The Oracle Enterprise Strategy

By Stewart McKie
DBMS, September 1996

From the networked enterprise to the Network Computer, Oracle builds on its database foundation.


It seems a little odd, but the world's largest database supplier is currently in the news as the main advocate behind a piece of hardware - the so-called NC, or network computer, a dedicated Internet terminal. Oracle Systems Corp. has taken a characteristically opportunistic view of the rise of the Internet as a means to both strengthen demand for its own database server products and poke a sharp stick in the side of PC evangelist Bill Gates of Microsoft Corp. Whether the NC will ever materialize as a significant hardware platform or turn out to be just a massive ego trip by Oracle Chairman and CEO Lawrence J. Ellison remains to be seen. But as only one product of many offered by the world's second-largest independent software company (in terms of 1995 revenues) after Microsoft, the success or failure of the NC concept may be just a minor blip in Oracle's impressive growth path.

Larry Ellison, Robert Miner, and Edward Oates founded Oracle in 1977 to create an RDBMS based on recently released IBM specifications for what was then a new data management model. The Oracle DBMS was launched in 1979. One of its early advantages was the portability of the database kernel over a range of operating platforms, and today Oracle still offers the widest range of operating platforms of any single RDBMS product. By 1985, Oracle's revenues had reached $23 million, more than doubling to $55 million in 1986 when the company went public. The company achieved a billion dollars in revenue in 1991, and at the end of its last complete fiscal year (May 31, 1996), Oracle reported $4.2 billion in revenues with a net income of $636 million. (See Table 1.)

Unlike Computer Associates or Microsoft, Oracle's revenue growth has been managed largely without acquisitions and on the back of home-grown products. This self-propelled success could be viewed as a testament to the quality of the core database engine tools and the renowned marketing skills of Oracle's aggressive sales force. But it would be wrong to think of Oracle as just a database tools developer and marketer. In 1988, Oracle released Oracle Financials, an application suite that has grown to include a full range of enterprise business management tools. Although it wasn't client/server in those early days, Oracle Financials was one of the first relational accounting products to hit the market.

Oracle's early growth came at the cost of some poor operating practices, however. During the early 1990s Oracle had a reputation for sharp sales methods, creative accounting, and delivering vaporware, especially with regard to the new Financials applications. Lawsuits, layoffs, and loss-making characterized fiscal 1991 for Oracle, when it made its first and only loss as a public company. At that time Oracle hired Ray Lane as VP of worldwide operations to help the company make its comeback. Just as this article was going to press, Oracle announced the promotion of Lane to president and chief operating officer. (See an interview with Lane.)

The Oracle7 RDBMS

Oracle's relational database server products make up the core of the company's business. There are now two server families: Oracle7 and the Oracle Universal Server suite. Oracle7 is the cross-platform RDBMS (see Table 2) on which Oracle built its business. Originally released in 1992, Oracle7 is currently at version 7.3. Oracle7 is a core component of Universal Server, Oracle's new data management suite that first shipped in February 1996.

Apart from specific technology differences, what differentiates Oracle7 from its competition are its cross-platform deployment options, the overall maturity and richness of the database engine and administration and development tools, and the fact that the same engine is also available in workgroup and personal versions. None of Oracle's competitors have an engine that runs on so many different platforms, few have been in relational database development for as long, and some, such as Sybase Inc., use different products for their "enterprise" and workgroup or personal database engine offerings.

According to Mark Jarvis, Oracle's VP of Server Technology Marketing, Oracle7 runs several of the world's very large (relational) databases (VLDBs), which are defined as databases of over five terabytes in size. Oracle7 is one of the technology leaders in parallel database processing, replication, and data warehousing.

Oracle7 has supported parallel processing for the past three years and can deliver parallel query, insert, and update processing. Parallel processing is supported across a number of SMP and MMP platforms.

Jarvis categorizes Oracle7's support for replication into four types, which are listed in Table 3. Although most RDBMS products now or will soon provide some means of handling the first three types of replication, Jarvis claims that Oracle7 is the only RDBMS that can deliver the depth of conflict-resolution logic required to manage true distributed update replication.

A recent Meta Group survey claims that Oracle7 is the leading RDBMS used for data warehousing and is also the RDBMS more people intend to buy for forthcoming data warehousing projects. Building a data warehouse solution is seldom a one-vendor task: The warehouse must be populated using middleware and complemented by desktop tools to query and mine the warehouse for information retrieval. Consequently, Oracle has an extensive partnering program that involves over 30 middleware and OLAP vendors. Oracle has also sponsored a data warehouse benchmarking initiative called "Test To Scale," which aims to prove the ability of the engine to handle VLDB warehouses on a variety of leading hardware platforms. This initiative is supported by most leading hardware vendors, and, to date, eight vendor servers have passed the Test To Scale benchmarks.

Jarvis claims that Oracle7 is used as the database engine for more VLDB data warehouses than any other RDBMS. Such widespread usage is probably partly justified by the parallel technology that the engine supports, but it is almost certainly also attributable to enhancements to Oracle's database optimizer that let it select from a variety of algorithms to execute a user query. The optimizer can select from algorithms such as star queries, bitmap index queries, hash joins, or parallel queries for its query execution, depending on the nature of the query and the data being queried. This type of query flexibility is valuable for retrieving data from large, mixed-data type data warehouses. On DEC Alpha platforms, Oracle7 supports the server's 64-bit architecture for further performance enhancements delivered by use of a very large memory (VLM) address space.

Oracle Universal Server

Universal Server is a suite of products that appears to the user as one seamless product. It is also Oracle's "multimedia" database server. Universal Server is not an object/relational hybrid, as the Illustra/Informix Universal Server combination will be, but rather a set of applications for managing all types of corporate data. See Table 4 for a list of Universal Server components and the data types they manage.

Universal Server also supports spatial data and its manipulation. Universal Server is not yet an object repository - this capability is slated for support in Oracle8, the next version of the Oracle RDBMS. At this time, however, no RDBMS competitor offers a single product that has the breadth and depth of Universal Server.

With Universal Server, Oracle has set out, as Jarvis puts it, "to Web-enable the database and database-enable the Web." Universal Server supports the storage and publishing of HTML documents using standard CGI scripts to access the database. A $2495 add-on lets developers bypass CGI and use Oracle's Web Request Broker layer for the development of Web applications, RSA2 Secure Sockets, and services such as Veriphone's credit card authorization for electronic commerce. The API supports plug-in components that Oracle calls "cartridges" for specific functionality that may be coded in Java, C, C++, or Oracle's PL/SQL language. Using functionality from the ConText product, data stored in Oracle Universal Server can be queried across the Internet using advanced natural-language thematic searching techniques that perform relevancy and ranking analysis. The result is a much more focused and contextually close set of results than the simple keyword searches used by many popular Internet-based search engines.

Oracle Development Tools

Designer/2000. The foundation of Oracle's development tools strategy is Designer/2000, a CASE tool and data repository for business modeling, metadata storage, reverse-engineering, and interapplication object generation. According to Dennis Moore, VP of tools marketing at Oracle, Designer/2000 is Oracle's fastest growing single product and has tripled its revenues over the last year. Oracle plans that Designer/2000 will eventually be used as:

a repository to store metadata from any Oracle application or any application developed with Oracle tools a means for reverse-engineering any Oracle application or any application developed with Oracle tools a means for replicating objects between different Oracle development tools

Developer/2000. It may surprise you to hear the statistics on Oracle's Developer/2000 application development tool. According to Moore, Oracle has sold over 700,000 seat licenses of Developer/2000 worldwide (which places it second only to Microsoft's Visual Basic), and Developer/2000 is now a $160 million business in its own right, with one of the fastest growth rates of any Oracle product.

Developer/2000 is used to build scalable, multi-tiered, cross-platform and multi-interfaced, enterprise-level, mission-critical client/server applications such as those running nuclear power plants and governments. One of the largest Developer/2000 applications was developed for the French government and is currently supporting up to 30,000 users.

Not only is Developer/2000 used to build mission-critical applications by end-user corporations, but it is also the basis for a number of products from client/server application vendors such as Avalon Software Inc. (Tucson, Ariz.), Design Data Systems Corp. (Largo, Fla.), and Fourth Shift Corp. (Minneapolis, Minn.) who have built their accounting and manufacturing suites using Oracle development tools.

Oracle Power Objects. Oracle Power Objects is positioned as a tool for the nonprofessional programmer who wants to build departmental, database-aware client/server applications quickly. Power Objects leverages an object-oriented version of Visual Basic syntax to deliver these applications for the Microsoft Windows or Macintosh client platforms only. One of the key benefits of Power Objects is that it is a database application development language rather than a generic programming language, and it can be tightly integrated with Oracle's own RDBMS.

In the plans for Oracle's Designer/2000 tool is a reverse-engineer Power Objects/ regenerate Developer/2000 objects facility to let applications scale from the department to the enterprise.

Oracle aims to make Designer/2000 a global repository for its applications' metadata and a way of interchanging objects between PowerObjects and Developer/2000 and reverse-engineering other Oracle-based applications. If it succeeds, Oracle will be able to deliver a compelling solution for enterprise Oracle shops. Essentially, this proposition provides an attractive foundation for any corporate IS department that must manage and deliver a mix of departmental and enterprise-level client/server applications using an Oracle database
foundation.

Enterprise Messaging

As electronic messaging becomes a key component of every enterprise information infrastructure for managing person-to-person messages, system-to-person messages, document distribution, and transaction workflows, the need for enterprise-level messaging hubs becomes critical. Electronic messaging is also an enterprise-level business because the person who sells the hubs will also typically sell hundreds, even thousands, of client licenses; every desktop across the enterprise must have access to the messaging hub. Furthermore, as messaging hubs handle more traffic, such as application workflow messages and data, the hubs require more robust and enterprise-scalable databases as a foundation - which of course is where Oracle comes in.

Hot on the heels of Microsoft's Exchange messaging hub comes Oracle InterOffice, which should be fully released by the time you read this article. InterOffice provides a messaging server based on Oracle7 and graphical client software that can be run from a desktop client or within an Internet browser. The InterOffice server can also be accessed by other client software such as Microsoft Exchange or Netscape Navigator.

Irrespective of the message, document, and workflow management functionality of InterOffice or its tabbed, notebook-style GUI, the product's Internet transparency and its foundation on the Oracle7 RDBMS are its most important distinguishing features for enterprise use. By being slightly behind in delivering this type of product, Oracle has benefited from the timing of the Internet explosion; InterOffice has been Internet-enabled from the start. By basing the product on the scalable Oracle RDBMS (unlike Microsoft Exchange, which is based on Microsoft's Jet engine), Oracle has ensured that this hub will be a no-brainer for any Oracle shop and for anybody looking for a messaging hub designed to handle enterprise rather than workgroup levels of users and transaction traffic.

Oracle Applications

Oracle has a $500 million applications business, but it is still a distant second in the client/server accounting market after SAP AG. But Oracle has overtaken other application software leaders such as Dun & Bradstreet Software Services Inc., J. D. Edwards World Solutions Inc., and Systems Software Technology Inc., and it is running an applications business over twice the size of PeopleSoft Inc. or Hyperion Software Corp.

Oracle accounting applications include:

Oracle Financials
Oracle Supply Chain Management
Oracle Manufacturing
Oracle Project Systems
Oracle Human Resources
Oracle Market Management

With the exception of CA, no Oracle competitor in the RDBMS market sector has a line of enterprise accounting, distribution, HR, and manufacturing applications this broad or deep. Informix, Microsoft, and Sybase all rely on third parties to deliver these applications on top of their respective database engines. Even though Oracle is a dominant player in the accounting applications market, dozens of its accounting competitors also deliver solutions on the Oracle RDBMS. It's very likely that the Oracle-based accounting market alone is worth over a billion dollars and drives the sales of significant numbers of Oracle's RDBMS engine. It's hard to believe that the competition can continue to ignore Oracle's lead in this area.

Nevertheless, the latest release of Oracle Application Object Library (10SC), with its new SmartClient architecture, has only just caught up with the technology of other client/server accounting applications as a result of the rewrite of the applications using Developer/2000. Like Microsoft (to quote Bill Gates), Oracle also "eats its own dog food."

Release 10SC is the first to support (among other features): a true MS Windows 3.1 GUI, two-tier client/server, stored procedures-based processing, and field-by-field input validation (as opposed to block mode). Although this functionality is hardly leading edge, at least Oracle has given customers an incremental migration path rather than the "rewrite" approach taken by many of Oracle's competitors. After all, who wants to change accounting systems every five years if it can be avoided?

Like most application vendors, Oracle is racing toward the Internet. Oracle applications are being enhanced so that reports can be published on the Web in Adobe's portable document format, and Oracle Forms can be regenerated as standalone Java applets for use within standard browser software. These Java applets can be served up from special application servers that can "front end" Oracle applications to extend the reach of the applications to any Internet/Intranet user on a form-by-form basis. This functionality is slated for release in early 1997. The applications are also being fully workflow-enabled, building on the functionality delivered by the existing Oracle Alert product.

Oracle's acquisition of IRI tools and technology gave it an OLAP product line that includes:

Oracle Express (multidimensional data server and tools)
Oracle Express Objects (graphical OLAP application development tool)
Oracle Express Analyzer (desktop OLAP query and reporting tool)
Oracle Financial Analyzer (financial reporting and analysis tool)
Oracle Sales Analyzer (sales and marketing reporting and analysis tool)

Apart from enhancing Oracle's decision support offerings, these tools complement Oracle's main applications line. Although both Sybase and Informix have also purchased OLAP technology from third parties, neither appears to have leveraged the technology as effectively as Oracle so far. It's hard to figure out why Oracle - or one of its competitors - has not yet managed to buy Arbor Software and dominate the multidimensional server market for the foreseeable future.

Sunrise Markets

Oracle also has products that have an eye toward "sunrise markets" such as mobile computing and video or music on demand. One product line, Oracle Mobile Agents, offers a messaging infrastructure and application development tools for connecting remote users to centralized application and database servers. This is a developing market and, to some degree, one that is complementary to the Internet applications market - it reaches out to remote users and depends on wide area networking bandwidth.

Another product offering, Oracle Media Objects, manages streamed sound and video data and builds applications to deliver this data to consumers via set-top boxes or Internet devices, for example. Microsoft's foray into the network and entertainment industry is focused on the front end to get Windows- and Microsoft-provided applications and "cool content" into everyone's home; Oracle, meanwhile, is concentrating its efforts on expensive back-end database servers that must store, manage, and serve up this content. Supplying the software to manage these video and music servers may turn out to be one of Oracle's most successful initiatives by the end of the decade.

Oracle Enterprise Manager provides a console for managing enterprise information assets. This Oracle product is aimed at a market similar to CA's CA-Unicenter. However, Oracle's Enterprise Manager concentrates on the management of distributed applications and databases rather than on the management of multiplatform system hardware or the network infrastructure. Oracle Enterprise Manager currently provides a graphical and easily navigable view of distributed application and database assets, along with job scheduling and event
management.

Back to the Future

Oracle's advocacy of the NC is an interesting but pragmatic diversion from its software tools and applications perspective. Millions of Internet desktops means hundreds of thousands of Internet servers potentially running the Oracle RDBMS. I find it hard to believe that these NC devices can ever replace or even supplement a PC in most homes. On the other hand, the NC seems like a viable proposition for markets that the PC has not really even touched so far, where the business requirement is restricted to initiating transactions such as requisitions, T&E entry, catalog orders, querying databases, downloading email and reports, or simply browsing information.

These markets serve the road warrior: cars and car-rental locations, trucks and truck stops, aircraft and airports, temporary office facilities, and hotels. I would gladly leave my laptop at home if I knew I could access the Internet from the airport, airplane, car-rental office, or my hotel room. This market depends on low acquisition cost, easy installation, and enough Internet bandwidth to handle the vastly increased traffic - and there's the rub. The NC may fail simply because the infrastructure of the Internet is not business-like enough to support millions
of busy Ncs.

The Database is the Enterprise

Oracle's strategy can be summarized in one statement: The database is the enterprise and the enterprise is a database. Oracle can be seen as part of that essential triumvirate that can rule an enterprise:

IBM (for desktop-to-mainframe hardware, operating systems, and networking)
Microsoft (for desktop and workgroup operating systems, applications, and tools)
Oracle (for desktop-to-mainframe database engines, applications, and tools)

Oracle leverages its core database technology more effectively than any other company in the industry. Only a few tactical examples - including the NC - do not support this simple, fundamental strategic vision. I guess that Oracle's simplicity and focus-of-mission statement, like a Japanese haiku, are what make the difference between strategic poetry and pulp fiction.


Stewart McKie is principal of PinPoint Inc., a financial software consulting firm based in Redmond, Washington. He also edits the CFO/Info newsletter. You can email Stewart at 74660. 3123@compuserve.com.


Ray Lane Speaks Out

Interview by Clara H. Parkes

DBMS: What's the current status of Oracle8, and why is it taking so long to come out?
LANE: Oracle8 is going into beta I believe in July. It will be in a long beta cycle partially because we think it needs a long beta cycle. I don't think we've put an official production date on it, but certainly it will be delivered in the first half of the next calendar year. There's not a lot of pressure to deliver it. With Oracle7 there was a lot of pressure because we'd lost some market leadership to the programmable server that Sybase had delivered. There isn't that pressure today because we feel we've got a very competitive product in Oracle7.2 and Oracle7.3, so nobody's pushing on development to get it out, although they want to get it out.

Is it true that you and Larry Ellison disagree on Oracle8?
The disagreement I think is because I've said we don't need Oracle8 and object stores are not all that important. I do say that - object stores are not that important. Object development will become crucial over the next few years, and we'll certainly need object storage for that. But we don't find a big need in the marketplace for storing objects in a database - it's certainly not a big market today. Larry would probably say, "No, we need to get it out there, we need the relational objects, it's the only data format we don't cover today." We now feel very confident in the Universal Server with video, text, and multidimensional data, and we need objects as a part of that. So I agree with him. But we've delivered a lot of this in Oracle7 release 7.3, and if it had object stores it would be Oracle8.

Also, we have a maintenance policy where the longer we can call it Oracle7-something, the longer we don't obviate maintenance on the last version. The moment we announce or put Oracle8 into production, the clock starts ticking on when we have to back-level support Oracle7 (back-level support is traditionally for 18 months). Not that we couldn't extend that, but you can't keep supporting the past, you have to move on.

What's the current status of the Network Computer (NC)?
It's a critical time period for the NC right now. The first time we talked about the NC was probably a year and a half ago. If you take all of the set-top box software in the media server era that we went through, you could say that it was three years ago that we were talking about it. The set-top box led us to the development of the NC, because that's what the NC really is.

So we've taken it from concept (mid-last year) to a working prototype, and we have a number of important agreements with manufacturers that will build it. We haven't quite ironed out how we'll design the company that will own the technology - the company probably will be outside of Oracle and we'll have a big equity partnership in it.

Will this require manufacturers to take a position about Microsoft?
I think that there will be a PC world and an NC world. It's not an either/or world. You'll have a big population of professionals and consumers who will now be enabled to buy a device who wouldn't have even bothered with a PC before. A lot of professionals will also put desktop machines in because the company now can afford them. And there's a number that are in the middle, myself included, saying, "I could have a PC or I could have an NC." I'm going to have to decide based on the type of work that I do. If the NC runs reliably on the network, I'll choose the NC every time, because I'm the last Macintosh user in Oracle. I never surf the Internet; I find it boring. I'm sure there'll be a day when I want to send transactions. I certainly send email over the Internet, so I do use a browser once in a while. But not
very often.

What's your strategy for multidimensional data support, and what's the status of your acquisition of IRI's Express technology?
The Universal Server and the OLAP tools that we bought from IRI are basically now totally compatible. We can use these tools with other databases, but using them together lets you build applications or do very complex queries, which is a very important part of data warehousing and developing new applications. I don't think anybody can match us on complex analysis being done off large databases.

I don't think Informix has much of a tools business, and I think Sybase has a better tool business. But we're finding we are getting major data warehouse decisions from people like Pac Bell, British Telecom, and other huge, consumer-based companies.

How is Oracle's Universal Server different from Informix's Universal Server?
Informix's Universal Server doesn't have a single database engine, it has three databases: Informix, Informix OnLine, and Illustra. So if you ask Informix if it has a video engine or text or whatnot, they'll say yes. If you ask them if it's in the same database, they'll say no. I just don't know when they will. Most of the industry analysts will tell you that Informix needs two years to do the integration, and then it's only through the optimizer, it's not real integration. We believe you can never integrate these. So Illustra may provide the datablades, but it's not a scalable engine. Informix OnLine is much more scalable, but how do you get the two together? I don't know anybody who's going to buy Illustra to build a very scalable data warehouse or a very scalable application. Integration is going to be the issue.

What do you predict as the next big wave?
I have a hard time looking beyond the Internet and the NC -it's difficult to tell what the next thing will be. This will keep us very busy for the next five years.

What is Oracle's long-term business plan?
To provide companies with software and services to enable a networked enterprise. I don't know of any other company that has the current position we have with distributed data, data warehouses, Internet, NC, and applications that provide self-service on the Internet, in production already, and with the services to back it up. Certainly Microsoft will be moving toward that in the future, but it can't provide enterprise-level services. SAP can provide applications, but it won't be Internet-ready for another year. We're in a great position now to enable this and I think that's what the market wants. We're no longer just building technology like a Field of Dreams company and hoping that the market buys it; we're trying to design into what the market wants. And what we think the market wants is this networked enterprise concept, or the virtual corporation concept.


* Oracle Corp., 500 Oracle Pkwy., Redwood Shores, CA 94065; 800-672-2537, 415-506-7000, or fax 415-506-7200;
http://www.oracle.com.

TABLE 1. Oracle's Revenues at a Glance ($ millions)

TABLE 2. Key Oracle Database Products

TABLE 3. Oracle7's Four Types of Replication Support

TABLE 4. Universal Server Components and the Data Types They Manage

Copyright © 1996 Miller Freeman, Inc. ALL RIGHTS RESERVED
Redistribution without permission is prohibited.

Please send questions or comments to mfrank@mfi.com
Updated Friday, September 20, 1996