Larry Ellison to IT: You're becoming obsolete

"The fact of the matter for Oracle applications is we do want to sell to business people as opposed to IT people. We think it is a little bit strange that business people aren't involved in this stuff. They, quote, 'can't understand it.' (We say), 'Well, no problem, Mr. Customer, you need to hire some people who speak technospeak. If you want to buy our products, you have to hire people who are experts in talking to us.' And we think this is kind of the old way of doing things -- that it's so complicated to get the infrastructure up and running, you need this army of professionals.

"In this new generation, we can now say this is how our purchasing works and we talk to the purchasing people. The business people are the ones who should understand what we are selling and the ones who should make the decision to buy or not buy," said Oracle Chief Executive Officer (CEO) Larry Ellison at his Internet World press conference on October 5.

Larry Ellison is sending a message to IT professionals all around the world. He is saying that large central IT departments are becoming obsolete. Few forecasts could be more important to the IT industry. But is anybody really listening?

It's easy to dismiss the seemingly endless series of pronouncements coming from the oracle of Redwood Shores, California, especially after his network computer fiasco. However, although it's true that network computer hardware has thus far failed miserably in the marketplace, Ellison's central theme that smart networks will be used to support dumb, browser-based devices - though certainly not unique to him - was right on target and is now conventional industry wisdom.

Similarly, while Ellison was clearly not the first person to forecast a shift away from packaged software and toward Web-based services, he is now actively leading the movement. More interestingly, Ellison is, as far as I know, the first CEO from an established enterprise software vendor to explicitly state the unavoidable conclusion that application service providers present a real alternative to the traditional IT department. Last May, I wrote a column that also said this. But it's one thing to hear this from a rabble-rousing pundit and quite another from one of your most important suppliers.

And yet many IT professionals still act as if a major shift from software to services is just idle speculation. I suspect that's because so many large IT departments have been shielded from the early signs of change. Consumers and small businesses are already moving at a stunning pace toward an almost completely services-driven IT environment. Similarly, for reasons of culture, cost, simplicity and, most important, speed, many leading companies such as eBay are now opting for the Web services approach. It's quite possible that corporate IT will be among the last groups to realise what's really going on.

Too often we think of outsourcing in terms of letting someone else deal with our old applications. But what happens to legacy applications is typically just a trailing indicator of change and thus shouldn't be used as your main Web services yardstick. It's all the new applications that will never be built in-house that signal the real services revolution, and these applications will be driven by business decision-makers and the application service providers who serve them.

You may think that Larry Ellison is once again overstating his case, but, more likely, it's your traditional packaged software suppliers that are overstating theirs.

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