2 years in, Hurd seeks firmer footing
Oracle OpenWorld is supposed to be the software company’s seminal pep rally of the year, a four-day conference in which executives fire up employees, partners and customers.
But CEO Mark Hurd’s keynote Monday morning at Moscone Center hit a somber note. Even before Hurd spoke, the Redwood City company showed a video from Moody’s Analytics chief economist Mark Zandi, who argued the global economy is facing serious problems.
“That weighs on all of our customers,” Hurd said. “The average tenure of a CEO today is just 18 quarters. Why? It’s hard to grow revenue. And Wall Street wants you to grow. They don’t care about your personal issues. They don’t care about your health. Just grow.”
Eight quarters into Hurd’s tenure, growth remains a challenge for Oracle, which finds itself behind in the race to develop enterprise software that can store and manage data over the Internet. The company has been furiously trying to catch up with Salesforce, Microsoft and Amazon in cloud computing, and move away from being installed on a company’s own servers.
Chairman and founder Larry Ellison’s decision in 2010 to hire Hurd was controversial. Hurd, if you recall, resigned from HP that year amid an investigation into claims that he sexually
harassed contractor Jodie Fisher. HP’s board cleared Hurd of sexual harassment but found that he improperly filed expense reports.
When Oracle promoted him four years later, Ellison announced that Hurd would share the CEO title with longtime executive Safra Catz. Such arrangements rarely work, especially when you consider Ellison remains a larger-than-life figure at the company.
But Hurd has surprised even some of his harshest critics. As an executive with a healthy ego, Hurd has nonetheless proven to be a loyal subordinate to Ellison. And he knows how to butter up the boss. At OpenWorld, Hurd conducted a multiple-choice survey about who the audience thought was best chief technologist in the business. All the options were Ellison.
At HP, Hurd was known as a cost-cutter who boosted profit at the expense of innovation. But under Hurd, Oracle has heavily invested in cloud computing. Last year, Oracle spent $5.2 billion on research and development, up from $3.7 billion in 2011.
“We’ve rewritten all of our software for the purpose of going all in on the cloud,” Hurd said.
Most importantly, Hurd has been trying to modernize the company’s sales teams, said Jill Rowley, an expert in software sales and a top executive at Eloqua when it was purchased by Oracle in 2013. (Rowley left Oracle a year after the acquisition.)
In the past, if Oracle wanted more sales, it would just hire more salespeople, Rowley said. The company also focused on killing the competition instead of winning customers. But today, just as Hurd wants companies to use Oracle software to boost efficiency, he wants sales teams to embrace technology to become more productive, she said. It’s a far cry from the old-fashioned, bug-you-until-youbuy sales culture.
For example, Oracle salespeople are using Web tools to reach smaller companies while reserving in-person visits for larger corporate clients, Rowley said.
“Mark Hurd sees the shift coming that Oracle must respond to,” reaching customers through mobile technology and social media, Rowley said. “He’s trying to move Oracle that way.”
In fiscal 2016, Oracle said cloud revenue totaled $969 million, or 11 percent of total revenue, compared to $611 million, or 7 percent of total revenue, from the previous year.
But the company has been struggling to increase profit margins. And just like the broader global economy Hurd spoke of during his keynote address, Oracle has not seen big gains in overall revenue.
“It is clear that forecasts for Oracle have been on a declining trend for some time,” Mark Murphy, an analyst with JPMorgan, wrote in a research note. “The narrative that Oracle could execute a cloud transition while steadily improving margins has fallen by the wayside.”
Wall Street is still struggling on how to evaluate companies like Oracle, Rowley said. She also suggests that Oracle’s complicated leadership structure of Ellison, Hurd and Catz muddles the company’s overall message to investors.
“Mark is doing a real good job in the environment has to operate under,” Rowley said.