How Detrimental Can a 2nd-In-Charge’s Departure Be?
Written By: Predrag Jakovljevic
Published On: August 10 2000
How Detrimental Can a 2nd-In-Charge's Departure Be?
In an unusually terse press release on June 30, Oracle Corporation, one
of the largest providers of software for e-business, announced that Ray
Lane was leaving his post as Oracle's President and Chief Operating Officer.
Lane remains on the Oracle board of directors.
Chairman and CEO, Larry Ellison, thanked Ray for his contributions to
Oracle during his eight years with the company. "I am grateful to Ray
for all of his efforts. He will be missed. We wish him nothing but the
It was a surprisingly small gesture of thankfulness for the man regarded
by many as the true brains and the 'gray eminence' of Oracle Corporation.
Lane has managed the company's day-to-day operations since 1992, a critical
time in Oracle's history. At the time of his appointment, Oracle's reputation
was suffering because of its hyper-aggressive sales force, financial mismanagement,
and the repeated delivery delays of its flagship products. During Lane's
eight-year tenure, Oracle's database business began to dominate the market,
while its application business captured the No. 2 spot, gaining more and
more ground on market leader SAP.
Oracle's CEO and Chairman Larry Ellison is seen as the visionary, Lane
was regarded by Wall Street and many industry analysts as Oracle's ballast,
the one who translates the vision into execution. While Ellison's name
is often associated with terms like 'flamboyant', 'aggressive' and 'ruthless',
Lane's, on the other hand, has often been mentioned in the context of
the company's 'moral compass', professionalism, and customer relationship
nurturing. Therefore, it is no wonder that his resignation has sent a
shockwave and prompted some financial analysts to dramatically downgrade
Oracle's stock, calling Lane's departure "extremely negative news." This,
bundled with a dismal performance from Oracle's database business and
recent catch-up e-business maneuvers by PeopleSoft and SAP, seriously
questions the company's seemingly apparent invincibility of the recent
departure may disturb users and the market in general, and in the short
term affect the company's operations; however, Oracle remains a behemoth
of a company that should be able to overcome the short term bumps in the
long term. There were some indications that Lane's departure was not completely
unexpected within Oracle's top brass. Nevertheless, the choice of Lane's
successor may be one of the most critical decisions Oracle will have to
is chosen, the transition needs to be as smooth as possible. The stability
and counterbalance to Ellison's visionary leadership will have to be preserved.
The market will closely observe the company's future moves, fearing the
possibility of it reverting to business practices that alienated a number
customers and partners during the early 1990s.
While Oracle's customers should not be overly concerned about possible
ramifications of the departure, they are advised to be alert. We recommend
monitoring Oracle's operations and overall strategic direction over the
next few quarters. Existing and potential users currently evaluating Oracle
products should consider both the maturity and the functionality of the
product in their evaluations and make thorough comparisons to competitive
offerings. Any organization evaluating Oracle Applications should only
consider existing proven functionality.
should vigorously insist on a contractual timeframe for delivery of a
solution and future upgrades, and seek reference sites (preferably in
their vertical market space), which have been successful with the product
suite. Each eBusiness component should be put through its paces using
a well-documented set of requirements, scripted scenario demonstrations,
and rigorous reference checking.