Oracle's flamboyant founder is now being credited with effectively forcing the departure of longtime President and Chief Operating Officer Ray Lane, who abruptly resigned last month.
Ellison also authored the hastily announced and widely ignored repositioning of the database company's product line two days before Lane's resignation, while Lane was on vacation.
And of course, Ellison had no qualms about owning up to the fact that he was responsible for hiring a private detective to investigate rival Microsoft's garbage.
If this is the new Oracle, the switch is working. Oracle closed its fourth quarter May 31 with income and profitability up. And a key Ellison lieutenant, Gary Bloom, executive vice president for product development and marketing, now seems to be more on Ellison's flamboyant wavelength than the no-nonsense Lane. Bloom was rising to the fore even as Lane chose the exit door.
"I just didn't fit" anymore, Lane told reporters last week, speaking for the first time since he resigned June 30. Lane said he made the decision to leave after receiving an hour-long phone call from Ellison while on vacation, stripping him of many of his duties. The parting, he said, "wasn't amicable" and "doesn't sit well."
A few days later, Ellison announced he would take over Lane's duties, then said they would be distributed among three "up-and-coming managers" at Oracle. They include Bloom, a 13-year veteran at Oracle who's held several key posts; Executive Vice President Safra Catz; and Chief Financial Officer Jeff Henley.
Bloom's key role
Henley has played a key role in straightening out Oracle's finances and increasing Oracle's credibility on Wall Street. Catz serves as a chief of staff to Ellison, dealing with organisational details in his wide involvement across the company. But it's Bloom who has been the behind-the-scenes advocate of Oracle's Web strategy and seems most in line with Ellison's thinking about new ways of doing business on the Web, analysts said.
At a time when some Wall Street analysts predicted Oracle's revenue numbers were about to level off, Bloom argued Oracle could increase its sales to small and midsize businesses if it approached them from a firmer pricing structure.
From its start, Oracle had refused to post price lists, saying every customer configuration was unique. But that dodge left room for an aggressive Oracle sales force to negotiate each deal individually. With their own commissions at stake, they were inclined to go for what they could get.
At the same time, Oracle was facing stiffer competition in the database arena from Microsoft's revamped SQL Server and IBM's DB2, particularly in the Windows NT/2000 market, where pricing is important.
"DB2 is priced at least three times lower than Oracle," said Janet Perna, general manager of data management at IBM, in an interview last month.
"I've been impressed with how [Bloom] has come up through the database group and convinced [Ellison] to revamp the pricing structure," said Ted Schadler, group director at Forrester Research. "Gary started the drive 18 months ago."
While Oracle leads in the number of units shipped, IBM and Oracle are locked in a dead heat for revenue leadership, with the lead changing hands last year in Oracle's favor by a factor of 1 percent. According to GartnerGroup's Dataquest, IBM garnered 29.9 percent of the US$8 billion database market in 1999 to Oracle's 31.1 percent.
A shift of 'monumental proportions'
In December 1999, Oracle posted a standard price list to its online store and customers were expected to check there to arrive at the final pricing of their Oracle system. "Instead of a process that drags out for weeks, with lawyers on both sides, you can go to our Web site and see our best offer," said Kevin McGuirk, an Oracle spokesman.
"An Oracle salesperson can no longer close a deal," Schadler said. "It's a cultural shift of monumental proportions."
Any negotiation that involves lawyers "freezes out all kinds of companies," McGuirk said.
With the online store, Oracle finds the cash register ringing regularly with sales to companies that it didn't reach before, McGuirk said. "Larry himself laid down the challenge that he wanted radical changes. Gary Bloom was an advocate of online price lists, one of several strong advocates."
Both Lane and Bloom were advocates of a more service-oriented sales force, one that moved away from Oracle's reputation for hiring "gunslingers" who went up against the customer to prove what kind of deal they could get. Instead of platoons of sales representatives, assistants and technical support personnel are now going to customer sites to close deals.
"We're sending in fewer people," McGuirk added. One result is reduced expenses, as Oracle lessens its dependence on feet-on-the-street and implements its own ERP (Enterprise Resource Planning) and customer relationship management software applications.
Relying on the Web site also reduces sales expenses "by separating the tire kickers from the real buyers," said Greg Blatnik, vice president at Zona Research.
Oracle, already the top database vendor, recently became the leading enterprise applications vendor, surpassing market-dominating SAP, the German ERP supplier, said Charles Phillips at Morgan Stanley Dean Witter.
During its fourth quarter ended May 31, Oracle raised its operating margins - a key profitability measure - from 21.2 percent to 41.1 percent, "a benefit of using its own eBusiness applications suite," Phillips said.
Who succeeds Lane?
Whether Oracle can keep up the pace and continue gaining ground on both the database and applications fronts remains to be seen. The company may not miss Lane now, but it relied on him eight years ago to rationalise what had become a chaotic sales process and reporting system, one that had led Oracle to miss its own projections.
Oracle remains mum on Lane's successor, but Bloom, who was traveling last week and unavailable for comment, remains the most likely inheritor of the president's responsibilities, if not his mantle.
"Ray Lane was a numbers guy, concerned with structure and the bottom line. Larry [Ellison] is a charismatic leader, given to bold decisions and moving quickly. There was a tension there," said Judith Hurwitz, president of the Hurwitz Group.
