To avoid being outflanked by an upstart Internet company, businesses need to throw out their legacy IT infrastructure and start all over again, Larry Ellison, Oracle's chairman and chief executive officer, said in a provocative, if fanciful, speech.
"Your problem is all the junk you've bought over the last 20 years," Ellison said, addressing a hall packed with IT professionals at the Business Week Conference on the Digital Economy.
Companies need a centralised IT system in which all their data is stored in a handful of large servers, the Oracle chief said. Applications for sales force automation, human resources management and accounting should come from a single vendor so that they can be tightly integrated and used more productively, he said.
"It has to be global, and it has to all work together. If you keep buying best of breed applications and gluing them together you're never going to know what's going on in your company," he said. "Your data is so hopelessly fragmented you don't even know who your customers are."
Ellison assumed part of the blame for the situation.
"At Oracle it occurred to me that what we have is wrong. What we've been selling to our customers is wrong. What our competitors .. have been selling is wrong," Ellison said. The software industry is "immature" and has been leading its customers down the wrong path, he added.
"This is a very bizarre speech," he admitted. "People are going to walk out of here and say, 'There's no way I'm going to throw everything away.' But that's what you have to do."
Pure-play dot-com companies like Amazon.com and ETrade Group have a huge advantage because they built their companies from the ground up, with the Internet and centralised computing as the focus, Ellison said.
"Amazon knows exactly what it's sold in the last 15 minutes, and to whom, and what they bought the last time they visited," Ellison said. "You're going to get killed."
IT professionals here said they liked Ellison's vision, but not his recipe for getting there.
"Do I think it's a good vision? Yes. Do I think it's practical advice for most companies like mine? No," said a general manager at a large US construction company.
High technology companies like Oracle, with its driven chief executive and an abundance of IT expertise, are in a vastly different position to the average bricks-and-mortar company, said the manager, who didn't want to be identified.
"Most CEOs won't do it because of the huge cost impact," he said.
"The ends to which he refers are highly desirable. The challenge is the transition and the economics of getting there," agreed Peter MacDougall, president of California's Santa Barbara City College.
Oracle is practicing what it preaches, according to Ellison. The company is in the midst of consolidating all of its customer and inventory information into two giant data centres -- a primary data centre in California and a back-up centre in Colorado. The database company is also installing "totally vanilla products, no modifications allowed," at its offices around the world. The work began six months ago and will be completed by the end of 2000, he said.
More information about the Digital Economy conference, which concludes tomorrow (Thursday) can be found on the Web at http://conferences.businessweek.com/1999/digital/