Oracle Will Have To Spend Its $9.3 Billion Elsewhere

logo_oracleOn November 4, Oracle’s high-stakes offer to buy NetSuite for $9.3 billion will expire. The shareholders holding out for more aren’t just bluffing, and they’re holding the cards. For Oracle, the pot’s too rich. They’ll fold and walk away from the table.

It will be a mutual agreement to disagree, where neither party wins.

Owning NetSuite would give Oracle a huge spike in cloud revenue. At $2.9 billion, their 2016 cloud revenues are decent. They’re expecting serious growth in 2017 but with not quite the same authority as their rival Salesforce, who is seriously kicking it. Oracle’s cloud growth strategy included the NetSuite buy.

It would also give the database giant access to the uncontested small and medium-sized business market. NetSuite’s software is made for the cloud imperative of today’s companies. Their cloud financials, ERP and Omni-channel commerce suites are used by 30,000 organizations worldwide. The SMB market is untapped, and Oracle sees the potential.

Huge potential, that’s the problem.

Activist shareholder group T. Row Price Group, who holds about 18% of NetSuite shares, is the company’s largest shareholder. (After Larry Ellison, of course, who owns nearly 40% of NetSuite, the company he co-founded after co-founding Oracle.) Price believes they deserve better than $109 per share, because the offer is based on the company’s market value, and not the company’s value to Oracle. Or in their words, the “synergies that will accrue to the buyer.”

They also believe Ellison’s “unique relationship” with NetSuite scared off potential suitors from outbidding Oracle. No doubt Ellison, and everyone else, thought it was a done deal.

At last count, Oracle has secured only 4.6 million of the 20.4 million shares they need for the acquisition to go forward. The deal comes off the table November 4.

The deal will fall through, and the two will go back to being competitors, NetSuite gaining ground with SMBs and Oracle doing just fine with its big-time, big shot brand, products and Salesforce. And deep pockets to find another wild card to play.

 

Do you see a clear winner in the failed deal? Or does everyone lose?

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With cloud adoption, talent is king.

blog-imageIf you sit 10 business leaders down to talk IT, seven will say they urgently need to migrate to the cloud to support their company’s growth. Ask about their cloud adoption plans, and you’ll have only four left in the conversation. That leaves six feeling behind the curve, for good reason.

Within a year, half of enterprise workloads world-wide will be running in the cloud, reducing costs and improving IT resource utilization. Among those who are already there, 85% reported saving money. 80% saw improvements to their IT departments — in areas like quality, efficiency and security — within six months of moving to the cloud.

When I sit down with IT and business leaders, I hear they want the performance of a cloud solution. They see it as the key to innovation, business continuity, customer service…to remaining competitive. My take-away is that it’s not cost that’s the main inhibitor to cloud adoption, and it’s not the data security boogieman. It’s talent.

IT teams are lean, scaled to keep their heads above water with their current infrastructure in an ever-rising tide of business demands. Who has the in-house bandwidth for a comprehensive cloud migration initiative? You’re only going to invest a year or 18 months, and half your IT budget, if you’re confident your resources can take you from strategy, to planning, testing and deployment.

With an abundance of respect for every IT team I’ve worked with, staff IT resources may not be enough. Charging your current IT team with tacking an infrastructure transformation while keeping the existing infrastructure humming could be risky. Even if you could bring a couple of strong players with cloud migration experience on board, you’re flirting with an outage, or more serious business disruption disaster.

Of course, your vendor selection is going to make a difference. If you choose a VMware-IBM solution or SAP HANA solution, you’re partnering with the best in the industry.

But it’s your choice of integration partner, or managed services provider that is essential to fully leverage the new technology and your current IT environment. Odds are, you’re headed toward a hybrid solution that will exist along with your on-prem investments for the foreseeable future. The right external expertise can help you get there, out in front of the curve.

Where are you on the curve? Are you well into your cloud adoption strategy, or is it still on paper?

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Google, IBM and Rackspace take on Intel

google + rackspace + IBMThere’s a heavyweight battle being fought over data centre dominance, with Google, IBM and Rackspace teaming up against Intel. Ultimately, the winner will be us.

Google is partnering with Rackspace Hosting, one of the largest cloud providers in the world, to develop new hyperscale server designs. They’re basing their designs on IBM’s next-generation Power9 processors, which will see light of day sometime in 2017. With Google using IBM servers in its massive data centres, and others following their lead, Intel should worry.

Today, Intel rules the server chip market with 99 percent market share. Everyone’s been expecting their crown to be challenged for years, but they’ve held on to their monopoly. And we don’t like monopolies, do we? We like choice.

In the data centre world, the money is in the compute components. It’s the more profitable, prestigious opportunity for chip makers, more so than in the memory, storage and networking spaces. This is where Intel has a stranglehold, and where IBM sees a future. Their new processor will be a big deal over the next few years. The Google-Rackspace project is just a hint at what’s to come.

We’ll know the fight is on when we get word that Google is swapping out its Intel Xeon processors with IBM Power processors. We’ll have to listen carefully though. It will be a much quieter roll-out than the Google self-driving flying car.

Every IT organization wants to become more efficient and cost-effective, and we have companies like Google to lead the innovation work. When they take an active role in creating a next-generation data centre to meet their enormous and exponentially compounding needs, we should have our noses pressed up against the glass.

When the dust settles on this one, and the heavyweights start getting more performance for the price, our enterprises can expect to get faster applications and cheaper cloud services for our hardware dollars.

How do you see your data needs growing over the next three years? How are you going to manage it?

 

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IBM and SAP’s solution to disruption is digital reinvention

imgresAnnounced in April, IBM and SAP are partnering to help organizations transform themselves to succeed in the emerging digital economy. And that means more than just reducing IT costs, which is the 2016 plan for companies globally. It means more than just revenue growth, something which IBM hasn’t been able to do for 16 consecutive quarters. For these two giants, also means improving the customer experience to squelch disruption, the new imperative.

Since 2014, SAP and IBM have partnered to make SAP HANA the solution for clients with digital transformation ambitions. There are over 10,000 SAP HANA customers today, and S/4HANA is gaining significant momentum. In the first quarter, the company won more than 500 customers, a third of them new SAP customers. SAP’s dominance in enterprise IT will only be cemented with the IBM partnership.

Both know organizations that can’t adapt in the digital economy quick enough are handing business over to their disruptors. While digital disruption advances with each month, it takes years for a company to make some changes in the way they operate. IBM and SAP want to bridge that gap.

What they are offering are combined complementary technologies like IBM Cognitive, Cloud and Power Systems with SAP S/4HANA and SAP HANA Cloud Platform. They also intend to co-innovate solutions, probably industry-specific. They’ll offer solutions for customers who want a cloud infrastructure and those who prefer on-prem.

The two will also use their combined industry experience to help companies through migration. New collaborative consulting models and transformation road maps may just bring an end to the squawking that’s common with SAP implementations.

Their solutions are for those ready to digitally reinvent their companies, from materials planning and supply chain capability, to product and service innovation, to improving the customer experience. Most CEOs feel the treat of increased competition from disruptors outside their industry. They believe the customer experience is well beyond products and services. They want their technology to strengthen customer relationships.

SAP has the track record of helping enterprises transform. IBM has deep penetration in enterprise architecture. Any company that can take advantage of their combined technologies and experience will have the competitive advantage. As long as their ready for a reinvention.

Is disruption from outside your industry keeping you up at night? Is improving the customer experience your new imperative?

 

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IBM plans to rule the hybrid cloud

We’ve seen this before. A burst of innovation in technology snowballs, and the result is paralysis. Too many choices, too many rainbows on the horizon, and not enough hard and fast answers.

When cloud computing was all about technology, anything was possible. But only a fraction of companies — other than tech shops — started operating in the cloud in a serious way. The enterprise had bigger things on its mind — innovating products and services, reducing operating costs and inching past the competition. It just didn’t make sense to sell off the servers and move up to the public cloud, not when existing technology was working just fine with regular maintenance.

Companies want their technology, their workloads and their IT teams to work harder and smarter.

IBM gets that. They know companies are geared for staged incremental progression, not rip and replace. Mixing cloud services with functioning data centres in a hybrid architecture sounds doable. Extending expanding workloads into the cloud sounds like common sense. Moving forward with hybrid cloud speed and cost-effectiveness sounds like a plan.

According to Robert LeBlanc, IBM Cloud’s Senior Vice President, 80% of enterprises will be using hybrid cloud architecture by 2017. So he’s making sure he’s ready to take in as much of that business as possible. Last year, IBM introduced 65 new cloud services. Of the dozen companies they acquired, three quarters were innovators in cloud technology. They opened eight new data centres, bringing the total to 46 around the world.

Because no one knows data centres like IBM, they’re a magnet for the best cloud-enabling technology available. Last month they drew VMware in, to deliver software-defined data centre architecture on IBM Cloud. Together, the two will collaborate on new hybrid cloud deployment offerings for workload migration, capacity expansion and data centre consolidation.

This could be the most important phase in the 14-year relationship between the two. VMware technology is already in place at an impressive number of top organizations, and IBM has established a matrix of cloud data centres.

In my last blog, I said IBM is in transformation. Last year they grew their cloud business by 57 per cent. With this partnership, they’re putting the pedal to the metal and accelerating into the turn.

With new hybrid cloud option on the horizon, is this the future of enterprise architecture? Are you going to be in that 80 per cent?

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Can Big Blue Bounce Back? You Bet!

IBM

When IBM announced its 2015 fourth quarter numbers on Jan. 19, the headline was that revenues had declined for the 14th consecutive quarter. It appears that Big Blue is a struggling tech giant with plummeting stock in the midst of a corporate turnaround that investors are finding agonizing.

The big picture is that they are reinventing themselves, and no company can do that like IBM.

If we think back, IBM started as an adding and tabulating machine business. They transitioned into punch card machines, then created the mainframe computing industry. Since then, they’ve dominated the software, computer memory, database and Windows-based PC markets.

They’ve ruled in a changing world by being a leader in innovation, by seeing emerging markets and putting American ingenuity to work. Last year, IBM filed and received U.S. 7,355 patents; it was the 23rd consecutive year they topped the annual list of patent recipients. They’ve also ruled by investing in themselves. Last year they spent over $3 billion to acquire 14 companies, on-boarding new technologies.

CEO Ginni Rometty is adamant that IBM’s future is in big data, analytics, mobile, security and cloud computing. While these more profitable businesses can offset the declining demand for servers and mainframes, the enterprise still needs IBM hardware for high end computing.

And then there’s the emerging cognitive computing revolution. When Rometty introduced the new IBM Cognitive Business Solutions division last October, she introduced the next big thing. Cognitive computing is the next area of innovation for IBM to pursue in big data and analytics.

IBM’s Watson system is already out front in this area. What started as a novelty million-dollar winner on Jeopardy is the broadest platform of cognitive technologies in the industry. It is transforming the healthcare industry with its ability to synthesize data and give medical professionals answers to questions that were previously beyond their grasp. Watson systems will do the same for telecommunications, financial services and government, by bringing new levels of clarity to data science.

Naturally, it will trickle down into our daily lives. Industry analysts predict that by 2018, half of all consumers will interact regularly with services based on cognitive computing.

At this point, we don’t know how intelligent our machines will need to be in the future. But guess who’s going to show us?

With IBM in the lead, the industry will follow.

Patience though. None of IBM’s transformations came easy or overnight. Corporate turnarounds take years, not quarters, especially with big companies. And IBM is big.

The question is, will 2016 be the year they turn the tide? I say yes. What do you think?

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Dell buys EMC in a big deal with a big question mark

Dell_EMC_HandshakeWith Dell announcing it will acquire EMC, there’s a lot to unfold and it will only get more interesting.

First things first. Is the deal good for EMC? I say yes. Finally, the enterprise software and storage giant will be owned by a private company and not a group of investors itching to sell the company or its components off for a tidy return. EMC’s considerable R&D team can continue to innovate and push the industry forward without distraction.

Is it good for Dell? Of course. No longer the leader in the consumer PC market, Dell has its sights set on storming the software-defined data centre, converged infrastructure and hybrid cloud computing markets. With EMC on their bench, they now have the strength to take on IBM and HP in the enterprise arena.

It was just a little over a year ago that HP made a failed bid to merge with EMC, a $60 billion deal that was scuttled in part by EMC’s investors. The next month, HP announced it would split in two. Obviously, HP’s plan was to bring EMC’s dominance in the enterprise to the new HP Enterprise half of the company. Well, that didn’t happen.

So, here’s another question begging to be answered: which is better, smaller or bigger? HP created its two separate, smaller companies so each would be more nimble, more focused. In contrast, Dell is creating the largest independently held tech company in the world with the EMC acquisition.

Speaking of big, let’s talk about Dell’s spend. At $67 billion, the EMC acquisition is the largest in the history of the industry. And it’s giving structured finance enthusiasts vertigo, as it will add around $49 billion to Dell’s existing $11 billion debt load.

HP Enterprise CEO Meg Whitman believes it’s too big a load. “To pay back the interest on the $50 billion of debt … Dell will need to pay roughly $2.5 billion a year in interest alone,” she says. “That’s $2.5 billion that they will allocate away from R&D and other business critical activities, which will keep them from better serving their customer.”

Some speculate that virtualization software leader VMware, which will remain an independent, listed company majority owned by EMC/Dell, will be sold to net some cash. I don’t think so. It will remain a part of the big company’s competitive advantage, and ongoing revenue stream.

Same goes for security solutions company RSA, which EMC owns. They’ll remain a part of the family.

Pivotal is another story. The EMC-VMware joint venture (10 per cent owned by GE) is on its way to the block. EMC plans to sell about 20 percent of its ownership stake in the cloud computing software and services company as an IPO, with Dell’s blessing.

When the deal’s complete, longtime EMC CEO Joe Tucci will take his overdue and much-deserved retirement and the corner office will continue to be occupied by Michael Dell, who started the company in his dorm room in 1984 as a 19-year-old college student, and took Dell private two years ago to own 70 per cent of the company.

With compatible entrepreneurial cultures and complementary product lines and R&D investment strategies, Dell should take its place out front in the highest growth areas of the industry.

Is IBM concerned? Of course not. CEO Ginni Rometty says IBM sets its strategy on its own terms, not in response to what the competition is doing. She added that IBM’s investors allow the company the same kind of freedom that Michael Dell says his privately-held status allows.

What about companies like Cisco, Oracle, Hitachi Data Systems and NetApp? Should they be concerned? I hope so. This acquisition is creating a formidable competitor, which will drive innovation all around.

What do you think? Will the bigger Dell rule, or will we see EMC spun out again in the future?

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