Softwar
Page 4
In fact, the show turns out to be pretty bad. The Chinese Oprah’s idea of intellectual seriousness is to keep asking variations of the same question over and over again: Does he mind Oracle’s being number two to Microsoft? How does he plan to become number one? How does he feel about being only the second richest man in the world, and how does he intend to overtake Bill Gates in wealth? Ellison becomes increasingly desperate to find ways of not repeating himself. Even when the audience gets its chance, it’s the same questions all over again. Clearly, the Chinese think being number two is a pretty awful fate—watch out, America.
It gets worse when Ellison is asked about something different: How important is China to Oracle as a source of engineering talent? It’s getting more important all the time, he says. In that case, says another member of the audience, how about moving R and D out here from California? Ellison blinks into the lights and suddenly realizes that the guy asking the question is Oracle’s managing director in China, Andrew Hu. The Oracle events managers, who have organized Ellison’s itinerary, are horrified: “What the fuck’s he doing there?” As other equally self-serving questions from the audience come in, the thought comes to Ellison that maybe there are other Oracle plants among the guests. “Er . . . just how many people are there here from Oracle?” he asks nervously. A forest of hands goes up. “At least half” appears to be the answer. “Christ, I didn’t know we even had so many people in China,” groans one of the flaks. If this happened in America, says another, we’d never live it down. Luckily, the show has been seen by only about 50 million people.
The last meeting before returning to the plane is with the mayor of Shanghai, Xu Kuang Di. The room in the city hall is a vast, ornately decorated chamber with rows of large armchairs on three sides. Xu and Ellison sit on a slightly raised dais, their respective interpreters perched, absurdly, just behind them, like hiding puppeteers. Xu looks every inch the tough boss of a tough city. The mayorship of Shanghai is not only one of the biggest political jobs in China, it can lead to the very top—both President Jiang Zemin and the country’s prime minister, Zhu Rongji, are former mayors of the city.
Ellison is at his diplomatic smoothest: Shanghai is one of the most exciting cities in the world, with the fastest growth and the most cranes (this is a line he clearly likes), and it’s one that he always looks forward to returning to (though it’s not fascinating enough to keep him in town for more than a few hours on this trip). Xu is equally flattering about Ellison’s accomplishments and the contribution Oracle is making to the new China. He then gives a little soliloquy about the importance of the Internet to Shanghai, the need to keep constantly upgrading technology and the city’s already quite impressive communications infrastructure. The growth of wireless was an example of how the new Shanghai was embracing technology, with more than 3 million mobile phones among a population of 13 million. He then asks Ellison the question that it seems everyone in China is desperate to have answered: What’s likely to happen to technology and Internet stocks? He’s very worried, he says, now speaking in quite passable English, that the experience of losses in the last few months could dent the appetite of inexperienced Chinese investors to hold stocks. You have to pinch yourself to remember that this is a Communist speaking, not the chairman of the New York Stock Exchange. The mayor suddenly asks what Oracle can do to put the city’s customs operations online. Ellison and Derek Williams can hardly contain their excitement. They assure Xu that they have the software ready to go and the efficiencies will naturally be astounding. Arrangements are made to meet with customs officials and begin “scoping” the project. A meeting that was conceived as little more than an opportunity to show the flag and drum up some local media coverage has turned out to be a lot more interesting.
In fact, aside from the weirdness of the lunchtime TV show, everything has gone amazingly smoothly. But now we’re not going to Tahiti after all: Geoff Glass, the senior of Ellison’s two full-time pilots, has looked at a map. Ellison’s idea that Tahiti is “on the way back” to the United States turns out to be wide of the mark—it’s a seventeen-hour flight, including a refueling stopover in Guam. The Pacific is very big. The pioneering flight from Tahiti to Birmingham is left for someone else to do. Eleven hours later, but earlier the same Thursday thanks to the sixteen-hour time difference, the GV touches down at the San Jose Jet Center, where Carl Olsen, Ellison’s driver, is waiting by the hangar with his boss’s new Bentley Arnage Red Label.
• • •
It’s a long Thursday. Ellison is back in the office by early afternoon to take a review meeting with the applications group. The meeting, in the eleventh-floor boardroom, is already under way by the time Ellison swings in. It’s as if he had just stepped out to get a Coke from the fridge rather than flown in from China. Although the atmosphere is typically Silicon Valley informal—whispered side conversations, tinkering with PDAs and cell phones, frequent excursions to pick up juices and sodas from the fridge across the way—and no one is obviously chairing the proceedings, the focus subtly shifts toward Ellison.
It’s all fairly routine stuff. There’s an update on how a few big E-Business Suite installations are going. The most important are a major CRM installation at Silicon Valley neighbor Hewlett-Packard that’s about to be rolled out to nearly four thousand marketing people and the vital “go live” at GE Power in Hungary. The good news is that there are “no software issues,” but one small cloud on the horizon concerns the way GE is handling the next EBS implementation at its Houston plant.
Ron Wohl, Oracle’s joint head of applications development, says that GE is warning that Houston is likely to be more complex than Hungary, because local managers are resisting the approach used in Hungary, where processes were adapted to work with the software rather than the other way around. At Oracle, this has become tantamount to heresy; a big part of the EBS campaign is to convince customers to take the software in “plain vanilla” form and install it rapidly without modifications. Wohl says that it may be possible to sort things out at a meeting of the GE-Oracle steering committee in a fortnight. But if that fails, either he or Ellison may have to go back to GE Power Systems’ boss and current Oracle poster boy, John Rice, and persuade him to tell the Houston people to see sense. Ellison has a better idea. Tell Houston, he says, they must write down on paper exactly why they have to be different from Hungary. Don’t let them argue about it at the steering committee, they’ll come up with some wonderful reasons and put up a great argument. “Make them write it down,” he says.4
The next day—Ellison usually doesn’t arrive in the office until about 1:30 in the afternoon—is taken up with meetings, first with the application server group and second with marketing, to approve some press ads. Oracle’s application server has been a problem for a couple of years. App servers are a vital layer in the software “stack” of Internet computing—the two main players in the market, BEA Systems and IBM with its WebSphere product range, market them as e-business platforms or even as the operating systems of the Internet.
But Oracle’s offering has suffered from poor performance in running applications written in the popular Java programming language because Oracle’s Java “container” has been taken from its database instead of being designed from scratch for the app server. As Oracle is a pioneer of e-business, it’s strategically damaging and frankly embarrassing for it not to have a competitive product. The options on the table are to resell a direct rival’s product, such as BEA Systems’, persevere with developing an in-house solution, or do a licensing deal with a tiny firm in Sweden called Orion (“basically just two guys”), which seems to have come up with a container that provides one of the world’s fastest Java environments. This last option is recommended by the application server group’s Thomas Kurian, a young Indian who’s a rising star at Oracle.
Interestingly, there is almost no “not invented here” vanity. It’s a simple question of what will deliver in a cost-effective and timely way. Ellison is asked to approve the $5
million deal that has been negotiated with Orion, which will preclude selling a similar license to any of Oracle’s competitors. The boys from Orion have also reluctantly accepted that they can’t give the program to the open-source movement for three years—it’s apparently the only requirement they balked at. Ellison is not only happy to cut the deal, he wants it done fast so he can avoid incurring any further parallel development costs. He even asks if there’s a danger of lowballing Orion with the $5 million. It’s not altruism. He wants to make sure that Orion has enough money not to stint on development that will benefit Oracle. The final question is whether the application server has been underpriced. Ellison is adamant about keeping a performance/price advantage over rivals. “It gets people downloading the software and generates buzz on all the tech bulletin boards. Keep the price low.” This is a recurring theme: even if people steal your software, you get the money back in the end because they’re forced to buy your other products and support.
At the last meeting of the week, marketing executive Stacey Torman has some new ads to show Ellison and Safra Catz, his formidable chief of staff. With an annual marketing budget of more than $300 million and a preference for displays in the business press, the company will soon be blanketing The Wall Street Journal, the Financial Times, and The Economist, among others, with ads. But Ellison doesn’t like the pie chart that’s in the ad, sourced from IDC, a computer industry market research firm, that’s meant to show Oracle’s dominant share of the database market, so he redraws the chart on the room’s whiteboard. He says that some research organizations apply different metrics to IBM’s share figures, but that anyway Big Blue fakes the number. Then he grumbles that he doesn’t know why Oracle bothers to use an ad agency. For production and placement, volunteers Torman.
Another research company, Forrester, that’s normally favorably disposed toward Oracle, has written a briefing note saying that when the E-Business Suite doesn’t work, Oracle blames its customers. Ellison wants to come up with an ad that confronts the Forrester claim. He suggests something along the lines of “Don’t try to finish our software for us. Let us finish it for you. Hiring a systems integrator to modify our software costs millions and rarely works as advertised. We have thousands of the world’s most talented software engineers, but even they fuck it up on a regular basis before getting it right. Don’t try this at home.” Torman says she’ll get someone to work on it.
After that, it’s back to rewriting the current crop of ads. There’s one that Ellison wants to run in Monday’s FT that is aimed at countering some of the negative news that flowed from missing the quarter earnings number a couple of weeks earlier—the first sign that despite earlier boasting, Oracle was not immune to the problems of the slowing economy after all. The ad will say that despite everything. Oracle’s profits and margins both went up, thanks to the E-Business Suite’s effectiveness as a “cost reduction engine.” The only problem is that the FT’s advertising sales office says that it needs two weeks to take a new ad. Ellison can’t believe it and says maybe he should call Marjorie Scardino, the Texan chief executive of Pearson, the FT’s owner, over the weekend. Already, he’s practicing his Texan drawl for Scardino’s benefit.
• • •
It’s a three-hour ride by GV from San Jose to Birmingham, Alabama—a place that Ellison proudly boasts he’s never been to in his life—plenty of time for Ellison to mount a favorite hobbyhorse. The reason for this voyage of discovery is to announce a partnership with Birmingham-based HealthSouth, one of the country’s biggest health care providers, to build a so-called digital hospital. It’s an important deal for Oracle, even though it will be putting in more resources than it’s likely to get back in the short term. But that’s not the reason Ellison is so excited. He’s been thinking for some time about how Oracle and the Internet could transform the efficiency of the health care industry, which is not only the world’s biggest—he thinks he’s read somewhere that its annual value is about $3 trillion—but one in which software-driven process automation has yet to make any major impact.
Once he starts describing the idea, the words come tumbling out. Almost all medical records, in America and elsewhere, are kept on paper. From prescriptions to insurance claims, medical practice is a never-ending trail of expensively generated and poorly filed paper. The computer systems that do exist are largely based on incompatible proprietary technologies that stop them from being able to communicate with one another—little pockets of automation. And although medicine in advanced industrial countries is seen as glamorously high tech with its array of diagnostic scanners, laser surgery, and sophisticated drugs that increasingly draw on biotechnology, there has been almost no attempt to integrate these new techniques synergistically. Add to that the problem of spiraling health care costs, standards of service that often fall below even the most basic consumer expectations, and the rise of expensively litigated malpractice suits.
Looking uncharacteristically pious, Ellison says that this may be one instance where it’s possible to make money and do some good at the same time. He genuinely believes that the E-Business Suite, by combining customer/patient relationship management with resource planning applications into a single integrated system and leveraging the connectivity of the Internet and wireless communications, can bring huge benefits to the health care system. By eliminating unnecessary paperwork and duplication of effort, time and money can, in theory, be redirected toward patient care. Even more dramatically, Ellison is convinced that by keeping everyone’s records on a single database and linking that wirelessly and in real time to what is going on in the hospital, it should be possible to eliminate many of the medical errors—misprescription alone is thought to be responsible for the deaths of more than fifty thousand patients a year just in the United States—that frequently kill or damage patients.
The importance of the deal with HealthSouth is threefold. First, as the world’s first fully integrated, all-new, start-from-scratch digital hospital, the HealthSouth Medical Center will be a showcase for Oracle’s technology—if only the 20 percent savings on administrative costs that HealthSouth is conservatively budgeting for are delivered, Ellison hopes that health care providers from all over the world will be beating a path to Birmingham. Second, Oracle is the first to admit that while it is the biggest provider of clinical trials software, it has gaps in its industry knowledge that need to be filled, and it will also have to adapt its software to the particular needs of health care. To achieve that, it’s crucial to have a committed “anchor customer,” such as HealthSouth, that shares its vision and will work with Oracle to get the software right; that’s why it makes sense for Oracle to do the work for free. Finally, there are nearly a dozen other providers of technology to the project, from Carl Zeiss (optics) to GE Medical Systems (diagnostic imaging). Ellison admits that getting all of them to work together will be like herding cats but says it’s a great opportunity to get all of them onto the E-Business Suite.
When the GV touches down in Birmingham, Jay Nussbaum, the avuncular head of Oracle’s service industries division, based near Washington, D.C. in Reston, Virginia, is there to greet and brief Ellison. Although there are a couple of limos waiting to take us to HealthSouth’s ninety-two-acre campus on the outskirts of the city, the firm’s CEO, Richard Scrushy, has thoughtfully sent a HealthSouth-liveried Sikorsky S-92 helicopter as an alternative. As Ellison gets into the plush cabin, followed by two unsmiling minders, Nussbaum suggests that perhaps he should get a chopper like this for flying into and out of the Japanese imperial village that he is controversially building among the redwoods in snobby Woodside. “This the neighbors would really hate,” says Ellison. “That would be it, they’d try and take me out with missiles if I got one of these. It’s worth thinking about.” But not for very long. Ellison hates helicopters—they’re ugly, noisy, and unstable—and he usually avoids them whenever possible.
Ten minutes later we’re inside Scrushy’s office. It’s as big as a tennis court, with an abund
ance of highly varnished wood and vermilion leather; curving plate-glass windows provide a panoramic view over the campus. Bizarrely, on the walls are pictures of Muhammad Ali’s great fights, while the main ornaments are model airplanes—dozens of them, with pride of place given to a GV just like Ellison’s.
Scrushy is an intense, wiry man, some ten years younger than Ellison but with suspiciously black, thinning hair. He and Ellison are scheduled to do a conference call with a reporter from USA Today before the main presentation. He talks at speed with a pronounced southern drawl (“We’re gonna build somth’n’ here you-all that’s never been built before . . .”) in an uninterruptible stream of unstructured hyperbole. For once, Ellison seems happy to play second fiddle, coming in only when Scrushy finally runs out of steam. The truth is that he doesn’t have to say much. Scrushy has bought into the idea of the E-Business Suite completely and is a passionate preacher/salesman. Later, when Scrushy is making his big speech of the day and extolling the benefits of fully integrated software that works straight out of the box and automates every process, Nussbaum whispers, “It’s like we slotted the tape right into his head.”
When the USA Today interview is over, Scrushy steers Ellison toward the sumptuous HealthSouth boardroom, where executives from the other firms contributing to the digital hospital and the governor of Alabama, Don Siegelman, there to cast his official blessing on the project, are waiting to be briefed on what to say at the press conference. Young women wearing big hair, high heels, and revealingly tailored red suits are on hand to fetch and carry. For some reason, they present both Ellison and Siegelman with a golf putter. In appearance and attentive manner, they resemble fantasy airline stewardesses. Would Scrushy, who is a keen flyer, rather be running an airline than a health care business?