Feathers fly over Oracle

Determined to stand tall on its database legs, Oracle Corp. walks into its AppsWorld conference this week in San Diego carrying a kit bag of troubles weighted with sluggish sales of its 11i E-business Suite.

And as the Redwood Shores, Calif., company attempts to leverage its strength in the database business to feed its enterprise application aspirations, Oracle finds itself at odds with industry consensus on the value of Web services-driven open application interfaces.

Oracle will not introduce any new applications at the show, but will use the opportunity to cajole customers along the 11i E-business Suite upgrade path.

“About half the user base is on 11i, and the other half has not yet upgraded, which is why we will have a major focus on upgrading to 11i either through traditional means or through our outsourced model,” said Judy Sim, Oracle’s vice-president of corporate marketing.

“Rather than focus on new products – because we think most people already have the products they need – the focus is on getting those products to where they are working right for the customer,” Sim said.

However, analysts are not convinced about Oracle’s application strategy.

“11i is turning into the Rodney Dangerfield of the industry. It doesn’t get any respect,” said Louis Columbus, an analyst at Boston-based AMR Research Inc.

“The 50 per cent could include commits, or it could be based on letters of intent. Given the controversial release of 11i, I think 50 per cent is a stretch,” Columbus said.

One of Oracle’s challenges is convincing analysts and customers that its packaged approach can compete technologically with best-of-breed applications assembled using Web services.

“Oracle is much happier with the all-in-one situation than its customers are,” said Philip Russom, an independent industry analyst based in Waltham, Mass. “It’s hard for any vendor to assemble a collection of technologies that match the best-of-breed products.”

Paul Dorsey, president of the New York Oracle User Group and president of Dulcian, a consultancy that concentrates on Oracle, agrees.

“I think there is a problem with Oracle applications,” Dorsey said. “When I look at the way Oracle builds applications, it’s not flexible at all. They’re big, bloated products. It’s circa 1985 thinking. And I think PeopleSoft and SAP are worse.”

Dorsey added that packaged implementations can be successful only for companies that can cram their business practices into parameters set forth by the software, rather than meeting business needs with software.

Oracle is trying to improve its applications with Web services, and recently offered attendees of the JavaOne conference in March a CD of the latest version of Oracle9i Application Server Release 2 with support for J2EE (Java 2 Enterprise Edition) 1.3 and its Oracle9i JDeveloper tool kit.

But SAP CEO Hasso Plattner used his keynote address at JavaOne to take Oracle to task for its integrated stack and assert that the enterprise application vendor collective must adopt the component model of application development driven by Web services.

Web services allow enterprise applications to interoperate with other systems and eliminate various stovepipe applications that are unable to communicate, Plattner said.

An emerging Web services player, SAP plans to expose as many as 2,000 of its interfaces via the Web services standards, company officials said.

What lies ahead for Oracle is the long slog to convince database customers it can build a viable applications development path.

“You do it the Oracle way or you don’t [do it at all],” said Henri Asseily, CTO at BizRate.com, an online comparison shopping and market research vendor in Los Angeles, and a member of InfoWorld’s CTO Advisory Council.

Asseily asserts that Oracle’s one-size-fits-all database and application approach is not effective.

“[Oracle’s application layer] didn’t have the openness that we needed. We couldn’t change the things that we wanted to change,” Asseily said.

As a result, BizRate.com builds its own applications in-house instead of buying Oracle’s offerings, Asseily said.

According to Tim Minihan, an analyst at Boston-based Aberdeen Group, the best-of-breed vs. packaged application story will vary from company to company. “The issue is what is best for the particular enterprise,” he said.

Buying decisions will be made according to whether or not the integration costs, resources, and time saved with the packaged approach are enough incentive, even at the risk of vendor lock-in, Minihan said.

“We’re seeing the emergence of a third option: the best of both camps. You can still have best-of-breed, but because these applications conform to industry standards, such as Java and .Net, integration becomes much less of a factor,” Minihan said.

Meanwhile, Asseily added that the pricing issues surrounding Oracle’s database leave lingering questions about its application to Oracle’s application pricing.

“I have no faith they won’t change the licensing strategy at a moment’s notice because it has happened before,” Asseily said.

Paul Krill contributed to this report.

Writing on the Wall

Many analysts are urging companies to move away from proprietary application stacks and instead adopt enterprise apps that are interoperable with other applications. They also urge buyers think in new ways.