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Could Oracle’s tribulations in regulatory hell be a tremendous boon for CIOs?

By annie shum | August 13, 2009

Global CIO: As Regulators Jam Oracle, IBM And HP Snatch Sun Customers

InfoWeek: Aug 10, 2009: While Oracle sits in legal limbo, IBM and HP are blitzing Sun’s customers in a prime example of the superb buyers’ market that exists for CIOs today.

It wasn’t supposed to be this way: Sun’s hardware was supposed to let Larry Ellison and Oracle extend seamlessly and appealingly from the data center to the desktop. Sun’s customers were supposed to feel safe and nurtured in the bosom of one of the world’s most powerful technology companies. Oracle (NSDQ: ORCL)’s new competitors like Hewlett-Packard (NYSE: HPQ) and IBM (NYSE: IBM), which itself had considered buying Sun, were supposed to be sent scrambling for alternative deals. And antitrust regulators were supposed to be mollified by Oracle’s promises that it would play nice with competitors using Sun’s Java and MySQL, allowing the deal to close by summer’s end.

After all, you don’t pay $7.4 billion for a head-case fixer-upper with commitment issues, do you??

But regulatory hangups are dragging out the completion of the deal at least until Sept. 3 and possibly until January, and until that completion is achieved, Sun has to operate as a fully independent company. That means that all the extensive plans for offering customers software-optimized hardware and the full shooting-match of products from applications to disks must remain on hold until European Union regulators decide on Sept. 3 whether to approve the merger or demand an additional four-month review. But IBM and HP, however, face no such lockdown on their activities and both say they are feasting on apprehensive Sun customers as Oracle stews in legal limbo. As we noted last week, an IBM VP says Big Blue has racked up more than 250 customers wins involving Sun customers in the past six months, and during that same time HP says it has bagged more than 100 Sun customers for servers and storage products. Worse yet for Oracle, those haven’t been random cutovers that happen all the time in the broad and often-cutthroat IT marketplace: They came about as the result of very specific and richly detailed migration plans that HP and IBM have launched to decimate Sun’s customer base while the regulators keep Oracle on ice.

But if it’s true that one man’s ceiling is another man’s floor, then Oracle’s tribulations in regulatory hell could well be a tremendous boon for CIOs. Because in these rough economic times, when CIOs are loath to spend but IT vendors are desperate for sales, the programs that IBM and HP have laid out could well become the baseline by which those and other companies will agree to deal with all customers, not just Sun’s. And that could be extremely vital for CIOs who must find creative ways to begin to reverse the 80/20 ratio (80% of IT budget sucked up by internal requirements, leaving only 20% for innovation) in order to be able to fund growth-oriented projects that will be indispensable when the economy turns around.

As JPMorgan Chase CIO Guy Chiarello, one of the world’s top CIOs, recently described the opportunity to InformationWeek’s Mary Hayes:

“For Chiarello, these are good times to get work done, even with the “tremendous pressure” on his IT budget. Chiarello doesn’t know how long the vendor price competition of this economy will last, but the company’s positioned “to make it last forever, because I won’t pay a dollar more [than I paid] for the last thing I bought.” ”

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