Ellison knocks Web services

Outsourcing is easiest, Linux is great and Web services have been hyped like something out of the women’s fashion industry, Oracle Corp.’s chairman and chief executive officer said Tuesday in a wide ranging address at Oracle AppsWorld.

Upgrading to Oracle’s newest suite of business applications can be a tricky process, especially for customers who have modified the Oracle applications they already have, but outsourcing the work to Oracle can make the job a lot simpler, chairman and CEO Larry Ellison said, in a speech that was broadcast from San Diego over the Web.

“The good news about 11i is it’s Internet-based,” he said, referring to the latest version of Oracle’s E-Business Suite. “The bad news is a lot of people running (version) 10.7 are not familiar with this technology.”

Installing any large suite of ERP (enterprise resource planning) or CRM (customer relationship management) software, from Oracle, PeopleSoft Inc. or any other vendor, is going to be a huge task, Ellison said. Since Oracle knows its applications best, customers should trust it to install and maintain the software for them, leaving them to focus on running their businesses.

The pitch has become a common refrain, as Oracle pushes hard for customers to upgrade to its newest suite of e-business software and to adopt its hosting services. But judging by questions posed by the audience after Ellison’s speech, doubts about the outsourcing model remain.

“Is Oracle going to guarantee 100 per cent uptime?” asked one audience member.

“I believe not even NASA guarantees 100 per cent uptime, that’s literally impossible,” Ellison replied, referring to the U.S. National Aeronautics and Space Administration. “(But) we do guarantee lower cost and higher satisfaction.”

If Oracle assumes responsibility for a customer’s software, another audience member asked, how could it ever match “all the years of knowledge and experience” that customers have accumulated about their own applications, particularly those that have been customized?

“You really don’t have to outsource everything to Oracle,” Ellison replied. More commonly, Oracle would handle maintenance and upgrades for most business applications, but customers could continue to extend those applications and keep control of customized software they consider particularly crucial.

Another customer asked if Oracle is committed to Windows NT. Ellison said that the company is committed to Windows — but showed markedly more enthusiasm for Linux. Whenever Oracle demonstrates its products “anywhere in the world,” he said, it does so on clusters of Intel Corp. servers running Linux.

He also reiterated a pledge made earlier in the year to move Oracle’s internal applications — its “entire Oracle E-Business suite, the whole mid-tier” — onto clusters of two-processor Linux systems. He said the process should be completed sometime this year.

“We think that gives you not only low-cost systems but a highly reliable, fault-tolerant system,” he said.

“We’re big fans of Intel,” he added. “Windows was the dominant platform for a while. We continue to support it aggressively. We also support Linux, which is a great alternative.”

Another audience member asked when Web services will move beyond a stage where it can be used to exchange “little blocks of code” to allow “real applications to be run in a Web services model.”

“You can only understand Web services if you’ve been in the fashion industry,” Ellison replied. “If you’re in the women’s clothing industry, you have a pretty good idea how Silicon Valley works.”

Web services is fashionable just as pink might be this year’s fashionable color, he said, but it’s no panacea.

“Web services is a very important new technology, we are fully behind Web services. But the idea that Oracle is going to put a Web services interface on its applications, and (that) Siebel is going to do that, and that that’s going to make it easier for you to connect Oracle to SAP, or Siebel to SAP, that’s just the most ridiculous thing I’ve heard in my entire life,” he said.

Web services provides a set of standards that makes it easier for two computers to speak to each other over the Internet, but underlying “semantic differences” in applications make it difficult to link software programs from separate vendors, he said.

Some observers will meet the remark with skepticism. Oracle has worked hard to convince customers that they can cut costs and boost the efficiency of their businesses if they use only Oracle’s business applications, rather than by tying together “best of breed” software from different vendors.

“We’re the largest supplier of software for building Web services in the world, but don’t be misled,” he said. “It’s not going to do all the things that people claim it will do.”

Oracle AppsWorld runs through April 10. Some keynote speeches have been archived on the Web and can be accessed via http://www.oracle.com/appsworld/

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