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Ray Lane on Software

March 25th, 2004 · No Comments

Excerpts from a News.com interview with Ray Lane (formerly, President of Oracle, and now a VC with Kleiner Perkins):

Now, customers are looking for simplicity, integration and security across releases. They want standards-based software that doesn’t require the labor expenditure of the past. Software CEOs have two choices: They can try to impose their proprietary methods on the market or they can adopt a new service-based approach to providing and maintaining software.

In the past, when customers have asked for improvements, we’ve said, “Replace your old system with this new system.” That’s not true anymore. You’ve got to use the existing infrastructure and take advantage of information already there. During the last 10 years, we did modernize the infrastructure. Now, I can actually do the renovation. I don’t have to knock it down.

An Indian company is a better renovator. They’re going to be a real player in the renovation market, because their business model has the advantage in the renovation market. It’s like the home-building world. Most new home builders are not renovators, and most renovators are not new-home builders. They require different skills. But renovation is just as important as building new homes.

The new enterprise has to do five things: respond and deliver to support demand; grow or shrink, based upon changes in demand; operate any time, anywhere, under any conditions; minimize asset and labor content per unit of production; and provide real-time transparency of operations, both internal and external. Those will be necessary to understand, as you build a software company.

InfoWorld has more from a talk given by him at the Open Source Business Conference:

Software is a service. We have to recognize it and a service company is a different DNA than a software company, said Lane.

Using an automobile industry analogy, Lane said that today, someone interested in getting into the automobile business would more likely get into service business that improves the car experience rather than get into the car-building or car parts businesses.

He also said open source software would have a destructive effect on growth of the commercial software industry, although he did not mean destructive in a pejorative way. Open source software will keep the software industry the same size over the course of this decade, he said.

The software industry, he said, is used to the next big thing and is still waiting for it. He listed developments such as the PC, client-server computing, and operating systems as examples of previous next big thing developments.

Its idiomatic about our industry as to why the question is even asked. We expect the next big thing to come along to get us out of implementing the old thing, Lane said.

If you really want to wait for the next big thing, I think the waits probably a decade, said Lane.

Tags: Software

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