In an article on Jeff Nolan, who runs SAP’s so-called “Attack Oracle” group in Silicon Valley, Tom Foremski succinctly defines the different strategies of SAP, Oracle and IBM, the three companies that, arguably, represent the biggest powers in the world of enterprise IT today. SAP’s strategy, writes Foremski, is founded on a belief “that the value is in the processing of the data” – in the applications, in other words. Focusing its strategy lower in the “stack,” Oracle believes “that owning the database is the key to owning the glass house of the IT organization.” IBM is in the center, with its “strong middleware business” that glues the various parts together.
What this means is that the three companies are going after the same prize – controlling the customer relationship – from very different angles. Each, therefore, has a strong incentive to neutralize its competitors’ strengths by commoditizing the parts of the stack that are most important to them. SAP’s trying to commoditize the database, by promoting, for instance, the open-source MySQL; Oracle’s trying to commoditize middleware, also by promoting open-source options; and IBM’s happy to commoditize the applications (while maintaining an escape hatch to “business process automation” up above the stack).
It’s an interesting dynamic that, in total, would seem to simply accelerate the commoditization of everything. What the big guys appear to be hoping is that their control over the customer survives – or is even amplified by – the commoditization of the technology. The war, in other words, isn’t being waged over the technology – you might even say that it doesn’t matter – but over the terms of the customer relationship. It is, at heart, a marketing war, aimed at influencing perceptions – as Nolan’s focus on using creative “communications strategies” to attack Oracle implies.
Maybe, though, it’ll turn out that this is just a big mopping up operation at the end of an old war. If you look into the thickets around the battlefield, you can just make out the camouflaged faces of various bands of guerrilla fighters. The next war may be on their terms – fought not over the stack but the services that replace it.