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Oracle's Ellison: Oracle v SAP is modernity v 25-year-old technology

26th Mar 2010
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The battle lines are drawn between Oracle and SAP. And according to Oracle CEO Larry Ellison, it is a choice between modernity and ageing technology.
Competition in the applications market is picking up again as the economic recovery kicks in and that means more direct conflict between Oracle and SAP for dominance. 
Oracle's latest set of quarterly results show applications new license revenues were up 21% year on year to hit $477 million. Regionally the US and Asian markets grew strongly – 26% and 29% respectively – but Europe was considerably more sluggish on 7%. 
But growth is growth and those numbers enables Oracle co-president Safra Catz to boast: "We grew 21% while SAP continued to shrink at a double digit pace. Our applications business is doing very well in all regions and in all verticals and it is truly no wonder SAP is so unhappy."

Ellison gets bullish
Her boss Larry Ellison is as ever even more bullish. "We are taking advantage of their weakness. And we think we are going to get stronger while they get weaker," he declares. "SAP is not a diversified company in terms of their application suite. They don’t have a lot of what you are calling edge applications. They don’t have a lot of industry specific applications. Their technology is fraying around the edges. Some of it is our good execution I think and some of it is problems at SAP."
On the subject of execution, Ellison argues that Oracle has had a coherent battle plan in place to counter the German firm. "One of our strategies was to beat SAP in CRM -  which we do -  and then beat SAP in industry specific vertical applications," he says. "For example, a telecommunications company has applications where you call up AT&T and you turn on your iPhone and you want to turn on interactive TV. That is provisioning software. When you provision an application in a lot of telcos  that is the Oracle software that is compartmentally turning on those services for you. SAP has nothing like that. When you receive your bill, that is an Oracle application that is sending you the bill. SAP has nothing like that. When you deposit money in your savings account that is an Oracle banking application that keeps track. SAP doesn’t have that."
Ellison also pours scorn on SAP's Business ByDesign Cloud apps strategy – while all the time managing to avoid using the dreaded 'c-word' for now. He argues that the low end target audience for Business ByDesign is not a way forward for an enterprise player like SAP. "You can’t make a lot of money selling ERP to companies with less than 100 people. We think that is a strategy that goes nowhere," he says. "It is a different technology than they currently sell. It is a different sales force. It is a different customer than they currently sell to. We think it is a massive distraction for them.
"Our strategy is not to find all new customers. But to sell more to existing customers. Sell industry specific apps to existing customers. Sell technology upgrades to existing customers. We think they have made a fundamental strategic mistake. We think they have lost their way and if they don’t want to be number one we sure do."
Core to that idea of selling more to the existing installed base will be long awaited delivery of the next generation Fusion applications. While Ellison dismisses Business ByDesign for being "three years late", he applies a different measure to Fusion, arguing it seems that there is 'good late' and 'SAP late'. "Were we late with Fusion? Yes, we were late. I would much rather be late than deliver a product that isn’t extremely high quality," he says. 
Leaving aside such temporal semantics, Ellison argues that the key to the new offering is their use of up-to-date technologies to compete against what he positions as "25-year-old technology" from SAP.  "We have written in Java," he notes. "All of our accounting software, all of our supply chain software, all of our HR software, our sales automation, service automation software has all been rewritten in Java with a modern service related architecture.
"We have put years and years of effort into writing all of this in Java. Modern architecture. Modern orchestration," he adds. "It has a modern web 2.0 user interface. It is one technology stack, a Java technology stack on our Fusion Middleware. This is 21st century technology. It is really the only [21st century] application suite. Even was a late 20th century technology."

Is Cloud modern?
Mention of raises an important question related to modernity: will Fusion be positioned as a set of Cloud Computing applications? Ellison words his views carefully.  "One of the important things about our Fusion applications is they are designed not simply to run on-premise which of course they do,  but they are also on-demand or if you prefer Cloud-ready," he says. "So we will be delivering those applications both by selling the software directly, the old way of doing it which is still the most popular way. We will be selling the Fusion applications integrated with our hardware, our servers and our storage and our networks and we will be selling it on the Cloud. [It's] all modern service oriented 21st century stuff competing against SAP."
So the post-recession battle lines are being drawn up and the pitch from the Oracle camp will be 'old v new'. "I am certainly seeing a shift there where we were seeing two years ago SAP was considered the safe choice even if the technology was a little bit old and complex to implement," claimss Oracle co-president Charles Phillips. "That seems to be changing as customers appear to be more nervous about their technology and strategic directions and they are more open to discussing things with Oracle, even SAP customers. 
He concludes: "[SAP] don’t have anything new to talk about. It is the same product, the same technology and basically they are focused on general ledger. The industry is moving broader than that."

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