Managing Automation - February 2009 - (Page 37) [SPECIAL REPORT] and customers who have been shown Fusion Applications so far say they have been impressed, particularly with the product’s advanced user interface and embedded business intelligence features. And even with questions looming over Fusion Applications, Oracle has managed to gain applications market share in recent months by winning new customers to its current products and selling acquired best-of-breed applications, such as transportation management tool G-Log and demand planning application Demantra, to existing application customers. Over the past three years, Oracle has grown applications revenue from licenses, maintenance, and subscriptions by 33% per year. While rival SAP still enjoys a large applications market-share lead, its revenue from licenses, maintenance, and subscriptions has grown more slowly at 20% per year over the same period, according to a recent report by Forrester Research. In fact, experts say, the success of Oracle’s strategy for maintaining and enhancing its current applications — EBS, PeopleSoft, JD Edwards EnterpriseOne and World, Siebel, and others — has likely played a role in the Fusion Applications delay. Initially, after acquiring PeopleSoft and JD Edwards, Oracle officials committed to enhancing and supporting existing applications only through 2013, a development that concerned many manufacturing customers, which tend to hang onto their applications for 10 years or longer. In spring 2006, however, Oracle announced a change in strategy, dubbed Applications Unlimited. The company promised to maintain and extend existing applications indefinitely “as long as they remain viable.” And Oracle kept its word, rolling out promised new releases of applications, such as Siebel 8.0, JD Edwards 8.12 and 9, and PeopleSoft 9.0. Customers were relieved, and many revived dormant upgrade plans. “We’ve been With Applications Unlimited finding favor among customers and the applications business growing, suddenly Oracle’s immediate need for Fusion Applications became much less urgent, experts say. In fact, Oracle executives realized that focusing too much publicly on Fusion Applications could undermine the Applications Unlimited message — that Oracle was committed long-term to its existing application products. Also, by focusing too much on Fusion Applications as a fully integrated suite of next-generation products, Oracle ran the risk of jeopardizing its efforts to cross-sell newly acquired best-of-breed products, such as Demantra and G-Log, to existing customers. “They finally woke up to the fact that by talking so much about Fusion Applications, they were scaring their customer base to death,” says Jim Shepherd, research vice president at AMR Research. SOA SLOW TO CATCH ON Other market developments conspired to drain some of the urgency out of Oracle’s Fusion Applications push, experts say. For one thing, Shepherd says, the expected groundswell of organizations anxious to migrate to next-generation applications primarily for the sake of benefiting from new services-oriented architectures never happened. Oracle, SAP, and other vendors discovered that many customers preferred to stick with their existing applications rather than migrate to simply take advantage of SOA. “SOA was supposed to be the next big thing, the market equivalent of the shift to client/server, so Oracle scrambled to develop a product that was SOA-based from scratch,” Shepherd says. “But it turned out the market for that never materialized. So the sense of urgency for Oracle changed.” At the same time, Oracle’s ongoing acquisition binge complicated the Fusion Applications development effort, analysts and others close to the project say. Not only “They finally woke up to the fact that by did Oracle add a number of new talking so much about Fusion Applications, applications to its portfolio after launching the Fusion Applications they were scaring their customer base to project — Cimmetry, Hyperion, death.” — AMR Research’s Jim Shepherd Stellent, G-Log, Demantra, and others — but also it acquired pleased with Applications Unlimited and with middleware vendor BEA Systems. Oracle’s acquisition of applications, like DeThat deal — and Oracle’s subsequent decimantra, which fit the CPG space we are in,” sion to adopt BEA’s Weblogic server as the says Ray Gosselin, director of ERP solutions at strategic Java applications server underlying its food and beverage manufacturer Welch’s. middleware and applications suites —compliWelch’s deployed EBS 11.5.9 in 2004 and upcated and possibly delayed the Fusion Appligraded to 11.5.10 in September 2008. The cations project, observers say. In fact, Oracle’s company has also deployed Demantra. decision to place the Fusion Applications pro- 37 February 2009
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