Piper’s justice in Oracle land?

By : |April 7, 2010 0

BIG CHEESE SLIPPING AWAY.

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And one after one heavy-hitter sliding out.

The line-up of erstwhile Sun Microsystems’ big enchilada towards the exit door makes you wonder if it’s a hegira played out in a soft, graceful way.

All key people, all big wheels of their own galaxies at Sun, donning the parachute, it seems.

From Sun Microsystems’ veteran Simon Phipps quitting his chief open source officer post, or Jonathan Schwartz relinquishing his CEO mantle; to big boss Scott McNealy saying a emotional hasta la vista, the list only gets to the top of the tree, and longer.

Be it CTO for Sun’s relatively new cloud computing group Lew Tucker, tweeting out of the door; or Andrew Goodlace, the Australian MD of Sun and Chris Melissinos, Indian head honchos like Anil Valluri or Unnikrishnan bowing out; it looks like there is a new Piper at work with Oracle’s $seven billion acquisition of Sun Microsystems.

So will the piper drive out people assets along with business rats?

Is it a cause of concern? Or wasn’t it something expected when a square peg gets into a round hole?

Sun’s open, unconventional business and technology DNA is definitely a breed apart than the monolith, pragmatic, market ruler Oracle. The deal, as touted, might make a lot of sense on many dimensions for both the parties but the marriage will nonetheless entail some break-ups.

Imperialism or rebellion

Would it be a push-out or walk-out?

It’s easy to speculate that much of the exodus would be due to acquirer’s high-hand, but in this case, given the loyalty factors and deep credo that many Sun employees work by, this exodus could be an interesting case of walk-outs too.

Ramchandra Naik, Company and Market Intelligence Research Practice – Datamonitor India does not rule them out for instance.

 

“Oracle has no plans of laying-off Sun employees as already mentioned, instead it has plans of hiring more work-force to support Sun’s business plans. However, voluntary walk outs cannot be ruled out with respect to individuals’ issues.”   

 

Some top executive resignations may cite reasons like ‘high-time-for-a-vacation’, but ahem-ahem, is there more than meets the eye?

 

Is the genre of work culture and overall philosophical foundations of each company playing devil’s advocate here?
It could be either way, answers Asheesh Raina, Principal Research Analyst, Gartner, but he adds that environment, flexibility, methods could be serious elements.

 

“Oracle is driven by different methods. May be some of these senior people found the reporting ladder changing, which was not as comfortable. It could have bruised their egos or may have just been an ideology mismatch. It’s hard to comment but environment plays a role for sure.”

 

After all they have stuck around for long.

On the developer front, there’s an army that is loudly shouting a thumbs-down to the deal. Not hard to guess how the open source, community approach is feeling threatened with the deal.

A news piece reported how Michael Widenius, the creator of the MySQL database is now a vocal opponent of Oracle’s takeover of Sun Microsystems Inc, and has handed 14,000 signatures opposing the deal to regulators in Europe, China and Russia.

Analysts do not discount the imminent tremors on the developer terrain, but it won’t be seismic enough, it appears.

“Sun has built an expertise around the ‘open’ genre so a little bit of disgruntlement is natural. But a more important trigger could be the absence of clarity on what roadmap is Oracle taking henceforth. Once that part of strategy is clear, developers might be slightly happy and back.” Feels Raina.

Raina also highlights the conspicuous difference in ideologies that are play at Sun and Oracle.

Between open and proprietary species there’s still a strong, tall fence that stays firm.

It’s unlikely, as Raina says, that both the strategies can wok together. “Oracle would want to retain the tried-and-tested strategy, leading of course to some impact on Sun’s side.”

Shake-outs are normal and natural as seen in most acquisitions, he reasons, underlining the fact that there should be no surprise element with the high-key exodus after the deal.

The question is why?

Alignment issues? Overlap? Or Portfolio drops?

A lot is being speculated on how Oracle will go forward on the integration task, the new stack that will come up and what will be chopped off. If some products and projects go to the urn, the fate of people involved with those is not hard to guess.

 

But more than that it could be a case of pure differences of thought.

 

And that’s exactly why Raina reassures that other ranks in Sun’s hierarchy have not much to worry about. “In any deal like this, the hierarchy of management gets definitely affected. It’s the top most echelons that will be more vulnerable to the exit signs though. And that is because of issues on mismatch of vision and the way things used to run and forward. For a company of a size like Oracle, the pink slips won’t percolate much down and readjustments and internal shifts will take care of any resource issues, in my opinion.”

 

Integration and fate of many product lines and projects (specially some of Sun’s more ambitious open-source and Web 2.0 projects) that were on front-burners in Sun’s kitchen till now, would decide a lot ahead.
We have already seen panic buttons hanging on Sun’s Project Kenai, the OpenSolaris community, Sun’s open-source projects in application servers and portals , NetBeans IDE (cross pollination issues between between WebLogic, Glassfish, NetBeans and Oracle’s JDeveloper and Oracle Enterprise Pack for Eclipse).

 

This could be just a glimpse of the doubts brewing on Oracle’s Axe, but the bigger question is won’t people come under the swipe too?

There might be no point in keeping people for product it decides to fade out, agrees Raina.

 

Naik feels that while Oracle’s integration track record has so far been impeccable, the Sun takeover brings an entirely new scale of challenges. “Integration of Sun’s product portfolio of servers, storage systems, the Java platform and other technologies, will make Oracle a full IT systems and software vendor. With this acquisition Oracle will take advantage of making vertical applications unlike its direct competitors IBM and Hewlett-Packard.”

He also underscores that Sun and Oracle have successfully worked together for over 20 years. Solaris operating system is the leading platform for hosting the Oracle database while the Oracle Fusion middleware product line uses Java. “Looking at the earlier relationship between both the companies, there may not be any major overlap issues,” he opines. 

 

Arvind Kher, Chief Strategy Officer of ValueNotes, a business research firm, suggests that in any acquisition or merger, there is always the need for rationalization and normalization of products and services. “Even when there is no M&A involved, most large organizations perform such an exercise at their annual business plan meets. To that extent, this is a normal activity. Fortunately the overlap between Sun and Oracle is not very large.” He argues.

As Kher explains futher, the axe effect, hence, is much less than it would have been at the time of the PeopleSoft acquisition, for example. The hardware talent pool is integral to the business vision. The software talent pool is very easily reallocated, and there is no real need for pink slips, unless there is a cash crunch, which is a different issue altogether.”

 

Can Oracle afford it?

So what interpretations can we draw with resignations of Scott McNealy and Jonathan Schwartz? With the ousting of such key Sun pillars, how would it translate for Sun’s DNA and hence on executives and employees of Sun

For one, there’s nothing negative with the senior brass shake-out, believes Raina. “Oracle has a larger piece in the software market. And it’s not the first acquisition for Oracle. Though there have been teething troubles and time issues with integration earlier, Oracle still will catch it fine in the long term.”

Naik walks a different line of thought here.
“Post dotcom bubble era, Sun has not been making significant profits. The leadership transition from Scott McNealy to Jonathan Schwartz was also not helpful in regaining earlier profit levels.” He adds that the exit of Scott McNealy and Jonathan Schwartz may not have major impact on existing Sun employees.

Talking of how the DNA will get affected at Sun, specially after Jonathan and Scott walking out, analysts see a clear perspective.

With or without McNealy and Schwartz, the DNA would have changed anyway. When Oracle acquires your company, you acquire Oracle’s DNA. One living organism can’t have multiple DNAs, can it? Asks Arvind Kher, from ValueNotes.

The impact on the executives and the regular folks of Sun will be somewhat traumatic, but they’ll cope. Contrary to popular belief, the techie is a very adaptable animal. Some hardcore ideologists will leave, but more will stay on to push their agenda with the new management, Kher surmises.

Guess work, still

 

It has been reported that after the completion of the takeover, Larry Ellison would lay off fewer than 2,000 people, while hiring more than 2,000 people in engineering, sales and other roles. He has not ruled out that additional layoffs might occur later.

Not to forget that the employees at Sun had also raised their concern about the management change, as they felt the work culture would change.

Kher from ValueNotes foresees that there may not be too much of an upheaval in the developer ranks. “The acquirer always wants to retain the people who do the "real work", so to speak. But some senior heads will surely continue to roll, as they have from Day One.”

 

Kher says, “The deal has gone through, and people are not leaving in droves. Nor can we expect a great exodus in the immediate future.”

 

Sai Chandra Kanala – Senior Analyst, Company and Market Intelligence, Datamonitor India reckons that Oracle has clearly stated that all the issues regarding layoffs are mere press speculations. “Oracle has plans to hire more developers and engineers. There may not be any exodus of the senior ranks as both Oracle and Sun are different business entities having predefined roles and responsibilities. Moreover, Oracle has committed to hire teams for marketing efforts of MySQL or Sun’s portfolio as a whole.”

The acquisition can transform Oracle from a maker of software into an integrated technology powerhouse that houses everything from apps, software, hardware, servers to disks under one umbrella. No doubt, Oracle Chief Executive Larry Ellison is betting the deal will give his company an edge over rivals such as IBM Corp, Hewlett-Packard Co, Microsoft Corp and EMC Corp.

 

As Kher avers, for the most part, the technology guys will be able to deal with it. There will be a marked change in approach from technical to commercial. Sun’s philosophy will be replaced by Oracle’s philosophy. “Some of the senior team, especially Open Community acolytes, will find it difficult to assimilate into the volumes and margins mindset.”

 

They say a watched pot never boils, but at least for some time, this one will be hot with news, speculations and hopefully with some answers, finally.

 

For today, Sun is driving into the sunset under Oracle’s shadow. And it’s hard to say what’s on the piper’s mind. An elegy or a happy note?

 

 

 

 

 

 

 

 

 

 

 

 

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