Bringing the car-buying experience to IT

Friday, October 14, 2011

At the Oracle Open World event, which took place last week in San Francisco, Oracle's (Nasdaq: ORCL) flamboyant CEO, Larry Ellison, oohed and aahed the 45,000-strong crowd during his opening keynote speech with the announcement of the Exalytics Intelligence Machine, which integrates with Oracle's Exadata hardware, along with its Exalogic middleware.

But what does this mean for the Latin American market? At the event BNamericas met with Ricardo Pedroza, Oracle president of Colombia and Ecuador, to bring the announcement down to a regional level, and to find out what the industry drivers are for these two physically close yet philosophically distant countries.

BNamericas: The main issues at the event have been Exalytics, Exadata and Exalogic, etc. How do you see the demand for these types of solutions in Colombia and Ecuador?

Pedroza: When I go to visit clients of different sizes, there's always a common denominator, and that is complexity. Historically, technology has had different components. It's like the analogy of the car and technology. If we were to compare the IT industry with the automotive industry, and the automotive industry were at the same level of development as that of the IT sector, when you buy a car, you don't actually buy the car. You buy the motor, the chassis, a gearbox, different components - and you have to go to market to buy each one. Then you have to make sure that all the pieces go together and can be put in place, then you have to test them, optimize and finally you have your car. The problem is that if tomorrow your radiator gets broken, to get a new one you need to go back and optimize.

But the automotive industry doesn't work like that. You go out and buy your sports car, your family car or your truck, and you know that it will work and that the engineers have designed it to make it work. That's what we're doing now.

With the maturity of the industry, with large clients in particular, there are "tailor built cars." Those have a number of wires between them that are very weak. You take one out and the whole car breaks down, or if you need to change a part, there are so many pieces that you don't know how to do it. And that's just talking about the complexity of it.

There's also the issue of performance and price performance. So when you talk about more integrated solutions, done with engineered hardware and software from the beginning, yes, there's an interesting market for this. There's an installed base of clients that's big enough with a certain level of complexity that our technological proposal can quickly become a business proposal. Not just in terms of costs and simplifying the total cost of ownership, but also in terms of speed and time to market.

Look at the competitive world of the telcos. If your competitor makes a special offer on the market and you respond immediately, within 24 hours, to make a counter offer, but IT isn't necessarily able to respond in the same amount of time - where they need another week or two - that's a huge cost. It's the IT infrastructure that allows you to [properly respond] to these issues. The value proposition has to turn into a business proposition.

BNamericas: Speaking of telcos, Colombia is a very competitive market; it will soon launch 4G and may be the first country in Latin America to do so. How does this development influence on Oracle's business?

Pedroza: It's a very dynamic sector. Depending on how you look at it, there are leading companies in different areas, but there are no guarantees that these companies will remain leaders. So you need to be in constant movement. The industry is investing heavily in technology and marketing, associated with a value proposition that requires services and products. We've seen that these tailored solutions - these "cars" - aren't allowing the companies to move at the speed they want to move. So there's a migration there; the market is forcing the back end to move in order to be able to respond and have the flexibility that it needs.

BNamericas: Another sector that is often spoken about in Colombia is e-government. How has Oracle's relationship been with the Colombian government?

Pedroza: It's been a long-term relationship on different levels, with local and departmental governments as well as the national government. We've worked with organizations ranging from health to taxes. And as a player in the government sector, Oracle is increasingly dealing with protecting information. It's fundamental for the government to have information on its citizens, and it's fundamental that this data is in the hands of who it should be - the infrastructure, database or solutions administrators - and that they have access to this information. It's tied in with government transparency.

Another area in which government has been working with us has to do with the use of information for business intelligence - statistics and data to identify trends, how I can use the information to make decisions. It's fundamental. So we've worked with entities like the national police force, which is a worldwide example for all that we've had to go through in the last few years. And it's also important in technological terms of how to manage information.

In Bogotá we work with the district treasury department, which leverages technology in its tax collections. So there are many areas in which we work with government.

BNamericas: Does the government's Vive Digital program help Oracle in terms of setting the base upon which you can build?

Pedroza: We've worked in different areas in the Vive Digital program. We're close to the ICT minister as he's close to the whole IT industry, which has helped to move things in the country. The program has a strong focus on increasing the coverage of basic infrastructure to increase broadband penetration. But that's infrastructure; it's the easy part.

The issue here is how to generate value for those who are getting access - beyond getting on the presidential website and looking at the president's biography, using internet for transactions and those types of things. So the idea is to have the front end, the infrastructure, but also to better structure organizations to really have the work automatic, self-service for the citizens. So our work there, besides what I already mentioned with data protection, is in providing tools like ERP and CRM.

For example, the city of Bogotá installed a number of cameras to control traffic, with police monitoring the cameras to fine traffic violators. There's the mix of the database, integration, the ERP that bills and the CRM that maintains the "clients." I think the only thing we don't provide is the printer. But it goes to show the services that can be provided without having to leave the office.

BNamericas: Any other drivers in Colombia?

Pedroza: Banking. There are a number of players in that sector, and in the last few months 6-7 financial entities have become banks. Even though they have specific niches and a modest size, they're beginning to get going in the market and there are rumors of M&A for the banks to solidify their position. So they're in an investment phase, be that with CRMs, optimizing operating efficiency, or even changing their core.

There is the interesting example of Helm Bank, which decided to re-invent itself - not just in its branches and its corporate image but also in the back office. They wanted to focus more on the client and on client services, so they decided to go with Oracle, and we're in the midst of a project. They decided to change from the hardware, through the database and integration, ERP, the banking core, CRM, with all the security and analytics components in between. It'd be a lot to say it's [running on] 100% Oracle, but it's in a percentage of the 90s.

The Colombian economy has been pretty solid in the last few years, and we in Oracle have been able to double our size in the local market between fiscal year 2010 to date in fiscal 2012. From Colombia we've been attending a market called Oracle Direct, which serves small and medium-sized companies in all of Spanish-speaking Latin America. The numbers are good, and we're in a good time.

BNamericas: Moving to Ecuador, would you say it's different from Colombia?

Pedroza: Yes, Ecuador is a market where the government plays a big role; much of the investment comes from government. There's also movement in retail, banking, but most of the investment is coming from government and it's been that way for a few years now.

BNamericas: In what types of solutions is government investing?

Pedroza: It's very similar [to Colombia]: protecting information, mostly. Increasing the level of transparency is good for everyone.

And the banking sector has been stable. They're also looking to improve client services as they know that stability won't last forever; the rules of the game may change in the future. In industry, the oil sector is very dynamic, and there are telco projects. But the majority of the projects are coming from the public sector.

About Ricardo Pedroza

Ricardo Pedroza has been president of Oracle in Colombia since November 2005. His 20 years of industry experience include senior management positions at Microsoft for 13 years and two years in the commercial area of NCR.

The executive has a bachelor's in engineering and marketing from the Universidad de los Andes and a background in business and marketing from US universities such as the Kellogg School of Management, Columbia Business School and the University of Michigan.

About the company

Under the motto "Hardware and software, engineered to work together," Oracle technology can be found in nearly every industry and in the data centers of all of the Fortune Global 100 companies. Oracle claims to be the first software company to develop and deploy 100% internet-enabled enterprise software across its entire product line: database, business applications, application development and decision support tools.

For fiscal year 2011, ended May 31, Oracle's GAAP total revenues were up 33% to US$35.6bn, while net income increased 39% to US$8.55bn.