Rearranging the dust at Oracle

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A sensible restructuring or re-arranging the dust? That was the question bothering analyst firms over the weekend as Oracle suddenly restructured its applications software division in a bid to halt the recent decline in business.

Oracle is merging two groups--application development for its CRM and ERP products under the direction of one person. The winner in all this is long-standing Oracle executive ­ and one of Larry Ellison’s inner circle - Ron Wohl. The apparent loser is senior vice president Mark Barrenechea, who was in charge of CRM development.

He’ll now head up a new group at Oracle which will apparently be “focused on incorporating customer feedback and requests into future product development” according to Oracle. The group also will work with Oracle customer service and support to help customers install the applications.

Oracle said the reason for the change is a need for greater efficiency and because Oracle is selling so-called front- and back-office applications together as one package. "We had two separate development organizations, which created inefficiencies and redundant activities,” said a spokesperson.

It’s clear that the real reason for the reshuffle lie in the company’s recent difficulties in the apps space. Problems with bugs contributed to an overall year on year decline in revenues of more than 40 per cent in the most recent set of results. Oracle missed both database and business application revenue targets for the third quarter ended February 28th.

Analysts gave the move cautious approval, but wondered if it . AMR Research said it wasclear that Oracle had to do something to get its application business back on track and conceded that the move made sense from a development standpoint. But it warned that Oracle still needs to attack the problem at the root and improve the quality of its software to improve customer satisfaction and increase application sales.

Forrester Research was less impressed. “ The move helps Oracle upsell existing ERP customers and craft processes linking supply and demand -- within the Oracle suite. It doesn't yet address users' multivendor reality,” it argued. “While these changes make sense for streamlining the Oracle eBusiness suite, Oracle still has a way to go to demonstrate that its individual apps also can play well with competitors' apps. Oracle is making another attempt to overcome its continued failure to make a CRM splash.”

Meanwhile the company is today expected to unveil formally its plans for breathing life into its hosting strategy. Oracle executives wants to see additional $1 billion in revenue over the next five years to come from hosting databases and applications.

Oracle customers will now have several installation options. Customers can host their databases and application-server themselves or have Oracle or the database giant's service provider partners. For an additional fee, customers can hire Oracle to remotely administer the software, which includes diagnosing and fixing problems.

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