Interview

Interview: Oracle president Mark Hurd

Bryan Glick

Silicon Valley might be notoriously competitive, but it's still a place where it helps to have friends in high places.

When, in 2010, Mark Hurd was forced to resign as HP chief executive after allegations that amounted to conduct unbecoming of the role in the eyes of the HP board, Oracle chief executive Larry Ellison told the New York Times that, "The HP board just made the worst personnel decision since the idiots on the Apple board fired Steve Jobs many years ago."

And just to prove he meant it, one month later, Ellison recruited Hurd to take over as the new Oracle president.

In the subsequent 18 months, Hurd stayed largely out of the limelight and got to grips with his new job. Last week, he was in London to meet Oracle customers, and gave his first interview to the UK technology press – although journalists were briefed not to discuss "Mark's time at HP".

There's no need, with plenty going on at a supplier that has arguably been through more change – and certainly more acquisitions – than any other over the past five years. What was once a straightforward database and business software provider now has one of the largest application portfolios in the industry, and has become a hardware player too with the 2009 purchase of Sun Microsystems, snatched from under the nose of rival bidder IBM.

Hurd is now pursuing a strategy focused on the three key trends that every major IT supplier will tell you it is an expert on: cloud, mobile and big data. He claims that Oracle is now the number two software-as-a-service (SaaS) provider, with nearly $1bn annual revenues.

"At a $1bn roughly, we're the second largest SaaS company in the world and it's a huge gap between second and third," he says.

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Cloud computing

But many CIOs see big software providers as the main blocker to moving to the cloud, citing the need for expensive, up-front licence fees as a historic way of charging that goes against the pay-as-you-go nature of the cloud.

You have these really cool intersections, of tremendous scale of data, tremendous sophistication of consumers, tremendous power in consumer hands.

Oracle president Mark Hurd

Hurd denies that such reliance on old business models is in any way a problem.

"We're moving as quick as we can move. We don’t have any business model issues, we've been acquiring SaaS companies, building SaaS applications, with our Fusion cloud applications we've been at work for six years," he says.

"We're just getting started. You will see steady stream of application software available as SaaS over the course of the next 18 months. Every couple of months you will see modules become available. We are ahead of everybody for having a cloud suite of capabilities. I mean, who's ahead of us? Who's even close?"

The company's cloud portfolio is likely to be extended with the summer launch of Oracle Secure Cloud. The firm is not releasing any details of the offering, and its only previous mention in public was when Ellison announced the name to financial analysts in March. But Hurd says it will be a key part of the overall Oracle cloud portfolio.

"Oracle Secure Cloud will be one choice customers have. If they want to go and take advantage of Oracle Secure Cloud they’ll find the database and all sorts of tools available including our applications. You'll be available to leverage other clouds, from our cloud, so if you wanted to go into the Amazon cloud to gain some infrastructure, you can do that and come back to our cloud. It's an open cloud unlike Salesforce.com which is a proprietary cloud. Ours is elastic, it's open," he says.

"We'll have customers that would prefer to build a private cloud. They might want to build a cloud architecture but behind their firewall and we'll do that with them. And there are customers who want to keep their on-premise applications. You'll see us scaling out all three capabilities so you can choose the optimal delivery architecture based on geographic location, function and process. That way you have mixing and matching, and you'll have that choice."

Eliminating IT complexity

Oracle customers will be familiar with the supplier's biggest marketing push at the moment, what it calls "engineered systems" – pre-packaged combinations of Sun hardware and Oracle software, tightly integrated and tuned for optimal performance. IBM recently announced an equivalent range, dubbed PureSystems.

Oracle builds in a further incentive by bundling costs of all the components together - users of HP and IBM hardware may find their Oracle software will be 50% more expensive to license. Current offerings include Exadata – an Oracle 11g database applicance; Exalytics – in-memory business intelligence and analytics; and the Oracle Big Data Appliance – combining Oracle 11g with Hadoop and NoSQL unstructured data management tools.

Hurd says the aim is to overcome CIOs' biggest complaint – the complexity of legacy IT infrastructures.

"You hear the same message coming from customers – how do I get the complexity out, how do I simplify IT? You'll see a lot more of this standard configuration provision, with the work done by the IT company as opposed to the customer," he says.

"IT has got incredibly complicated and this federated thing where you have a solution built on six or seven different component technologies and it's your job to figure out which ones and put it together and integrate it and troubleshoot it - that’s what gets you hiring hundreds of people.

"The opportunity is [to say to your supplier] you do it - you do it as part of your R&D. That manifests itself in cloud and in engineered systems. That’s why these things are so hot right now."

He also sees engineered systems as Oracle's response to critics who say that a lack of an IT services capability puts the firm at a disadvantage when competing with rivals HP and IBM. There's been something of an expectation that Hurd would acquire a big services firm, since he led HP's purchase of outsourcing giant EDS in 2008.

"What might be good for this company isn’t necessarily good for that company. Oracle has deep intellectual property (IP). We have a tremendous set of applications - the other companies you describe don't. If you don’t have that IP it’s a reasonable strategy to try to build a services capability. We have a different strategy – we build applications. Our view is to automate and provision many of these things that today many companies use as services," he says.

"Many companies today buy an application or set of tools, and then they hire service companies to do a lot of programming. Our view is, don’t do that – buy a standard application. If you want SaaS out of the cloud, you'll take some days to install and you're up and running. It's not just giving a cool piece of IP to a customer, we've eliminated service, eliminated work, and standardised the solution. Our view is that we aren’t trying to create services, were trying to automate them and standardise."

Big data

For the world's biggest database software provider, it's no surprise that big data is also attracting big investment from Oracle.

Hurd became particularly animated discussing the challenges and potential of the smartphone technology that's in the hands of billions of consumers around the world and letting them all create data.

"This thing [pointing to a smartphone] is roughly the power of a mainframe circa 1982. There are five billion phones out there, two billion smartphones – that's two billion mainframes. Data [volumes] grew eight times from 2005 to 2012. To 2020 it will grow 20 times. That's 20 times as much data, and two billion mainframes, pounding away," he says.

"The bulk of the data isn't necessarily valuable, but there's something [in the data] that is. Big data is going to be interrelated to analytics that says, how do I get somebody to make a great decision at a very specific point in time that makes a dramatic change in outcome.

"You have these really cool intersections, of tremendous scale of data, tremendous sophistication of consumers, tremendous power in consumer hands, the only problem is you have a lot of old applications and not a lot of budget to make all this happen."

Hurd highlights the contrast between these "cool intersections" and the IT complexity that CIOs face, to demonstrate the direction he wants to take Oracle.

"Companies have 20-year-old applications – that’s at the core of the problem. They’ve built huge IT organisations that maintain these monolothic application structures with huge budgets. I've got worse news for you - IT budgets aren’t going up 50% to figure all this out. Budgets are going to be flattish. If that’s the case and you have to make yourself compete, something dramatic has to change. That’s why this cloud thing is coming up – you have to figure out a new way to deal with this issue," he says.

"You'll see new ideas from new companies, new ideas from existing companies, that help facilitate that outcome. But you have to have IP. In the end, we can make all these interesting provocative statements, but you have to have intellectual property that helps companies run their business."

Like his famously outspoken boss, Hurd is bullish about Oracle's prospects.

"Over the next decade I believe this: IT has to flip, and the core of what's in IT is the applications. It would be wrong if I didn’t express to you that we feel great about our position."

Ellison would no doubt be pleased to hear it.