Assignment 2 – External Analysis
Oracle: Software License Update and Product Support
Computer Systems Design Support Industry
By Catherine Wowk
Oracle operates six different business segments. Software License Update and Product Support is a segment of Oracle’s Software and Cloud Business which provides support services such as Oracle Lifetime Support, upgrades, enhancements, and technical support. It is roughly 47% of Oracle’s total revenue and produce the highest business margin at 89% and 77% of total business margins. (3)
Oracle’s Software License Update and Product Support is in the IT Consulting Industry, more specifically the Computer Systems Design Support segment. Oracle ...view middle of the document...
As industries such as Cloud Software continue to grow so will CSDS. Consumers will seek the needs of support professionals as new technologies arise. (Appendix C) No one company holds the majority of the CSDS industry as it is comprised of 53532 businesses, though it is predicted that within the next five years mergers and acquisitions will accelerate.
After performing a PESTAL analysis, it is clear that the Computer Systems Design Support industry is not immune to the effects of external factors. As Appendix F indicates, CSDS is influenced by all aspects of PESTAL. Social, economic and technological factors contribute to the industry and help its continuing growth rates. On the other hand, political, environmental and legal factors have the potential to cause significant setbacks to the industry. In summary, as new computer technologies are invented, the profitability of CSDS will increase. With the increase in new technologies will come an influx of new regulations resulting in an increased spending on research efforts. (4)
The Five Forces Model was used to determine the competitive analysis of the Computer System Design Support industry. Barriers to entry are low but increasing, threat from buyers is low, threat from suppliers is low, threat from substitutes is low and competition from rivals is high and steady. (4) Appendix E shows the detail to these conclusions.
The goals, strategies, assumptions and capabilities of existing and potential competitors in the industry are important to look at. Considering that Oracle has a 3.7% market share of the CSDS industry, is makes sense to discuss some of the other larger corporations in the industry, more specifically Hewlett Packard who has a 4.1% market share, as they are competing on the same level. With 9 different segments operating in 160 countries devoted to consulting and IT optimization, they are able to provide their clients with real time service, strategic development and implementation of the cloud into business models. In the next five years HP is expected to grow 0.1%. Recent acquisitions have helped the company’s growth but decreasing revenues have halted expansion efforts. Their consulting operations lag behind that of the industry, which explains its decreasing market share over the past 5 years. (4)
Key Strategic Factors:
Critical requirements for future success are the following five key strategic factors. One, adoption of commercial focus such as tailoring to their clients exact needs. Two, access and understanding of new and updated computer technology. Relevant and up to date information is the only way to keep customers satisfied with the service. Three, a strong workforce with a background in computer science. Four, employees need to possess good project management skills, including the ability to understand a client’s concerns and provide exceptional customer service. (4)