Oracle prepares for life after Ray Lane
BY CECILIA KANG
Mercury News
sjmercury.com
Five years ago, Ray Lane, then the top sales executive for Oracle Corp., flew to Detroit to make a sweeping sales pitch to auto giant General Motors Corp.
Accompanied by one product manager and one sales representative, Lane had set out to sell GM all the software needed to run the automaker's vast multinational operations -- from financial planning and human resources management to the database used to manage the company's reams of internal business data.
However, when the three Oracle employees arrived at GM's headquarters, they were met by hostile technicians and managers who felt burned by the Redwood Shores-based company, which had failed to deliver on past promises.
Unfazed, Lane steadily worked his way through a string of meetings all the way to the CEO. Lane was able to answer nearly every question fired at him -- from technical details to how Oracle's software would fit into GM's business strategy.
By the end of the day, the GM and Oracle were in serious discussions about a contract.
With Lane's sudden resignation Friday as Oracle's president and chief operating officer, many observers are now contemplating what effect his departure will have on Oracle, the world's second-largest software maker.
Although Oracle is still headed by its flamboyant founder, Larry Ellison, Lane was the one who focused on finding solutions to customers' real-world problems.
``Larry has always been the visionary at Oracle, and Ray has always been able to translate that vision to the customer,'' said Dennis Moore, a vice president of marketing at Oracle between 1990 and 1997 and the product manager who accompanied Lane on the GM trip. ``He doesn't just sell something, then leave. He tries to go in and solve a company's problems and let them know that Oracle is committed to them.''
Analysts and former executives said Lane's departure may leave a leadership vacuum at the top of Oracle's huge sales force. ``The best judge will be Oracle's results over the next four to six quarters,'' said Wendell Laidley, an analyst at Credit Suisse First Boston in San Francisco.
Lane didn't return repeated phone calls over the past few days, and through a spokeswoman, Ellison declined requests for an interview.
Oracle officials didn't say what Lane will do next, although analysts speculate that he will become a venture capitalist or return to his roots in management consulting.
Lane was behind recent big deals like Oracle's participation in the online marketplace created by the Big Three automakers. He made it a point to meet personally with the heads of Oracle's many Fortune 500 clients, developing deep relationships with CEOs that extended for years.
Investors are apparently worried about the impact of Lane's departure. In light pre-holiday trading Monday, Oracle's stock fell 5 percent, or $3.88, to $80.19, although the stock price has quadrupled in the past 12 months.
``Given what Ray achieved, concerns in the market are legitimate,'' said Chuck Phillips, an analyst at Morgan Stanley Dean Witter in New York who has followed Oracle since 1986.
But Phillips and others noted that many of Lane's best practices are now part of Oracle's DNA. And in the eight years since he joined the company, Oracle has developed a strong executive team that will be able to take over where Lane left off.
Some observers said Lane was gradually lessening his responsibilities at Oracle in anticipation of his departure. During that time, executives like Executive Vice President Gary Bloom have become much more visible within the company and to the public.
Ellison's team of top executives, analysts said, are firmly planted to take the company into its next big phase: providing software to help companies run their businesses over the Web.
Lane joined Oracle at a critical time. It was 1992 and the company -- known for its hyper-aggressive sales force and financial mismanagement -- was struggling and had repeatedly delayed a major upgrade of its flagship data management software. Oracle needed a seasoned manager to come in and clean things up.
With a more than a decade experience at consulting firm Booz Allen & Hamilton, Lane brought an even-keel conservatism to Oracle. ``Ray always brought a certain corporate discipline to Oracle's growth,'' said Bob Austrian, a securities analyst at Banc of America in San Francisco.
Indeed, Lane's influence on his sales team and other management was legendary within the company, according to Moore.
At a global management meeting in 1996, Lane spoke using slides that displayed one word at a time in gigantic 30-foot high letters. The first slide was ``War,'' and the next few included ``Victory'' and ``Family.''
The point was to rile up his managers to take on Microsoft Corp., which was competing directly with Oracle with its own database software product. And it worked: Lane's speech inspired yelps and cheers and a standing ovation from the 450 employees. ``People were spellbound,'' said Moore.
Lane's resignation had been expected for some time, as other leading tech companies, including Hewlett-Packard Co. and Compaq Computer Corp., approached him about taking their CEO slots.
More recently, Lane, who has a new family with a young child, had expressed a desire to step back from the hectic day-to-day operations at Oracle.
``It wasn't a surprise that Ray left,'' said Phillips. ``The first question to Ray at every analyst meeting was `When are you leaving?' ''
But the sudden announcement of his resignation late last Friday and Ellison's terse statement about the departure of his second-in-command was unsettling, they said.
Ellison told reporters over the weekend that he won't appoint a successor to Lane but will divide the former president's duties among three executives: Bloom, Chief Financial Officer Jeff Henley and Executive Vice President Safra Catz.
Bloom, 38, has steadily climbed the ranks of Oracle since joining the company in 1986. He is known as a technology visionary and heads Oracle's software development, although he lacks sales experience.
Most recently, he made a name for himself by using Oracle's technology to shave $1 billion a year from its costs -- prompting Ellison to double the target to $2 billion. The project is a living proof of what Oracle's software can do for a big company.
Henley, 54, who joined Oracle in 1991, is credited with cleaning up the company's balance sheet over the years. ``Jeff brought financial control to the company, and Ray injected business control,'' said Phillips.
With years of financial experience at food service company Saga Corp. and at Pacific Holding Co. in Los Angeles, Henley forced the debt-burdened company to swallow the bitter pills of cost-cutting and fiscal conservatism. A couple of quarters after his arrival, Henley's work was apparent: Oracle broke out of a pattern of losses and reported earnings of $13.6 million, compared with a loss of $1.3 million the previous year.
Catz, 38, joined Oracle in April 1999 and is largely unknown to outside analysts. Prior to joining Oracle, she was an investment banker at Donaldson, Lufkin & Jenrette for about 13 years. |
