Oracle Fusion Applications have had low levels of adoption by existing Oracle customers, because there is little incentive to migrate, says Forrester.
Is Oracle paying the price for keeping its word? When the software giant began its spending spree to flesh out its own offerings by acquiring other companies, it took two decisions that have dominated its applications strategy ever since.
One was a commitment to develop a next generation of applications under the umbrella title of Fusion. Those applications took the best part of seven years to come to market, but are now coming into general availability.
The second commitment, designed to calm the nerves of existing customers of PeopleSoft, Siebel and the other acquired firms, was a promise under the label of Applications Unlimited that it would continue to support and update those applications.
In other words, no-one would be forced to migrate to the new Fusion range as a result of Oracle pulling the plug on the installed base of applications already in use.
Of course Oracle would prefer you to move up onto the new generation that it has spent millions of dollars developing, but you can do it at your own pace and without pressure.
But the problem with that second commitment is that while it provides valuable reassurance for existing users – and helps to fend off the FUD factor from rival providers intent on scaremongering about the evils of the Oracle empire – it does mean that no-one has any real urgency to make the leap into the Fusion generation.
That point’s been made this week with the publication of a study by analyst firm Forrester Research of a (relatively small) group of Oracle customers, almost none of whom seem to have plans to move onto Fusion apps any time soon.
Some 64% of respondents said that their next planned upgrade would be to newer versions of the software they’re currently using (eg PeopleSoft or Siebel etc) while 25% stated outright that they had no plans to upgrade, let along move to Fusion.
While arguing that Applications Unlimited was a good pitch at the time, Forrester’s analysts question its longer term impact as not advantageous to Oracle’s applications revenue prospects.
“Oracle Fusion Applications have had low levels of adoption by existing Oracle customers, in part, because Oracle’s Applications Unlimited policy has provided them with little incentive to migrate,” notes the report.
Why the delay?
So what’s holding customers back? "Lack of clarity about Oracle’s app strategy and Fusion’s immaturity" were cited by respondents as the main reasons for lack of enthusiasm to progress along the Fusion upgrade path.
"If Oracle Fusion Applications are the future for Oracle, most Oracle users haven't gotten the memo,” argues Forrester. "Oracle will need to increase client interest in Fusion or de-emphasise it as another app in its Applications Unlimited offering."
Another problem may lie in the perception among some customers that if you’re going to move on it should be to Cloud applications – and that’s a problem because only 11% of respondents reckoned that they would source Cloud apps from Oracle while 17% said that they would go to another provider.
While Oracle has become a Cloud convert – even to the extent of some revisionist labeling of early Fusion apps plans as Cloud offerings when history recalls that they were pitched as no such thing! – it seems entirely credible that the firm has yet to convince customers that it’s a Cloud apps player a la Salesforce.com or Workday.
That’s not to say that the Oracle version of the Cloud won’t gain more and more mindshare of course. Only a fool would write off Oracle CEO Larry Ellison’s determination to re-define and dominate a market. This is a man who has shrugged off his notorious “just water vapour” jibes
and become someone who apparently always believed in the Cloud
But Forrester suggests that there’s a lot of work to do as while Oracle has made significant acquisitions of Cloud apps players such as Taleo and Right Now (and latterly Eloqua), to date this has not been enough "to take up the slack."
Ultimately Forrester's report makes four recommendations to existing Oracle apps customers:
- Assess the long-term sustainability of each of your enterprise apps.
- Develop a plan for replacing, upgrading and adding applications.
- Strike best-possible deals with Oracle for Fusion migration.
- Shift to “the cadence of the Cloud" when embracing new apps.
Oracle to date has been cagey about responding to the report, although some inside sources have argued that the study is out of date and based on a small survey group conducted in the middle of last year.
Reporting its most recent financial quarter at the end of December, Oracle stated that total new software licence (not just apps) and Cloud revenues were up 18%, including Cloud revenue of $230 million for the quarter.
At the time, Oracle CEO Larry Ellison boasted that Fusion is “ERP, CRM and HCM, the most complete suite of Cloud applications available from any supplier” and that it was gaining traction. “We’re seeing rapid growth in Fusion across-the-board in CRM and in HCM,” he claimed.
“We're at the stage where we're winning the majority of deals and competes against Workday. We're beating Workday in North America, and we're almost shutting them out in Europe. We also are getting good wins against Salesforce with our Fusion Sales automation product.”
At the end of the day Oracle should be afforded credit for sticking to its Applications Unlimited commitment all this time. But it will be interesting to observe how far 2013 sees the firm’s marketing machine increasingly focused on pushing the merits of the Fusion range.
The future lies this way and making the case for the next generation is a logical step – especially after you’ve spent seven years and millions of dollars to try and shape it!