Larry Ellison, Bob Miller, and Ed Oats founded Software Development Laboratories (SDL) in 1977. SDL was founded to implement a commercial version of Relational Database Management System (RDBMS). Inspiration to implement RDBMS system came from the 1970 paper on RDBMS authored by Edgor Codd named “A Relational Data for Large Shared Data Banks”. In 1977 SDL implemented first commercial version of RDBMS for CIA. The code name for the project was Oracle. The unique product that the company offered was increasingly recognized in the market and company changed its name to Oracle Systems Corporation to identify itself with its flagship product Oracle.
Oracle decided that it would use SQL to retrieve data from database because founders understood that IBM’s SQL will become a de-facto standard. This was one of the early strategic decisions. So Oracle made sure that commercial RDBMS that was developed was compatible with SQL. This gave Oracle a significant advantage over other service providers in those days. Oracle wanted to exploit then forthcoming world of minicomputers. Oracle realized that minicomputers were relatively cheap and hence there would be a young market minicomputers and hence for its database. Foreseeing this, Oracle had quickly geared up to develop portable RDBMS. This innovation laid the true foundation of this IT giant. In 1979 Oracle got its first customer in the form of Wright-Patterson Air Force Base. Oracle had significant technological advantages over the products that were in use then. This meant that Oracle had no trouble attracting customers to a new technology. IBM at that point of time was trying to market its RDBMS system for Mainframes. This helped Oracle in its marketing efforts as the customers it talked to already had an idea of RDBMS system. The technical advantage coupled with marketing advantage from IBM systems mainframe RDBMS must have helped Oracle to grow as quickly as it did in its initial phase. Oracle’ success story continued as more and more customers opted for Oracle. Meanwhile the focus at oracle had been to help the customers. Oracle continued to develop newer versions of its RBDMS by adding functionalities that focused at helping customers with the ease of use and configuration. Oracle added technical capability to scale up the db access and storage capacity. Oracle also moved in the direction of reporting techniques by developing Interactive Application Facility that helped user format data into more usable reports. By 1982 Oracle had a customer base of 72 customers and estimated revenue of nearly US$2.5 million. Oracle invested nearly one fourth of this revenue in R&D activities. Portability of database systems and consistency of the data were the focus of Oracle strategy then.
1985 saw a shift in Oracle strategy. Oracle shifted its focus to develop capability that empowered client/server mode. This allowed multiple desktop computers to access database server over a network. And this new focus also meant an increasing focus on data security. With this Oracle was leading Client/Server revolution. In 1989 Oracle was preparing for the internet boom. Oracle added the functionality of Online Transaction Processing (OLTP). Internet boom arrived in 90’s and Oracle reached to new levels with this. As Larry Ellison once quoted on the risk they took on the future of internet, “if the internet turns out not to be the future of computing, we’re toast; but if it is, we’re golden.”
Understanding the need of the customers Oracle launched its Oracle E-Business Suite-11 that includes software to perform financial – (Oracle Financials), manufacturing- enterprise resource planning and HR- (Human Resource Management Systems) -related functions (Oracle HR) in the year 2000. Oracle E-Business Suite removes integration expenses and risk from application implementation. This integration suite was a win-win situation for both Oracle and its customers. This was a major advantage for the clients as it saved them on huge IT budgets and helped Oracle sell more applications. This made other competitors move towards offering integrated solutions, making integrated solution an industry standard.
Oracle continued to focus on internet technologies even during the downturn in enterprise IT in the year 2000. Oracle delivered some of the major technical breakthroughs that are a standard in the computing world today. These technologies include Oracle Real Application Cluster, Oracle E-Business Suite, Oracle Grid Computing, support for enterprise Linux, and Oracle Fusion.
At the beginning of the millennium Oracle acquired its rivals PeopelSoft and Siebel. These were high value acquisitions that helped Oracle strengthen its position as a market leader and offer products in the entire spectrum of internet technologies.
Meanwhile the industry was moving towards Java based internet applications. Oracle continued to build next generation applications. Oracle released its Oracle Business Intelligence Suite in 2006. In 2008, Oracle acquired BEA Systems. With this acquisition Oracle aimed at providing top class middleware portfolio. At same time Oracle released it Oracle 11g release of database. This release was focused on delivering many features that were the need of high growth rate and complexity of the internet world. In 2010 Oracle acquired Sun Mircrosystems. This acquisition was strategically important Oracle was a leader in Middleware, Database systems and Sun was leading hardware provider with Sun Servers. This acquisition made Oracle the largest and most complete provider of industry and business application software. This suite of applications includes middle-tier software, Enterprise Resource Planning (ERP), Customer Relationship Management Software (CRM), and Supply Chain Management Software (SCM).
Oracle has a strong presence in the services fields. Oracle offers Consulting, Training and Certification, Product Support, and Financing. Oracle’ clients include all the fortune 100 companies. It has touched almost every industry. Oracle can boost about the fact that it has developed and deployed 100 percent internet-enabled enterprise software across its entire product line: database, business applications, application development, and decision support tools.
Today Oracle competes for new database licenses on UNIX, Linux, and Windows operating systems primarily against IBM’s DB2 and Microsoft SQL Server (which only run on Windows). IBM’s DB2 still dominates the mainframe database market.
Enterprise Strategy and Business Model of Oracle
Oracle has evolved over time. When Oracle started it had only one business model. Its enterprise strategy was to gain market leadership by launching first commercial version of RDBMS system. Oracle worked for CIA as a first client.
Oracle’s strategy to create a portable version of RDBMS system was successful. Oracles choose C language to develop RDBMS system. This helped Oracle to easily ship its products on any operating system. In order to maintain its market leadership Oracle wrote C-compiler for IBM’s mainframe system. This helped Oracle to ship its products on any IBM Mainframe system consolidating Oracle’s hold on RDBMS market.
Here we can understand that identifying the business opportunity was the key. The opportunity that others missed was capitalized to start a dream story.
Once Oracle established itself as a market leader, it shifted its focus to help its customers. Oracle continued to work on its RDBMS system to release next versions packed with new features. Every version intended to add capability that will help its customers to scale up their operations and build on top of the existing infrastructure. Oracle also focused on ensuring safe and secure ways to upgrade helping existing customers.
Oracle saw a great potential in the world of internet. And Oracle shifted its strategy to develop computational capabilities that will help Oracle’ customers access databases over the internet. This strategy was implemented by heavy investment into the research and development. Success of internet proved their strategy right.
With time Oracle shifted its strategy to not only building on its existing capabilities but also on delivering intelligent information to database users by adding business intelligence capabilities. As a famous quote by Oracle’s CEO Larry Ellison goes, “A single unified process automation database with integrated daily business intelligence moves the company out of the dark and into the information age.”
Oracle quotes its strategy as, “We believe that information matters. We believe that information is power. We believe in doing everything that we can to help our customers lower their costs, get information on demand, and make the best decisions, so they can compete and win.”
With this strategy, Oracle has changed the definition of the database. Now database is not just a place to store data but to retrieve data intelligently to help the customers understand it.
In current scenario Oracle customers use Oracle technology, applications, and services to build applications that help them retain the value of existing investments, stay competitive in existing economic scenario, cut costs and improve security, make compliance easier and manage complex upgrades with fewer risks. Today, Oracle is the largest business software company in the world, with more than 3, 20,000 customers and supports these companies in more than 145 companies. Oracle strategy now is to focus on reducing TCO, total cost of ownership, and increasing ROI, return on investment.
With such a strong presence in the database market and having build huge research and development capabilities Oracle focused on acquiring companies and products that enabled Oracle to offer a complete stack of products. Like the acquisition of SUN Microsystems has helped Oracle establish a leadership role in hardware business.