Oracle plays management musical chairs

This game of C-suite musical chairs had been rumoured in Silicon Valley for some weeks, ever since Oracle CEO Larry Ellison launched a hugely public tirade against HP's board of directors for canning his friend Hurd following revelations about false expenses and allegations of sexual harassment.  

 

At the time Ellison insisted: "The HP Board just made the worst personnel decision since the idiots on the Apple Board fired Steve Jobs many years ago. HP had a long list of failed CEOs until they hired Mark who has spent the last five years doing a brilliant job reviving HP to its former greatness.”

 

So no-one was particularly surprised when Ellison stepped up on Monday to announce that Hurd would be joining Oracle. “Mark did a brilliant job at HP and I expect he’ll do even better at Oracle,” said Ellison. “There is no executive in the IT world with more relevant experience than Mark.”

 

What was less certain was where Hurd would sit in the hierarchy. Alongside Ellison – the longest serving CEO in Silicon Valley and a man with apparently no immediate plans to go anywhere – sat Safra Catz, co President and the 'go to' person for day to day operational issues,  and Phillips, co President and the man credited with driving Oracle's aggressive acquisition strategy of recent years.  Three's company, noted observers, four might be a crowd. 

 

Fortunately it seems Phillips has been seeking to “transition out of” Oracle since last December and as such has now resigned, making way for Hurd to step into his role as co President. So the triumverate of senior management remains intact, just with a new side to the triangle. 

 

Ironically, given that Hurd's abrupt departure from HP - the UK's largest public sector ICT provider - was mired in a minor sex scandal, Phillips was himself caught up in an embarrassing situation earlier in the year when it was revealed that he had been having an affair for the past 8 and a half years which had come to an end in mid-2009. The affair came to light when the rejected woman he had been seeing plastered billboards in New York with giant images of him and her alongside romantic declarations. 

 

 

So what changes can we expect from the new look Oracle management team. It's interesting that Ellison chose to credit Phillips with developing a more customer-centric style within the company whereas to most analyst and observers his main contribution would seem to have been the execution of a growth by acquisition strategy that saw Oracle gobble up firms such as Siebel, PeopleSoft and Sun Microsystems. 

 

“Charles has evolved our field culture toward a more customer-centric organization and improved our top line consistency through a period of tremendous change and growth,” said Ellison. “When Charles approached me last December and expressed his desire to transition out of the company, I asked him to stay on through the Sun integration which has gone well. We will miss his talent and leadership, but I respect his decision.”

 

For his part, Hurd is a perfect candidate to manage to future direction of what used to be Sun Microsystems, a key competitor of HP. Oracle and HP once enjoyed enormously close ties, but the takeover of Sun clearly puts pressure on that relationship even in a world where the marketing teams talk glibly of 'co-opetition'. What better person to take on HP than its former, scorned CEO, a man who – metaphorically – knows where the bodies are buried.  

 

A previous role for Hurd is also worth noting.  Prior to HP, Hurd led a turnaround at NCR, where he helped integrate the company’s hardware business with the acquisition of Teradata, which resulted in the Teradata database engines that are the forerunner of Oracle's Exadata database machines.  

 

 

When Exadata was announced it was seen as a major evolution in Oracle's strategic direction. For the first time Oracle was a software and a hardware firm, it was said  - although that view depends on erasing gambits such as the Network Computer from memory. It's been a pet project for Ellison who this week declared: "Oracle's future is engineering complete and integrated hardware and software systems for the enterprise. Mark pioneered the integration of hardware with software when Teradata was a part of NCR."

 

The Oracle CEO was more explicit in his enthusiasm for Exadata. “When we introduced the Exadata database machine, it really was focused on datawarehousing and our primary competitors were companies like Teradata and Netezza,” he explained. “When we introduced Version 2 of our Exadata database machine in partnership with Sun and then we bought Sun, we really focused not simply on datawarehousing performance, but also on online transaction processing. 

 

“Our current version of the Sun Exadata database machine substantially outperforms IBM’s fastest computer in both data-warehousing and transaction processing. As a result, in our previous quarter in Q4 some of IBM’s largest customers began buying Exadata machines rather than big IBM servers. And the 2011 Exadata pipeline continues to grow and is now approaching $1 billion, making Exadata the fastest growing new product in Oracle’s history.

 

"The competition has really shifted from companies like Teradata and Netezza to big IBM machines and the Q4 results bore that out. We beat IBM 30 times in Q4. We beat Teradata nine times in Q4, and we beat Netezza seven times in Q4. And we sold the Exadata machine into some of IBM’s largest and bluest accounts, including Bank of America, Carrefour the second largest retailer in the world behind Wal-Mart and Thomson Reuters.”

 

Now, with Sun's hardware arm inside Oracle as well, the ambitions for the hardware business are even higher – and the targets even greater. Co president Safra Catz is looking for $1 billion revenue from hardware in the first quarter of current fiscal years Whether that's achieved will become apparent next week when those results are released. 

 

Whither Chuck? 

 

As Hurd settles into his new role, it's unclear what the next step is for Philips. As a former analyst at Morgan Stanley, 'Chuck' was one of the most widely respected market commentators in the tech industry, a reputation he brought with him to Oracle. At one point it was thought he had political ambitions and in early 2009 was appointed by President Obama to a 16-person committee making up the Economic Recovery Advisory Board in the US. Whether those ambitions have been damaged by the affair revelations remains to be seen. 

 

One rumour this week in Silicon Valley was attracting a lot of attention though – that of a straight swap. With Hurd off to Oracle, what price Charles Phillips as the new CEO of HP? Whether the board of HP would be ready to overlook the revelations about his personal life is a moot point especially since so much was made of Hurd's personal life when he was ousted, but there would be certain satisfying symmetry. 

 

And from HP's point of view, while Hurd might know where the bodies are buried at HP, Philips most certainly will know which closets hold which skeletons over at Oracle...