The Database Report – January 2008

Here we are at the end of one year and the beginning of another; and, all in all, it was an eventful year in the database marketplace. Here’s hoping 2008 is just as interesting! But before we
embark on the New Year, let’s take some time to review the goings on in the DBMS market place during the fourth quarter of 2007.

Business Intelligence Market Consolidation

It seems like this year will end up being viewed as the year that the business intelligence (BI) market consolidated. With Oracle buying up Hyperion earlier in 2007 and the two big remaining
independent BI vendors being bought this past quarter the future of BI is now solidly in the hands of the big boys.

OK, so let’s review what happened this quarter. First of all, in early October SAP announced its intention to acquire Business Objects. My first impression was that this looked like a direct
reaction to Oracle’s purchase of Hyperion. SAP’s purchase price for Business Objects is in the neighborhood of $6.8 billion, a 20 percent premium over the closing share price for
Business Objects prior to the announcement.

In an open letter to Business Objects’ customers, Henning Kagermann, SAP’s CEO, indicated that SAP is committed to operating Business Objects as a stand-alone entity based on open
standards within the SAP Group. This should quell any potential fears that SAP might integrate the new BI functionality into its ERP business application software such that it could not be used
elsewhere. Of course, that would not be a wise decision and SAP is smart to announce this intention as early as possible.

Kagermann goes on further to stating, “After acquiring control of Business Objects, SAP Group will protect your investments in Business Objects solutions just as we protect the investments of
the SAP customers. While we expect to bring additional value to all customers through this acquisition, we want to assure the Business Objects customers that the products you have purchased from
Business Objects, or intend to purchase from Business Objects at this time, will receive continued support after the close of the transaction in accordance with your contract with Business
Objects.”

This is indeed good news because there is significant overlap in the performance management capabilities of Business Objects and the OutlookSoft capabilities SAP previously acquired.

But this deal does stoke the fires of the ongoing competitive battles between Oracle and SAP. Business Objects’ market share is larger than that of Hyperion; Business Objects is three times
larger than Hyperion was. So many were expecting Oracle to launch a competitive bid or react in some way. But that did not happen.

Instead, IBM made a move in early November snapping up Cognos, the remaining big player in the BI market. The price tag? $5 billion. Cognos will be the 23rd IBM acquisition in support of
its Information on Demand strategy. Most of the acquisitions were not of the size of Oracle’s acquisitions of PeopleSoft and Siebel, but in terms of sheer number, IBM’s acquisitions
rival Oracle’s.

Back to the Cognos deal: Cognos has more than 25,000 customers and about 4,000 employees. And it will be interesting to see how IBM plans to integrate the Cognos offerings into its significant
information management portfolio. Operationally, IBM has indicated it will integrate Cognos as a group their Information Management Software division, to be led by Rob Ashe (Cognos’ current
CEO) and reporting directly to General Manager Ambuj Goyal.

During a press conference, Rob Ashe said, “On the business and customer side, we couldn’t be more excited about how IBM plans to approach this marketplace and that’s all about growth.” Ashe
later added, “We’ll be able to do a lot more than we could on our own given IBM’s global reach.”

What possible problems loom for IBM here? Well, there is some overlap with IBM’s Alphablox and Cognos’ PowerPlay and TM1 Engine. Something will have to be done there. And the ETL
capabilities of Cognos will almost certainly give way to IBM’s DataStage.

OK, so what do all of these moves mean? I think it means that SAP and IBM decided they better act before it was too late. For years both of these companies were growing their BI portfolios
internally, bolstered with some small, strategic acquisitions. This significantly changes that strategy. And I think neither would have happened without Oracle’s earlier acquisition of
Hyperion. That said, I think that both SAP and IBM bested Oracle in terms of the companies acquired.

The next steps will be to clarify the partnering. IBM’s partnership with Business Objects is likely to change, as will the Cognos relationship with Informatica. But it is way too early to
predict exactly how they will change (or if they will just wither and die).

And what has Oracle been up to with their BI offerings since the acquisition of Hyperion? Well, their plans rotate around a new product called Oracle Business Intelligence Enterprise Edition Plus
(OBIEE Plus), which was released after Oracle acquired Hyperion. OBIEE Plus bundles Oracle’s BI suite (based mostly on Siebel technology) with Hyperion System 9 Essbase BI tools, including
Interactive Reporting, SQR Production Reporting, Financial Reporting and Web Analysis.

Which brings us to the ultimate question: what is the future of the BI? Right now, the major players are all behemoths: IBM, Oracle, and SAP. The remaining pure play BI vendors include SAS,
Actuate, Information Builders, and MicroStrategy. I would not be surprised to see HP acquire one of these. And, of course, Microsoft is a possible acquirer, too, but they have a nice BI strategy
and offering already, so that would be unlikely in my opinion.

Stay tuned though, because next quarter could see more consolidation.

Oracle Continues Its Acquisitive Ways

As the BI market was consolidating on one front, Oracle continued to shop on other fronts. In early October, Oracle announced that it planned to acquire LogicalApps. LogicalApps, based in Irvine,
CA, makes automated governance, risk and compliance (GRC) software.

“Regulatory compliance and the associated risk is a top priority for business executives today,” said Oracle President Charles Phillips. “This acquisition underscores Oracle’s commitment to
building a comprehensive, open and integrated GRC application suite. Companies will now be able to simplify compliance with multiple, complex regulatory requirements while improving business
operations.”

The move into acquiring compliance software is a bit different for Oracle, which until now had focused on the acquisition of software in three categories: applications, database, and middleware.
But the LogicalApps technology can be used to add real-time policy enforcement capabilities to the Oracle GRC Suite: a set of applications based on technology Oracle acquired when it bought
Stellent Inc. in late 2006.

Financial details of this transaction were not disclosed.

Oracle also made waves this quarter with a proposed acquisition that did not happen. On October 9th, Oracle delivered a letter to the Board of Directors of BEA Systems, Inc. with a proposal to
acquire BEA for $17.00 per share in cash. This offer was at a 25 percent premium over the previous day’s closing price of $13.62. However, the bid, which worked out to $6.7 billion, caused BEA
stock to jump up 36 percent to $18.56, so BEA rejected the offer, saying it significantly’ undervalued the company.

It would seem that BEA was hoping to drive up the price even further, perhaps hoping even for a competitive bid from HP, IBM or SAP. But none were forthcoming. One of the things that puts BEA
Systems “in play” is that Carl Icahn owns 13.2% of BEA and he is pushing the company to seek a buyer to spur revenue growth. BEA’s software license sales fell 9% last quarter.

At any rate, in late October BEA countered Oracle’s offer asking for $21.00 per share. The company, in a statement said “We continue to believe that Oracle’s unsolicited proposal to acquire
BEA at $17 per share significantly undervalues BEA, and is therefore not in the best interests of BEA shareholders.”

But Oracle was not biting. In a letter to BEA’s board, Oracle stated that it was “unwilling to increase” its offer of $17 per share. “The $21 per share price is a multiple of nearly eleven
times BEA’s last twelve months’ reported maintenance revenues,” wrote Oracle President Charles Phillips. “Nobody would seriously consider paying that kind of multiple for a software company
with shrinking new license sales.”

And then the deadline on Oracle’s offer expired. BEA Systems remains an independent company and its stock was still trading under the $17 offer price in early December. But I would wager a
guess that we have not heard the last of the acquisition attempts of BEA Systems. Indeed, Oracle issued a statement which, in part, read: “The BEA shareholders should not assume that Oracle will
renew its $17 per share offer in the future…(but) many things can change: BEA’s business might materially weaken, the stock market can fall further from its recent record highs or Oracle
may have committed its capital elsewhere.”

But the BEA tussle was not the end of Oracle’s 2007 acquisitions. In early December, Oracle bought Moniforce, a provider of Web application performance management software based in The
Netherlands. The purchase price was undisclosed, but Oracle stated that it intends to retain Moniforce’s work force.

The Moniforce software measures the performance and availability of Web applications from the point of view of the user. Oracle plans to use capabilities within the Moniforce offerings to add user
experience evaluation to its Enterprise Manager tools.

An Update on the Oracle, SAP Lawsuit

There was some news regarding the on-going Oracle lawsuit against SAP this quarter, too. For those who are not familiar with the lawsuit, it all started earlier this year when Oracle sued SAP
claiming that the German software firm stole Oracle’s trade secrets. Basically, the claim is that TomorrowNow, a subsidiary of SAP, had accessed Oracle’s software documentation
inappropriately. If you want to read the complaint in its entirety you can find it here: http://www.oracle.com/sapsuit/complaint.pdf.

So what happened this quarter? Well, in mid-November, the founder of TomorrowNow, Andrew J. Nelson, resigned. Earlier in November, Nelson, who was also president and CEO of the SAP subsidiary, had
earlier in November sent out a letter to customers stating that TomorrowNow was in the process of implementing “an important business change designed to benefit both our clients and TomorrowNow.”
Additionally, several other members of the senior management team also resigned. Mark White, who was appointed executive chairman of TomorrowNow in July, remains with the company.

At the same time in November, SAP said in a statement that it is examining its options regarding TomorrowNow, including a potential sale of the company. At this point, I’m guessing that SAP
wishes it had never acquired TomorrowNow. Then, on the day after Thanksgiving, TomorrowNow discontinued its current customer support program. This move was problematic for its existing customers
because it causes a service interruption for those customers who had yet to establish an alternative service provider.

What about the actual lawsuit, you may ask? Well, late in the third quarter the trial date was set for February 9, 2009. Oracle was looking for a September 2009 start, so SAP seems to have scored
an early win. But it is a procedural win only. Additionally, the judge placed some limits on the trial: no more than 20 witness interviews for each side and three forensic experts each. So what?
Good question. To me it seems like the likelihood of a pre-trial settlement is slim to none. We will probably have at least another year of these two companies squawking at each other in the press
and this will most likely go to trial. But won’t it be fun to watch?

News From the Financial Front

In financial news, Oracle’s first quarter fiscal results were impressive. Earnings per share were up 28 percent to $0.16, compared to the same quarter last year; and total revenues were up 26
percent to $4.5 billion. Quarterly net income was up 25 percent coming in at $840 million. Total software revenues were up 26 percent to $3.5 billion with the all-important new software license
revenue up 35 percent at $1.1 billion. Database and middleware new license revenues were up 23 percent and applications new license revenues were up 65 percent.

“We reported new software license revenues up 35%, the strongest growth of any quarter in ten years,” indicated Safra Catz, Oracle President and CFO. And Larry Ellison noted “Our Q1 database and
middleware new license sales growth rate of 23% was the highest in seven years.”

In early October, IBM announced its third-quarter 2007 earnings, which came in at $1.68 per share, up 16 percent compared with earnings of $1.45 per share in the third quarter of 2006. Third-
quarter income from continuing operations was up 6 percent at $2.4 billion compared with $2.2 billion in the third quarter of 2006. And total revenues of $24.1 billion increased 7 percent over the
third quarter of 2006.

But remember IBM has three very large business segments: services, hardware, and software, so let’s focus on the software component of IBM. Software revenues were $4.7 billion, an increase of
7 percent compared with the third quarter of 2006. And revenues from IBM’s middleware products, which include WebSphere, Information Management, Tivoli, and Lotus came in at $3.6 billion, up 6
percent versus the third quarter of 2006. Focusing just on the Information Management software, which includes DB2, revenue increased 9 percent.

What about Microsoft? Well, late in October Microsoft reported its strongest first quarter in eight years. First quarter revenue was up 27 percent at $13.76 billion as compared to $10.81 billion
for the same quarter last year. And net income for the quarter was $4.29 billion, representing a 23 percent increase over the $3.48 billion of a year ago. Microsoft’s earnings per share for the
quarter came in at 45 cents, beating analyst estimates of 39 cents per share.

Evidently Microsoft has now shipped 88 million copies of their Vista operating system, which according to the company is almost double the number of copies of Windows XP shipped in the same amount
of time. Although much of the financial good news was attributed to the Vista operating system and the launch of the XBox 360 game Halo 3, the news on the DBMS front was very good, too. Unit and
revenue growth for Microsoft SQL Server were both up more than 15 percent.

Looking ahead, Microsoft indicated it expects to report revenue in the range of $15.6 billion to $16.1 billion for its second quarter, which ends December 31, 2007.

Big Database Conferences

As is the case every year, the fourth quarter boasts many large DBMS and data specific industry conferences. The biggest of these conferences is most certainly Oracle Open World, held in San
Francisco, CA. This year Oracle Open World was held the week of November 11, 2007.

As always, Oracle Open World provides a combination of education, loud marketing, and partying. This year’s report attendance came in at 42,000 high techies looking for news and specs on
Oracle’s database and applications.

Every year, Oracle brings in a marquee name to provide a free concert for the event’s attendees; past entertainers have included Journey, Cheap Trick and Elton John. This year’s musical
entertainment was provided by Billy Joel and Stevie Nicks with Mick Fleetwood.

OK, so right about now you are probably asking something like “Hey, did anything worth talking about actually happen at Oracle Open World this year?” Well, sorta. Larry Ellison took the
opportunity to tout Oracle’s Fusion applications. “Starting in 2008, virtually all of our new applications that come out are Oracle Fusion Applications, and are built on
industry-standard middleware with a service-oriented architecture,” explained Ellison. “With Oracle Fusion Applications, we are focused on three customer requests: they must coexist
with existing applications; they have to deliver real, measureable business benefits, more than just cool technology; and they need to be available via software as a service, in addition to on
premise.”  And Anthony Lye, senior vice president, CRM On Demand, ran a brief product demonstration of the first three Oracle Fusion Applications: Oracle Sales Prospector, Oracle Sales
References, and Oracle Sales Tools.

Ellison participated in another interesting offering on Sunday evening, when he delivered his behind-the-scenes take on the history of Oracle Corporation. Ellison talked about the founding of the
company, and how it grew from a four-person startup to the huge enterprise software company it is today.

Various talks and presentations also hyped up new Oracle Database 11g features like the Partition Advisor and improved compression. Virtualization also got a big push from Oracle at the conference.
The company announced that it was entering the virtualization market with a virtual machine hypervisor based on Xen. Xen is a free software virtual machine monitor that runs on a host operating
system and allows several guest operating systems to be run on top of the host on the same computer hardware at the same time.

Oh, and there were numerous keynote addresses by many industry luminaries. Keynoters included Paul S. Otellini (President and CEO, Intel Corporation), Mark Hurd (Chairman and CEO, HP), Hector de J.
Ruiz (Chairman and CEO, AMD), Jonathan Schwartz (CEO and President, Sun Microsystems), Michael Dell (CEO and Chairman of the Board, Dell), as well as by most of Oracle’s key executives.

What about the other DBMS conferences? First up we have IBM’s Information on Demand conference, IBM’s premier event covering all of its information management software. IBM’s
conference was kicked off by Dana Carvey who served as Master of Ceremonies and comic relief for the keynote that opened the conference. Other IBMers followed including Dr. Ambuj Goyal, General
Manager of IBM Information Management.

Although IBM’s Information on Demand conference is decidedly smaller scale than Oracle Open World, IBM’s conference is growing in size each year. With over 900 sessions and in excess of
6000 attendees the Information on Demand conference is probably the second largest and most important data-focused event after the Oracle Open World.

The theme of the conference was “Act. Right. Now.” and IBM did a fine job of educating and entertaining attendees on ways to take control of their growing data and information assets. But
there were no big announcements made at the event.

Additionally, the annual European event for the International DB2 User Group (IDUG) was held in November 2007. This event is much, much smaller in scale than Information on Demand, but it focused
on DB2, as opposed to IBM’s entire portfolio of information management offerings.

For SQL Server users the annual PASS conference was held late in September 2007. PASS, which stands for the Professional Association for SQL Server, hosted their annual event which has become the
largest user-run educational event exclusively dedicated to SQL Server. The event was held in Denver, Colorado and was attended by over a thousand SQL Server users. To read more about what happened
at this event check out the exhaustive coverage at http://www.utcoverage.com/PASS/2007/.

New DBMS Releases and Announcements

This quarter was also graced with multiple technology announcements worthy of your attention. In early October IBM unveiled version 10 of IMS, their 40 year old hierarchical database management and
transaction system. The new release delivers enhanced XML and Web services capabilities making it easier for customers to evolve existing business critical applications to Service Oriented
Architectures (SOA).

For those of you dismissing IMS as ancient technology, keep in mind that nearly ninety five percent of Fortune 1000 companies use IMS for their most critical data management needs with more than 50
billion transactions running through IMS databases on a daily basis. Additional new features in IMS 10 include:

  • Broader XML and Java Tooling Encourages new application development and expands connectivity by supporting open standards such
    as Web 2.0, XML, SOAP, Java, and JDBC.

  • Dynamic Resource Definition Eases manageability, simplifying installation and operations which reduces total cost of
    ownership

  • Enhanced Database Recovery Control, Multiple Systems Coupling and Security  Increases scalability with availability,
    recovery, performance, security and capacity enhancements

IBM also unleashed DB2 9.5, also known as Viper 2 this past quarter. DB2 Viper 2 offers a range of  technology advances including new pureXML data management capabilities that deliver up to a
200 percent improvement in XML data transaction performance and significant storage savings. Early customer testers of the transactional XML feature, combined with Viper 2’s leading deep
compression technology, have reported up to a 500 percent reduction in the amount of storage space required to store XML data.

Viper 2 also includes new automated features, such as autonomic memory management and integrated automated failover and backup, aimed at simplifying system setup and slash downtime. In addition,
DB2 9.5 offers compliance features and tools modeled after the audit and encryption capabilities employed by DB2 on IBM System z.

Announced the same day as Viper 2 was DB2 Warehouse 9.5, built upon the new DB2 Viper 2 data server. DB2 Warehouse 9.5 offers improved business intelligence combining advanced, embedded analytics
and high performance. And to bolster DB2’s warehousing capabilities, in late November IBM introduced the DB2 Warehouse Performance Management Suite. This suite of integrated tools provides
capabilities for reporting and analysis of data and system utilization that will help enterprises more quickly and easily deploy, manage and scale business intelligence and data warehouse
applications.

Oracle continued with its 11g roll out by delivering Oracle Database 11g on Windows. It was previously only available on Linux and Unix systems. The wait was worthwhile, though, because in addition
to performance improvements, the Windows version features improved integration with Microsoft’s platform on both the administrative and developer levels.

And finally, at least in terms of new DBMS versions, a new beta release of PostgreSQL was delivered in the fourth quarter of 2007. The first beta of PostgreSQL Version 8.3 offers a plethora of new
and improved features including improved performance consistency, synchronized scans, the ability to be built with Visual C++, up to 20 percent more efficient storage and fully integrated advanced
text search with an improved API.

Oracle SQL Developer 1.2

Late in September 2007, Oracle also unleashed the latest version of their free SQL Developer tool including several new features and capabilities for simplifying the migration of data from
Microsoft and MySQL DBMSs to Oracle.

The new Migration Workbench tool lets users browse or move data, database objects, tables and programs from Microsoft SQL Server, Microsoft Access and MySQL databases to Oracle databases. Although
it might seem like a small detail, this is actually rather significant.

SQL Developer 1.2 contains parsers that recognize Transact-SQL (or T-SQL) syntax, along with statement translators that enable the pasting of T-SQL code into an editor and changing it into PL/SQL
code.

Oracle SQL Developer 1.2 supports Linux, Max OS X and Windows and is available for free download from the Oracle Technology Network at http://www.oracle.com/technology/software/products/sql/index.html.

The Oracle Executive Shuffle

And since we like to keep an eye on key executive changes here, it is worth noting that John Wookey, senior vice president for application development and head of Oracle’s applications
strategy, is no longer with the company. Thomas Kurian, the senior vice president responsible for Oracle’s Fusion Middleware, has moved into his job. Oracle officials declined to comment on
the executive switch.

Customers who are heavily invested in Oracle’s Fusion project should probably monitor this situation to ensure that it does not cause changes to the strategy or delays in the development
cycle.

And over in Asia Pacific, SAP appears to be having some success poaching Oracle executives. In late November SAP appointed former Oracle senior VP of applications Mark Gibbs to the position of
president and CEO of SAP Asia Pacific. Earlier SAP Asia Pacific appointed Chris Hummel, former Oracle VP of services global sales support to head up SAP’s regional marketing operations.

MySQL Gets All Googly

And finally, we take a look at news from the MySQL front. In late October, MySQL unveiled its software roadmap for 2009. Interestingly, it contained code from Internet search giant Google.

Although Google is secretive about the technology underlying its services, it is widely known that Google is one of MySQL’s largest users. Evidently Google has worked to customize MySQL to meet
several of its specific needs, including improved database replication and tools for monitoring high volume transactions. And MySQL plans to include some of these capabilities in future versions of
its MySQL database software.

So Long ‘07

And so ends another year… and another edition of The Database Report. Be sure to check in with The Database Report each quarter for our ongoing review of the news and issues impacting
database users and the DBMS market.

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About Craig Mullins

Craig S. Mullins is a data management strategist and principal consultant for Mullins Consulting, Inc. He has three decades of experience in the field of database management, including working with DB2 for z/OS since Version 1. Craig is also an IBM Information Champion and is the author of two books: DB2 Developer’s Guide and Database Administration:The Complete Guide to Practices and Procedures. You can contact Craig via his website.

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