Safra Katz’s false analogy

Use of an analogy is one way of trying to get people to understand your proposition. Joint President of Oracle, Safra Katz, is reported by Michael Krigsman –  Oracle’s integration strategy: Customer trade-offs – to have used the analogy of buying a car vs buying technology to explain Oracle’s acquisition strategy.

… we would go online to buy thousands of disconnected parts from many vendors, which our children would assemble into a completed car because the parts would not come with instructions. Just as we finished assembling the car … a light would go on indicating that an upgrade or patch is required. Katz said, “We would then do it all again.”

Katz used this car assembly story as a metaphor for product complexity in the enterprise … Oracle reduces this complexity by bringing together under one roof infrastructure, hardware, and database products that are “engineered to work together.”

The problem is that analogy is false – its trying to make out that purchase decisions by consumers and businesses are the same. As a marketing colleague has pointed out about information, there a significant differences between the consumer and business market.

B2C vs B2B

When you buy a car, you don’t have to consider whether the wrong car choice will change your personal or family life (unless you can’t pay or buy an old, unsafe car). Business decisions on enterprise software are far more complex and have a different set of considerations.

As Michael points out:

Even though integration can reduce implementation complexity on customer projects, large vendors may introduce another set of risks.

While a large end-to-end vendor can offer greater simplicity, the trade-off involves the customer transferring power to that vendor. In a single-vendor world, customers who invest in large systems can become beholden to the large vendor, which gains greater control over pricing, product features, maintenance costs, and future development.

Update: See Vinnie’s comment on SAP’s perspective of integration strategy

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IT collapse is top fear

The Economist Intelligence Unit has released a report Coming to grips with IT risk, a report sponsored by SAP. There is a summary here.

According to the report companies fear the collapse of their IT systems more than terrorism, natural disasters, financial risk or regulatory constraints, yet the majority do not manage IT risk effectively.

The problem seems to be that IT systems (read ERP and other integrated apps) are getting more complex, and complexity increases the risk of IT failure. However, managers still view IT risk in terms of security.

Other findings include:

  • Poor project management is the most common source of IT project failure – a particular concern in Europe.
  • Scope creep is a  problem – which would be avoided by better project management.
  • Senior business management does not understand IT issues adequately. 
  • IT risk will increase in the next three years.

Isn’t this an area where the GRC (governance, risk, compliance) people should be looking?