Questions for Oracle

It is hard to fault Oracle's timing of its appointment of Mark Hurd to replace the outgoing Charles Phillips. A long holiday weekend that US analysts take seriously so few were paying attention other than the hard core Twitterers.

The markets will likely welcome the news as representing a strengthening of the board to deliver more profit to shareholders. Look for an up tick in the stock price. The Wall Street Journal notes early thoughts by one analyst:

"I think Hurd is a perfect fit for Oracle," said Brent Thill, an analyst with UBS Securities. "This is a guy who can help take the company to the next level."

Even so, many questions remain. The same Wall Street Journal article raises questions about the conditions of Hurd's departure from H-P and the fact his $35 million payout will be impacted by confidentiality conditions. This is a tricky one. H-P could sue on the assumption that as he is now working for a competitor his ability to maintain confidentiality goes out the window. Experts believe the non-compete will be hard to make stand up but that still leaves the question - what about the money? I guess we'll have to wait see if H-P sues. I'm betting that Larry Ellison has provided Hurd with assurance that whatever his potential loss, Oracle will cover with stock options and the promise of even greater riches at Oracle.

Oracle Open World 2010 has now become an investor led distraction. Attention will be upon Mark Hurd's likely first performance. Some observers will be looking to hear more about the software and hardware strategy, watching for hints about acquisition and holding their breath for any jabs at HP. Other observers will be looking for hints about customer relationships, Charles Phillips old job. Larry Dignan opens up that can of worms with:

Not all observers will agree that Phillips was great with customers. However, Phillips was a consistent front man. Now Hurd is that front man. It’s going to be interesting to watch how Hurd will be received by Oracle customers.

My gut reaction is that customers will not react well. Regardless of the job Phillips did in keeping PeopleSoft, JD Edwards and Siebel customers in line, the fact remains these are old products likely to be replaced by Fusion Apps - assuming that Oracle gets them out the door. Now that the company's main customer advocate has gone, Oracle will need to reassure inquiring minds that Fusion is here and that it will deliver value while continuing to provide support in the handover period.

Early discussions among HR experts like Bill Kutik and Naomi Bloom suggest that while there is plenty to look forward to, the eating won't be so easy. How will Oracle manage this aspect of the Fusion rollout and who will be responsible for holding customers' hands in the interim period? Oliver Marks notes in a conversation with Mr. Kutik that:

Oracle are showing the Fusion version of their Human Capital Management suite for first time at the HR Technology Conference, and other modern applications will be demoed which have modern collaborative ’social’ networking tools built in.

Demo - now there's a word we hear a lot. And what about the remaining parts of the Fusion Apps suite? News occasionally dribbles out but Oracle is keeping its favored analysts tight lipped.

That brings us to R&D. During Hurd's time at H-P, investment in R&D dwindled. Fusion Apps has gobbled up a huge amount of resource but will Hurd use the expected Fusion releases to signal a reining back on that line item? I hope not because to do so would be a clear signal to customers that they are not being as well looked after as the arguments for their 22% maintenance dollars suggest?

Sticking with OOW, the question arises whether Ann Livermore, H-P's EVP enterprise business will appear or whether there will be some hasty rescheduling. Silicon Valley companies are not known for being forgiving when one of their own defects, even if he/she was fired first. It seems inconceivable that Hurd could share a stage with her. However and regardless of the heightened competitive tensions, H-P and Oracle will still do a lot of business together so it makes sense to bring Hurd on and get him off before Livermore's scheduled appearance. One thing's for sure, what happens will tell us a LOT about how the two companies are really getting on.

Then we come to acquisitions. The consensus view is that Hurd can easily slip into Phillips shoes. Like it or not, Phillips roll-up of the large enterprise stack has been impressive as an exercise in financial engineering. What's left is now almost a rump of gaps that Oracle will want to fill and fill quickly. Saying it can take on IBM is one thing, executing is another. Some will argue that at least some of Hurd's results as an acquirer are less than sterling. Look what's happened to EDS? When it was acquired it was ailing. Nothing H-P has done has righted that particular boat. There is plenty of speculation about which company Oracle will tilt at next. Here, Hurd will need to offer analysts a sense of where he thinks the gaps lay.

But what do you think? What questions would you ask Mark Hurd at the upcoming Oracle Open World press conference?

In the meantime, I am left with one fleeting vision: will Larry Ellison and Mark Hurd appear on stage at OOW in tennis attire? It would make an ironic and yet poignant statement.