Oracle wins in the Gulf

By WILLIAM MILLER DUBAI
Build a better mousetrap, goes the saying, and the world will beat a path to your door. That's a nice idea - that the secret to success is innovation - but is it reality?

When it comes to information technology, the answer is no, or at least not always. Think about it: what do today's IT clients want most? Not necessarily the very latest technology, but the technology that works with everybody else's technology, that will make doing business easier and faster and, most of all, that won't crash and cause disruptions.

Domination. Hand it to the Oracle Corp., then, for its brilliant new marketing campaign. The California information-management software giant - with annual revenue in excess of $10.8 billion and a dominating presence in the Middle East - has just one word to say about its products. "Unbreakable" strikes home with clients everywhere, especially after September 11th, even as it promises the impossible.

Oracle's enormous success surely owes something to its superior technology. But the company has also shown a flair for salesmanship rarely seen in the region. Take the case of Dubai, starting with Oracle's winning the rights to host the Tejari.com platform at its own facility in the United States. Tejari, a government B2B, is one of the Gulf's highest-profile e-ventures, an online marketplace floated in early 2000 by Sheikh Mohammed bin Rashid Al Maktoum, Dubai's crown prince and the UAE's defense minister.

Oracle rolled out the red carpet to get itself on to the project. Larry Ellison, the company's CEO, was enlisted to woo Sheikh Mohammed and his project team. Late last year, Oracle hit a new high by bagging a contract for providing the platform for Dubai's e-government. "It is a very different Oracle that the industry is seeing now," says a regional marketing manager with a leading US software company. "Earlier, it was just not as much in the limelight, and there were equally good vendors competing for the same space.

"Looking back, the Tejari victory was a major coup for Oracle, despite it being a well-known fact that it had to heavily subsidize to get in on the ground floor. It's standard practice for IT vendors to get large-impact customers by offering them better terms. But they used this leverage to get to the other Dubai-based enterprises, which had to align themselves with Tejari, whatever the cost imperatives for their own organizations."

With Tejari, every procurement and tendering procedure that the various Dubai government departments enter into is done online. Even before Tejari became operational, a host of Dubai government departments had signed on. Dubai government-owned entities and the top of the private sector soon followed. "Tejari was one initiative that could not be allowed to be fail under any circumstances," says a senior official closely associated with the project. "The Dubai authorities had a lot riding on it. Local enterprises simply had to be seen to be getting onboard early."

This is where Oracle made its brilliant play of pitching its wares, say IT industry sources, not without a touch of envy. "There was one Dubai organization still using legacy applications," says a senior IT manager with a Dubai government department, "and they were doing quite well despite that. Sufficient pressure was subtly put on it to shift to Oracle, the reasoning being that, otherwise, the organization would not be able to use Tejari's services."

That is where the substantial cash flow comes in for Oracle. Even if the database was subsidized, the applications that made up the whole procurement process possible came with a high markup. "We could have gone in for a compatible system from an Oracle competitor, possibly Sage," the IT manager added, "which was available at a third of what it cost us for Oracle. But we had no choice; our costs are up because of the premium that comes for Oracle implementation and the people they provide."

In its marketing campaigns, Oracle hammers home the promised savings that will accrue to clients over the long term by jumping on the company's bandwagon. But regional enterprises tend to wait to see how a software product is received in the United States before they buy it. This process usually takes six months; this was not a luxury afforded by Oracle to its many captive customers.

Diagnosis. "There were a lot of bugs with the early versions," says a senior systems manager with a leading Dubai government department, "and it would surprise us if Oracle doesn't come out with many updates and at least two or three patches a month. If one were to diagnose these solutions in detail, there wasn't anything that was exceptionally good about them, despite Oracle proclaiming their superiority."

Again, Oracle used its clout and its Tejari connections to get its way and quiet any dissenting voices. Since Tejari has confirmed plans to enlarge its operations to cover key Gulf markets and India, Oracle should continue to cash in - this is a perfect route for the software developer to tap into a huge market.

With the US and Western European markets in the throes of recession, the Middle East - which has been a hive of activity as far as IT investments go in the last three years - is seen as the perfect territory by IT vendors to peddle their wares. At the same time, Middle East businesses and governments are increasingly savvy about buying what they actually need and not just what vendors tell them they need. In this case, though, there may not be all that much of a distinction.

Last year, Oracle scored big with the National Bank of Dubai and Kuwait University. In mid-December, the Dubai Department of Economic Development went live with its e-government portal, based on the Oracle Internet platform. A month earlier, Oracle announced that it had been selected to provide an e-business suite for government-wide resource planning, affecting more than 40,000 government employees in 25 different departments. Implementation of the project will take about three years.

Each new contract, big or small, comes with the promise of future contracts with client partners, or with their own clients. If you want to do business in, for instance, Dubai, your company will soon have no choice but to own the technology to buy and sell there. That should prove the real secret behind Oracle's future success. After all, building a better mousetrap is all well and good, but what really matters is catching the mice.