Convergence: The Wave of Future Success - March Toward Convergence

March Toward Convergence

Another company that clearly understands the importance of business-technology convergence is Oracle. The world’s second largest software company was built on a highly focused pursuit of business excellence that’s measured in revenue, profitability and performance relative to competition.

Founder Larry Ellison imposed his business vision and applications on the marketplace, even though the market wasn’t always ready for what he peddled. Oracle’s success came because the business drove the use of technology, instead of technology trying to fill an ill-defined void with no strategic direction.

Oracle is one of three companies, along with GM and Verizon, on the Baseline/BTM 500 to achieve a perfect business-technology management score. The database company’s numbers over the last five years speak for themselves. Between 2003 and 2007, Oracle delivered, on average, a 14 percent return on assets each year, 21 percent ROI (return on investment), 22 percent gross revenue growth and 40 percent EBITD (earnings before interest, taxes and depreciation).

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Most amazing is Oracle’s five-year earnings-per-share increase of 21 percent—more than 8 percent higher than its competitive set. And it posted these numbers during a period when it spent billions acquiring major rivals: PeopleSoft ($10 billion), Siebel ($5.8 billion), Hyperion ($3.3 billion) and JD Edwards ($1.8 billion).

Oracle achieved this impressive performance through the convergence of its business-technology governance and by solving one of the most perplexing challenges facing enterprises: responding to change and being the instigator of change. Convergence, in our opinion, is the means to achieve these goals.

A New Concept

A converged business-technology management model is a relatively new concept. The Baseline/BTM 500 assessment model is based on the BTM Framework and Maturity Model (see “Business-Technology Maturity Model,” below), which rates an enterprise’s convergence maturity on five levels (from low to high):

Level 1: Initial
Level 2: Repeatable
Level 3: Defined (at this point, discernible alignment first occurs)
Level 4: Managed (the threshold of synchronization)
Level 5: Optimizing (convergence)