Developing Transformational Capability Of The Organization Information Technology Essay
The aim of the paper is to propose an Information Systems Portfolio of Oracle Corporation and analyse/build the capability of the organization. The paper discusses about the organizational structure and appropriate improvement and recommendation are provided. It also discusses the key strategic and high potential projects namely Oracle Fusion Application (OFA) and Cloud Computing.
1.1. Executive Summary
Oracle is a technology based global company which develops databases, middle ware and application software. Oracle markets their products, distributes and provides beneficial service to the clients to control their business needs. Oracle has reached No: 1 in the database business portfolio against its competitors IBM and Microsoft. On the other hand, in the application portfolio of business, it is still trying to get the No: 1 position, SAP being its major rival in Enterprise Resource Planning (ERP) business. Oracle has acquired more than 40 companies in the past 5 years and mainly Oracle’s business is running mainly because of acquisition. Oracle’s major acquisitions in the past five years are “PeopleSoft”, “Siebel”, and Sun Microsystems recently acquired in Jan 2010.
1.2. Oracle Business Strategy
Oracle’s acquisition strategy has aided them to grow and become the dominant player in the software product industry. Oracle’s objective is to give end-to-end solutions to business from database, middleware, enterprise applications. It is presently focussing in the release of “Oracle Fusion Applications” (OFA) which is a descendant to the Oracle E-business Suite. OFA is a compilation of various software products which includes finance, human resources, order management, payroll, manufacturing management, CRM and Supply Chain Management. Oracle success is entirely driven by innovation through acquisition strategy. After the recent acquisition of Sun Microsystems, Oracle is planning to maintain the investment in Java and Open Source projects run by Sun. This acquisition has given Oracle the way to enter all forms of business in the software industry from Storage Servers, Operating System (OS) [Solaris and Sparcs] to software products. Oracle foresees in delivering a complete incorporate suite from Operating System, database in one suite to satisfy the needs of the customer.
1.3. Oracle IS Strategy: Where we want to be?
Oracle desires to become No: 1 in applications and middleware, similar to what it has in database.
The objective is to continue with innovation and go forward in the industry at the same time focusing on the customer satisfaction and recommending reliable solutions to the customers.
1.4. Oracle IT Strategy: How can we achieve?
Oracle can climb the No: 1 position in the ‘application portfolio of business’ with the aid of several acquisitions in the past and its constant dedication towards innovation and technology. Oracle is presently concentrating on the product “OFA” whilst providing enhancements for the previous releases and supporting the customers.
Table 1: Oracle’s product portfolio and target market
Oracle’s success is concentrated on the three main things Simply, Standardize and Automate. After the OFA release Oracle should be able to attract more customers, improve the operational efficiency and establish brand loyalty with the customer.
2. Information Systems application Portfolio: ORACLE
Figure2: IS Investment Proposal
In the present scenario, the requirement is for a software or product that could satisfy the needs of the customer. Oracle’s OFA would address all these problems. The objective of this strategy is to give complete end-to-end solutions to the customer. Oracle can attract more customers by investing more in OFA and gradually succeed in winning its rival SAP in the ERP industry. The competitors are Epicor, Infor in the middle market segment and Microsoft which hives ERP solutions for the Small Business Management (SMB). Oracle should concentrate more on the quality of the OFA to attract customers. It needs to devote lot of time, money and resources in pleasing with a user friendly application and future releases should support more functionality.
2.2 High Potential
Oracle has got the necessary technologies and capabilities to move forward with cloud computing. Oracle owns the required infrastructure as service, application (software) as service and platform as service. The strategic investment in OFA is to gain more market share. Also, Oracle needs to invest in cloud computing to win Google, Amazon, Salesforce and Microsoft. Oracle must take required steps before its major rival SAP moves into cloud computing. According to SAP CEO “SAP is reducing the business complexity in the ERP software and is concentrating on shifting to cloud computing. Albiet SAP being number one in the ERP industry it lacks in web application and technologies which oracle should exploit to have competitive advantage.
2.3 Key Operational
Oracle’s investment for ‘key operational’ is database and CRM business. Oracle leveraged its products by acquiring Siebel and PeopleSoft. It should concentrate more on support and distribution of its service/product. The rivals in this portfolio business are SAP and Saleforce. Salesforce has moved already into cloud computing and Oracle should take immediate steps before SAP gets into cloud computing. Key operational strategy focuses more on surviving and avoiding disadvantage in the industry.
All the business in the database field is in the support side portfolio of business. Oracle has already established the position in this industry. However, it should concentrate on retaining the position against its competitor Microsoft and IBM. It should concentrate more on cost savings by automating the process and it should invest less in this portfolio of business.
2.5 Current business and existing projects
Note: * - existing system is satisfactory, () - existing system needs improvement,
* * - Planned system, - Potential system
3. Critical Evaluation of the Investment Portfolio
3.1. Investment Justification
3.2. Use of resources , Money invested and Risk
Figure 3: Resources, Money Invested in IS portfolio
It is evident from the above exhibit 3 that there is good balance in the portfolio among resources, risk and money invested. The high potential and strategic projects have more risk because the investment is high while the Return on Investment(ROI) is more in these projects. The ROI takes longer time and also it takes time to implement innovative technologies.
3.3. Key Questions(why, what, how)
Figure 4: why, what and how questions for investments
The exhibit above explains us the portfolio of why to invest and what to invest and how to implement.
4. Managing the Portfolio
The Table above describes about the portfolio management across various projects. Oracle uses its own product like HRM, Peoplesoft and Oracle financial services for its business needs. It follows process and does project evaluation. It investigates the open source technologies for various stages of software development life cycle.(SDLC).
Figure 5 Benefits Planning
Oracle Stake holder Analysis:
Table 3: Stake holder Analysis
5.2. Structuring the benefits:
The benefits could be classified according to the four parameters namely degree of explicitness, do new things, do things better and stop doing things. The degree of explicitness is categorised as financial, quantifiable, measurable and observable below in the table.
Table 4: Structuring of Benefits
OFA is an on-going release by Oracle and has tried to join the features of the different product and release as one single product for the customers.
Benefits and Measures
Table 5: Benefits and Value Measure
Oracle’s organizational competencies , IS competencies and building the capability of the company to meet the proposed IT portfolio of investments. The investment proposal discussed should be strategically aligned and it should help Oracle to achieve its business objective. Creating value for stakeholders and investment portfolio has been discussed earlier. The organization capability is being discussed below.
Figure 6: Strategy framework for business transformation
The frame work explains the overall development of establishing a strategy and changing the capability of the company.
Developing transformational capability of the organization
Business transformation is identified as delivering importance to customers, improving organizationational performance and stakeholder analyis through IT enabled projects and benefits focused plan. Business transformation capability is described as organizational capacity to recognize benefits from investments in IT project and transformation. Oracle is realizing the benefits from the investments in IS portfolio.
7.RBV-perspective of competitive advantage
Figure 7: Resource to Capability
Resource and capabilities are one of the most important essential in a firm’s strategy. A resource based view (RBV) unites both the resources, capabilities analysis and external analysis (Barney , 1995). The resources cannot be measured alone; their value is derived from the relationship with the market forces scarcity, demand and appropriability.
The firm’s resource includes “competencies, assets, organizational processes, information, frim attributes and knowledge that facilitate a firm to envisage of and execute processes that improves its effectiveness and efficiency. Oracle’s resources include high technology, innovation, brand reputation, company size, product line and quality.
Organizational capability refers to the competencies of the strategic application (Kangas, 1999; Moingeon et al., 1998). Oracle’s capabilities are its speed to market in designing process, delivering the products, customer service and marketing skills
Figure 8:Resource and Capability of Oracle
Application/Assesment of IS competencies,Organizational competencies
Figure 9: A framework for positioning IS competencies
According to Peppard et al (2000), “The IS competencies are not only necessary for success and there are various other competencies which needs to be considered. There model proposed by Peppard is shown above and used for assesing the competencies. There are six spheres of IS competence which were recognized by the researches. These six competencies and CRM competency of Oracle are shown below.
Define the IS contribution
8.3. Define the IT capability
8.5 Deliver Solutions
8.7.CRM competency assessment:
According Jack Welch, former CEO, and General Electric “There are two source of competitive advantage:
1. The ability to learn more about our customers faster than the competition.
2. The ability to turn that learning into action faster than the competition.”
Model to link IS capability with IS competencies and resources
Figure 10 A model of IS capability
Calderia (1998) presented a model to represent the components of IS capabilities. There are three stages in the model namely the resource level, organising level and enterprise level.
9.1. From Resources to IS Competencies
The competencies are implanted in the organizational process. The alteration of a competence relies on how the people of the organization cooperate with the others. There was no proper restructuring after acquisition and there always existed gap within and across the teams.
Oracle doesn’t pursue any methodical approach for a project. Almost all the projects were planned with the less involvement of senior management and technical leads. OFA was initially headed by Wookey. Wookey is currently involved in moving SAP to cloud computing. There was no proper process and most of the milestones were slipped in the project. There was less involvement of technical person while designing and architecting which has delayed the release and desired output.
Oracle’s attrition rate is high when compared to other companies. Oracle has invested more on acquisition and because of that there were less pay increments for the past 4-5 years. Therefore, most of the employees had to switch to other companies for better designation and good opportunities.
The team’s structure in an organization can affect the performance of the task. OFA development is done partly in India by sharing the work with other functional teams in USA. The organization structure was not effective and proper communication across the team was lacking.
9.2 From IS competencies to IS capabilities
Oracle should recognize the capabilities needed for cloud computing, innovate strategies and effectively implementing them. The implementation of these strategies are dependent on the organization’s capability. Oracle should concentrate on retaining the work forces skilled in web applications for moving into cloud computing. Oracle has got the required capabilities and technologies for shifting to cloud computing.
Business change perspective of IS/IT competitive advantage
Figure 11: IS Strategy balances the demands for business change with the supply of IT enablers
The IS competencies gives the organization the potential to identify and deliver the IS/IT changes according to the demand forces which alters the organization to certain extent to meet the continually changing supply-side.
11.From IS capability to Organization Performance
The IS capability of organization is examined in the way which affects business performance. The model show below displays the IS capabilities along with IS competencies which also includes organizational performance and strategy. The model points out that the organizational performance at the end is retrieved from several business operations like marketing, sales and manufacturing.
Figure 12: The new IS/IT alignment: IS capability and Organizational Performance
12.Assessing Benefits Realization Capability of Oracle
13. Problems after assessing IS and organizational Competencies and Capabilities of Oracle:
Figure 13: The IS organizational competencies and the success factors
14. Risk and Challenges
15. Organizational Improvements
Oracle must formally announce to the entire workforce if a company has been acquired. The company doesn’t send any formal emails regarding acquisition to the employees. Oracle less frequently conducts formal All Hands meet with the employees. The senior management for the release of the OFA project should have been planned properly. The delay of the current OFA release is because of frequent changes in the design and replication of the work. The proper plan for work should be planned by the company. Oracle though spent lot of money on acquisition but still they were making profits. Oracle followed a strategy of not giving hike to the employees continuously for three years. This demotivated the employees to move to other companies. This could have been avoided by giving reasonable incentive to the employees. Oracle’s upper management did not make proper product awareness among the team and the effective release of the product wasn’t planned. Proper planning could have avoided the delay of OFA release.
Oracle must follow its acquisition strategy as it helps in gaining competitive advantage. It should balance its investment on R&D to innovative new things. The present scenario in the IT field is towards cloud computing. Oracle possesses all the required infrastructure and technology to shift to cloud computing. It should focus on the application business side as these are ‘cash cows’ which generates more revenue to the company. Also, it must retain the customer by having user friendly applications. Cloud computing provides customers are more sophisticated product which can be accessed through internet depending on the demand. Salesforce.com, Amazon and Google have moved into cloud computing. Oracle should take appropriate steps for shifting to cloud computing to retain its key position. Oracle owns consulting skulls on technological advices, product implementation and business strategies. Oracle must focus on CRM as the growth is likely and the CRM businesses are expected to reach $10.9 billion by end of 2010. This business has a potential growth and contributes to company’s revenue.
The latest trend in computing and software industries has been towards the most happening “cloud computing” trend. Oracle shifts towards cloud computing, motivating employees, operating effectively and utilizing the in-house skills of the employees and further continuing its dedication towards technology and innovation to become the leader in the informational technology field. Oracle realizes it is difficult to win ‘Microsoft in PC business and IBM in mainframes, but it believe it can be a number one software vendor over the internet and it must concentrate on retaining the position.
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