After some time at Seeking Alpha, I have learned that principle means less to investors than the size of a company's "moat," the barriers to entry that let it keep its prices high and profits floating.
Kirill Tatarinov, president of Microsoft Business Solutions, was trying to sell Microsoft's (MSFT) own transformation to the cloud at the company's Convergence conference recently when he accidentally wound up describing the width of competitor Oracle's moat instead.
As Dennis Howlett described it at ZDNet:
It has taken the company five years to transition off Siebel and onto its own CRM but according to the company the process is complete. "There is no Siebel left at Microsoft."
Microsoft is a highly skilled, highly scaled tech company, yet it took Microsoft five years to leave the Customer Relationship Management system of Siebel, now a unit of Oracle (ORCL), and build its own.
If it takes a tech company that long, imagine how long it might take a non-tech company.
CRM is just one of many data-based applications that is supposed to, eventually, move to the cloud, and thus into a more competitive arena where moats are smaller and choices greater. It's the application set most often used by marketing departments and support people.
Microsoft calls its own cloud applications suite Dynamics, and it now includes a number of key data-driven applications. Its campaign slogan for it is "Don't Get Forced: Get What Fits."
But if it took Microsoft itself five years to get itself unforced, what does that mean for its customers, and Oracle's moving forward? This may have gone over the head of tech analysts, but it tells financial analysts that Oracle's moat may be more powerful, its control over customers more absolute, than they realize.
Remember too that this is a moving target. Oracle has its own transition program for customers, toward a cloud-like environment. It's obvious from Microsoft's presentation that many large customers should be listening closely to what Oracle has to say, because if it takes Microsoft five years to switch CRMs how long will it take them?
Disclosure: I am long MSFT.
