through the public cloud, is particularly appropriate for SMEs and rapidly growing companies.
Customers in the region can subscribe to Oracle applications through the cloud, though they are interacting with servers sitting in Oracle data centres outside the region. The company has looked at partnering up with companies that would host cloud offerings locally, though it is still unclear whether such offerings would be financially viable.
“We are in discussions with local partners to have their own setups and cloud services,” says Abdulkhalek. “With these kinds of offerings, economies of scale come into play and we’re doing some studies together with them to see if there is enough potential that justifies such investments for the region.”
He sees possibilities for particular niche applications customised for the region or a particular vertical. Ultimately, however, it would have to make financial sense for a local company to set up a data centre infrastructure in the region. Otherwise, local resellers would act as the front end for a service that is actually hosted outside the Middle East.
At the moment, customers interested in subscribing to Oracle applications as a service can do so through local sales teams. “The services are sold here, so whenever you need intervention, the teams are here locally to intervene, to help and support. It’s just that the servers are sitting in the US. For the customers, it’s transparent. Whether the servers sit here or in the US, does not make any difference,” says Abdulkhalek.
The number of regional companies subscribing to such services is still small, but the Oracle VP says that there is interest and the cloud option is placed on the table when discussions are had with customers. “Whenever we address a customer with requirements, we put the options on the table for them to evaluate. For those that don’t want to invest in their own data centres, the cloud becomes an option. Some of them are not comfortable about security or having the data offsite, so it’s not an option for them.”
After nearly 25 years in the region, Oracle Middle East sees itself as still very much in growth mode and increasingly focused on partner specialisation. Abdulkhalek says this is particularly important given customers’ increasing interest in analytics and business intelligence, for which Oracle has a range of solutions. “Today, with the availability of social media, bigger and bigger computers, and different types of software, data will grow exponentially,” he says.
“But then the challenge is: How do I make sense of all this data? So business analytics will be key and offerings in the big data space will be key. In the future, that will be one of the main preoccupations of IT.”
In this space, the VP says Oracle has done its job, integrating business intelligence features into the fabric of the application suites. “When you buy a suite, the BI is an integral part of it,” Abdulkhalek says. “Customers just need to invest in tailoring it and configuring it for their own use, rather than looking at it as a separate project. We’ve made it a natural part of the application.”