Oracle is coming out with a raft of new packages, refreshing old consultant relationships, and bolstering support in an attempt to ratchet up its applications revenues in the face of stiff competition.
However, while the software supplier hopes to outshine its competitors, it will take a lot more than a set of well coordinated marketing messages or the trotting out of corporate mantras to do it.
There are still question marks over whether the firm?s applications fully comply with European Monetary Union (EMU) requirements, and customers are still reticent about moving to the network centric Release 11, which is holding Oracle back from capitalising on what it believes is its market edge.
Ron Wohl, Oracle's senior vice president of applications development, acknowledged at Oracle's European User Group (OUEG) conference in Barcelona a couple of weeks ago, that only 75 out of about 2,000 European customers have currently gone live with Release 11.
Another 575 are in the migration phase, while Jeremy Young, OEUG president, admits that his organisation is also still running Version 10.7.
"When we looked at EMU compliance, we knew it was going to be a problem but were satisfied we could do the basics," he says.
But this picture is at direct odds with warnings from Ray Lane, Oracle?s president and chief operating officer, that the Internet changes everything and that customers need to "Amazon the competition before they Amazon you."
On the product front, Oracle is making an effort to shed its 'buy in until we build it, then dump 'em' partner image, while at the same time revving up its internal development effort. But this has produced mixed results.
In the customer relationship management (CRM) market, where Oracle is placing the greatest emphasis, it has nearly 600 developers working on more than 36 new products, which are due to ship in May this year. These span four broad areas - sales and marketing, service measurement and customer care, call centre and ecommmerce.
According to Rick Powles, Oracle?s CRM director for Europe, Middle East and Africa (EMEA), however, CRM plays on customers fears.
"People bought sex and sizzle over functionality and integration. Many customers are expressing concerns about making individual investments in companies that are appearing in evolving markets," he explains.
While this may be true, Siebel, Oracle?s arch rival in this space, has successfully positioned itself as the one to beat in the CRM market, something that Powles tacitly acknowledges.
"Siebel attacked a window of opportunity and put its foot on the gas where there was no serious competition," he says.
But, while Oracle hopes that its application integration story will help increase its mindshare in the CRM market, this may prove more difficult than the supplier thinks.
According to market research firm the Gartner Group, Siebel has the momentum behind it to exceed Oracle's entire licence revenues by the end of next quarter.
And to make matters worse, Oracle has not yet proven that it can make its mark by supplying a complete CRM applications suite. While it recognised that it was in trouble about a year ago after promising to deliver CRM functionality, but providing relatively little, it found it had little option but to divert resources to it and also acquire technologies to help it get to market.
Unfortunately, however, the strategy has succeeded in drawing attention to both Oracle?s deficiencies and its schizophrenic attitude towards partnering.
On the technology front, Oracle has made a number of acquisitions, notably Versatility's call centre technology. But purchasing applications is not the same as making them work together and the inevitable integration work slows down the release process.
It is also unclear whether Oracle has all the pieces in place to make its CRM offering effective or whether its ambivalent attitude towards its partners will enable it to undertake development at the speed customers demand.
Broadvision, for example, which supplies Internet based one to one CRM technology, is both a key technology partner and supplier for Oracle?s marketing applications. The firm provided the core technology for Oracle.com's UK targeted customer and partner news service.
Rob Bruce, Broadvision?s account manager, claims: "Noone has full one to one marketing out of the call centre at this time, not even Siebel, who I would suggest are still working on the premise of task oriented software. Customers rightly think it is incredibly important, so the vendor that gets there will have a significant offering."
On the other hand, Graham Technology was recently critical of Oracle's partnering strategy (see VNU NewsWire, 9 February, 1999), suggesting that the vendor pushed an inappropriate set of building blocks at customers, while effectively sidelining partners.
But Oracle is also struggling to find its feet in other applications areas.
Like its competitors, it has little concrete to say on the supply chain market. Although it partnered with Manugistics to take its process manufacturing packages some time ago, a newer initiative that ropes in both i2 Technologies and Andersen Consulting for electronic synchronisation is something of a departure from this.
Extending supply chain operations means not only undertaking applications integration work, but also multiplying such work by the number of supply chains attached to the enterprise.
While Ken Sharma, a senior partner at i2, says: "We're a way off making it a reality," Andersen has demonstrated a proof of concept package that Oracle believes shows the way forward.
Lou Unkeless, Oracle?s senior director of product marketing for supply chain applications, says: "We've looked at automating plant level planning as well as the supply chain. It's still early in the process and yes, integration is the challenge. We have to define the level at which integration has to happen ? that will be interesting."
And it would appear that while Oracle started by focusing on high tech customers such as Psion, it has since changed tack. Although Oracle and Andersen claim the proof of concept package should reach a broader audience, those who have yet to start on optimising their supply chain will find it the easiest to implement.
i2?s lack of presence at the OEUG conference, however, does raise the question of whether end to end supply chain automation is little more than a pipe dream.
But Oracle has now fleshed out its plans for what it calls Strategic Enterprise Measurement (SEM), hot on the heels of PeopleSoft's enterprise performance management announcements (see VNU Newswire, 12 March 1999).
Oracle says that users will see value based management systems 'early next year', which integrate activity based management functions and the firm?s recently acquired balanced business scorecard technology. Value based management systems analyse activities that contribute to wealth to the business.
John Wookey, Oracle's vice president of financial applications, says: "Oracle will not take a strong position regarding the consultancy services that go with this offering ? we will provide product ? we will be the plumbers."
But if it sticks to its word, this will be a significant departure from how Oracle currently does business because as Wookey points out, the supplier invested significantly in acquired knowledge through its consultancy arm.
While it would be a tempting opportunity for Oracle to wade into this market, its hesitancy implies that it is uncertain about what it wants to do.
The SEM market is generally seen as being appealing to large enterprises that are advanced in their management thinking - an area that is dominated by traditional consultants Andersen, Deloitte & Touche and KPMG.
Interestingly, however, Oracle says it is neutral regarding the underlying applications, which would imply it is waking up to the fact that it cannot be all things to all people. Although the vendor would clearly prefer customers to buy everything it has to offer, time to market considerations combined with a need for appropriate functionality and expertise are reshaping the way it does business in some areas of its applications division.
With such a mixed bag of application approaches, however, Oracle has its work cut out if it wants to accelerate growth and bring its installed customer base along with it. Today, it claims to be the number two applications vendor behind SAP and ahead of Peoplesoft, with total applications related revenues exceeding $2 billion.
IDC, on the other hand, estimated that in 1998, Peoplesoft's licence and maintenance revenues were $1,123 million compared with Oracle's $920 million.
Mark Lane, Peoplesoft?s international vice president of marketing, says: "This shows clear daylight between us." But Pier Carlo Falotti, Oracle?s executive vice president for EMEA, is not resting on his laurels with last quarter?s 20 per cent increase in European revenues, claiming "Success in Europe is the number one priority in Oracle."
The question is, however, whether new products and attempts to accelerate the adoption of Release 11 will be enough to prove that Oracle is serious about its applications business.
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