Oracle Apps World: Oracle tells users that integration is now OK - but only as Plan C!
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It’s hardly a new occurence for Oracle to make announcements that turn previous corporate policy on its head. Usually it centres on a pronouncement by CEO Larry Ellison, often made seemingly off the cuff at a user conference while he’s grandstanding on stage.

Many of these then fail to play out in practice or simply fail to materialise at all. Long standing company watchers may well remember the famous announcement that the Oracle 8 database would be a fully object oriented database; of course, it wasn’t! Then there was the suddent defection from telling users that client server was the way ahead, a maxim replaced overnight that the internet was the way ahead while client server was a bad thing.

But Ellison was nowhere to be seen when the latest abrupt about turn took place this week at the Oracle Apps World conference in San Diego. Instead newly promoted Co-President Chuck Phillips took time off from orchestrating the continuing assault on PeopleSoft to pronounce that Oracle would be offering an integration platform to allow users to mix and match other vendors applications with its own.

This is of course the company that has spent the last two years loudly proclaiming that mixing and matching is mug’s game that only benefits services operations like IBM Global Services and that sensible users will buy single source end to end solutions from Oracle in the shape of Oracle 11i. So what’s changed?

The new product, whose name Customer Data Hub manages to avoid the word ‘integration’ - is designed to help companies instantaneously gather information from Oracle systems and other business systems in one centralised place, according to Phillips.

He conceded that the effective ‘all or nothing’ policy of the past couple of years might have detered some prospective buyers. "The whole 'i' word--integration--is off the table," he said, adding that introducing the new Hub meant that there was no reason for companies to be put off buying into Oracle’s applications strategy.

But leopards don’t change their spots that quickly. “Choice A” according to Phillips is still that customers should buy the end to end Oracle suite. "We still think an integrated suite is the best option," Phillips said. "This is recommended. It gives users a single, complete data model and builds applications around that data model. This [announcement] is an acknowledgement that some customers can't get there as quickly."

If customers really won’t move at Oracle’s pace, then they have two other choices. Choice B centres on Oracle eBusiness Suite with more "formal" integration technologies embedded into the suite to work with legacy applications. But customers who choose ‘B’ will be assumed to have a goal of moving onto the full eBusiness Suite “over time”.

The Hub is Choice C. "With the eBusiness Suite, you're going to get your information faster," said Phillips. "But this is a way for you to get the most out of your stored information with near real-time data synchronisation. This is not a data warehouse. The goal here is to have a system of record."

The message was reiterated the following day when Ellison himself took to the stage to deliver his keynote address. "Go ahead and keep Siebel for sales if you want to," he told customers.

He added defiantly that the integration hub was simply an extension of existing policy. "Our original dream has not changed one bit," he said. "We're still trying to solve the worst problem in the information age - data fragmentation."

With that volte face complete, the company also tried to breathe life into its somewhat lacklustre outsourcing services initiative, following the lead of would-be acquisition PeopleSoft by announing a new pricing scheme. Starting immediately, Oracle is offering to manage customers' Oracle software with a per-employee usage fee rather than the old method whereby it customers were charged up to 5 percent of what they spent on the software's purchase.

Under the new model, customers that use Oracle's Data Centre as the outsourcing location pay $150 a month per Professional Application user. Organisations wanting Oracle to manage the software from their own sites pay $90 a month. The fees are in addition to customers' licensing fees.

"We know the cost of managing a piece of software - no matter whose it is - is four times the purchase price of the software, per year," said Tim Chou, president of Oracle Outsourcing. "We easily save customers 50 per cent over what they would spend managing the software themselves."

"We have [developed] how we do things in a precise and engineered way,” he added. "Our business model is not built on going to low-cost labor. It's on high degrees of standardisation and, ultimately, automation. We believe every customer will end up in this model."

The new pricing will allow customers to forecast better how to allocate an IT budget throughout the year, according to Jacqueline Woods, Oracle’s vice president of global pricing and licensing strategy. "It's not really a shift in our current pricing model, but more of a realigning of the pricing that will be more flexible for our customers that purchase outsourcing solutions from us,” she said.

Inevitably never far from anyone’s mind was the long shadow of the protracted takeover bid for PeopleSoft. While the party line is still that Oracle is confident of success in its hostile acquistion, there was some interesting expectation setting by Phillips which suggests that the possibility of failure is being prepared for. "Our applications business was never contingent on getting PeopleSoft," he said. “[The PeopleSoft bid] was an opportunity we tried to take. It was opportunistic."

Asked whether Oracle would be ready to raise its $19.50-a-share bid, Phillips said this was "irrelevant." PeopleSoft shares have been trading above the bid price for several months. "There are many miles to go before we get to that road," declared Phillips.

Phillips view is supported by analyst firm Gartner Group which has declared the bid on hold for now. “Oracle's bid is in limbo until the U.S. Department of Justice rules on its antitrust inquiry into the deal,” said Betsy Burton, research director at Gartner Research. “As it pushes out its latest release of its e-business suite, Oracle will continue legal and financial maneuvers to remove the significant hurdles it faces in completing the deal. We see nothing on the immediate horizon to indicate a lessening of these hurdles.”


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