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Monday, September 04, 2006

More on Oracle's Fusion strategy

The venerable Bruce Richardson at AMR had a meeting and e-mail correspondence with John Wookey, head of application development at Oracle, regarding Oracle's strategy for Fusion. Richardson summed up his correspondence with Wookey in an AMR alert.

The main takeaway, in my opinion, is that Oracle intends to continue major investment in its existing products (E-Business Suite, JDE, PeopleSoft, Siebel, etc.) at the same time that it is investing major resources in its next generation Fusion product. This approach is meant to give (the big word here) "choice" to customers as to when to upgrade/migrate to Fusion.

Wookey says,
The key is choice. We expect people to embrace Fusion, but we want them to move to Fusion based on when it makes the most business sense for them. We are not taking the traditional vendor approach that pushes customers to move based on vendor timelines.
But can Oracle really afford to do two things--to fully invest in its multiple existing products at the same time it is investing in an entirely new product? Wookey says yes, though he doesn't say how doing both will affect Oracle's financial performance as a publicly held company:
Typically, a vendor only has enough resources to re-platform applications and put the existing technology into maintenance mode (i.e., bug fixes); this means that customers don’t have the luxury of figuring out when it is right for them to move to the next technology. They are forced to go when their vendor releases its next product.

Our strategy is different. We are giving our customers a choice … true choice because we will continue to make the current products better and we will deliver a next generation application suite that customers will move to when they see the business value.
Oracle's strategy is clearly aimed at keeping its existing customers from jumping ship while it makes the transition to Fusion. In this regard, I think Oracle is smart.

But what Richardson did not probe is Oracle's apparent decision to base Fusion on the E-Business Suite (EBS) data model and business rules. From Oracle's perspective, this decision is logical--Oracle has to start somewhere with Fusion. But as I pointed out previously, this decision has huge implications for existing and prospective Oracle customers. For existing customers, it means that while EBS customers will face something like a major upgrade to go from EBS to Fusion, customers running JDE or PeopleSoft will face something like a complete migration to a new product. This is why Oracle has to commit to investing in its existing products.

But the implications for prospective Oracle customers are also serious: if you are shopping for a major ERP system today, and you are considering Oracle, you should only consider EBS. There is no point in buying JDE or PeopleSoft (the situation is less clear with Siebel), no matter how much money Oracle sinks into these products today, because they do not represent the easiest path to Fusion.

That's the line of questioning that I wish Richardson had pursued.

Related posts
Oracle's Fusion strategy: clear as mud
Fusion to build on Oracle's E-Business Suite

by Frank Scavo, 9/04/2006 07:10:00 AM | permalink | e-mail this!

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