Oracle's embarrassment: Dragged down by Oregon Obamacare, antitrust suit

Larry Ellison is doubly saddled this month with Oregon's bungled Obamacare website and a competitor's countersuit

Page 2 of 2

Given that Terix is so small (its annual revenue is less than $50 million), why does Oracle care what the company does? According to Oracle's own financial reporting, hardware sales of Sun products have dropped steadily since 2010, but overall margins on the Sun portfolio have been steady and margins on services have climbed. You don't need an MBA to figure that the only way Ellison and company can keep making money on the Sun acquisition is to squeeze out as much profit as possible from services.

Oracle has a monopoly on Solaris products, which is not in itself a violation of the law. But Terix's suit essentially claims that Oracle is engaging in unfair competition and violation of U.S. antitrust laws. It's an interesting case, but it may be tough for Terix to outgun Oracle. "For every $100 I spend on lawyers, Oracle can spend $100,000," Appleby said ruefully.

For health care enrollment, Oracle fails Oregon

More than six months after it was due to open -- and four weeks after 2014's enrollment deadline -- Oregon's health care exchange is the only one in the nation that still doesn't let the public enroll in coverage in one sitting. The exchange system, called Cover Oregon, is so troubled that Oregon last week called it quits with Oracle, the primary contractor.

A Cover Oregon technology committee recommended that Cover Oregon be scrapped and transitioned to the federal marketplace instead. Oregon CIO Alex Pettit said fixing the existing system would be too costly at an estimated $78 million, would take too long to implement, and would be too risky. Pettit said switching to the federal HealthCare.gov system, which actually works after an emergency repair job, would cost just $4 million to $6 million.

Despite months of problems, Oracle kept assuring the state that everything would be fine, according to reports by Oregon's KATU-TV. On Oct. 2, 2013, one day after the exchange failed to go live, Oracle's official corporate Twitter account sung the praises of the website: "Check out this article from @InformationWeek discussing Oregon's successful #HIX, built on #Oracle technology." Not only was it not a success, it didn't even work.

About three weeks after Cover Oregon went live, Cover Oregon CTO Garrett Reynolds emailed his boss, CIO Aaron Karjala, a damning review by Reynolds' team of Oracle's work. "The review shows that the Oracle development team's quality of the work was atrocious and that they broke every single development best practice that Oracle themselves have defined," Reynolds wrote. "It is one of the worst assessments I have performed in my 18 years of Siebel work." (Oracle bought Siebel years ago and has incorporated it into its various products.)

At that point, Oracle switched gears, admitted the site was a mess, and pointed fingers at Oregon. As far as Oracle is concerned, "Cover Oregon lacked the skills, knowledge, or ability to be successful as the systems integrator on an undertaking of this scope and complexity," Oracle President Safra Catz said in a letter to Cover Oregon.

No doubt, there's blame to be had at Care Oregon. Remember that positive InformationWeek story? Its report relied on statements from Cover Oregon CIO Karjala, who in the weeks before its launch gave no indication of major issues and in fact crowed to the press about the care his team took to do it right, surely as part of an Oracle-sponsored media effort. Karjala has since resigned from Cover Oregon at the request of the state's governor, after a review found significant management failures.

This is not so much a case of bad Ellison as a reality check that big, bad Oracle is like any other systems contractor when it comes to executing complex projects. Hapless clients are part of the reality in that business -- otherwise they wouldn't need prime contractors in the first place. Oracle's been in that business a long time and prides itself as an alternative to a typical, inside-the-Beltway dysfunctional government contractor kept alive by cronyism.

There are plenty of complexities in both issues, and as they say, mistakes were made by more than one party. But at bottom, Oracle could have done better in both situations, which is why it's been a bad month for both Ellison and Oracle.

I welcome your comments, tips, and suggestions. Post them here (Add a comment) so that all our readers can share them, or reach me at bill@billsnyder.biz. Follow me on Twitter at BSnyderSF.

This article, "Oracle's embarrassment: Dragged down by Oregon Obamacare, antitrust suit," was originally published by InfoWorld.com. Read more of Bill Snyder's Tech's Bottom Line blog and follow the latest technology business developments at InfoWorld.com. For the latest business technology news, follow InfoWorld.com on Twitter.

| 1 2 Page 2
From CIO: 8 Free Online Courses to Grow Your Tech Skills
View Comments
Join the discussion
Be the first to comment on this article. Our Commenting Policies