Oracle Applications customers reveal their future plans

I'm a huge fan of primary research, especially when it is paired up with great analysis. Some Enterprise Software and Solutions (#EnSW on twitter) analysts base too much of their commentary and advice on what they read in the news, see at user conferences, and hear from other analysts.

Computer Economics is an #EnSW analysis firm with a difference. Frank Scavo and the folks at Computer Economics do great research - quantitative and qualitative - on the #EnSW world. If you are an IT executive, or an #EnSW vendor, you owe it to yourself and your enterprise to check out their research.

The latest published research from Computer Economics is a study called "Go-Forward Strategies for Oracle Application Customers." In the spirit of full disclosure, I should mention the following, and you should bear these facts in mind as you consider my comments:

• I have been in the #EnSW world for around 25 years now, including long stints in executive product roles at Oracle and SAP.
• My company, C3, may someday be competing with Oracle (and other #EnSW vendors).
• Computer Economics provided me with a copy of this $995 report at no cost for my review.
  

Here are some key findings from the report, followed by some of my thoughts about the results:

• Finding: Dissatisfaction with the cost and benefits of support runs high across the Oracle Applications customer base, with 42% of respondents reporting dissatisfaction with the quality of Oracle support, and 58% reporting dissatisfaction with the cost of Oracle support.
• My thoughts: That is a very surprising result, showing an astonishingly high level of dissatisfaction!

• Finding: Customers generally expect Oracle to grow as a share of their IT spending, despite their level of satisfaction.
• My thoughts: There are a number of obvious reasons for this result, including vendor consolidation, customer expectations of growth in their business coming out of this continued weak economy, and the difficulty of moving from one application product set to another.

• Finding: Third party maintenance and support is attractive to a substantial fraction of Oracle Applications customers.
• My thoughts: A far smaller percentage of Oracle Applications customers are considering third party maintenance and support as compared to the fraction who are dissatisfied with support quality and price. It is not clear to me that any third party can really deliver bug fixes, patches, and legislative and regulatory updates. Nonetheless, #EnSW vendors are increasingly dependent on maintenance and support revenue, and thus they are increasingly vulnerable to customers using third parties, or going off maintenance and support entirely.
  

• Finding: Despite - of perhaps because of - their dissatisfaction with the current applications support, Oracle Applications customers are not planning a rapid migration to Oracle Fusion Applications, with 5% planning to migrate away from Oracle, 24% researching or planning to migrate to Fusion, and the remainder with no plans to migrate to Fusion. e-Business Suite has the largest percentage of customers considering Fusion Applications, and JD Edwards has the largest percentage of customers considering moving away from Oracle.
  
• My thoughts: Oracle is just beginning to roll out information about Fusion Applications, with the first big "reveal" coming at this year's Oracle Open World. Many Oracle Applications customers have only a limited understanding of the benefits and features, and limitations, of Fusion Applications. Over time, you can expect this result to change dramatically.

• Finding: The report includes information about the staff required to run various Oracle Applications products, including e-Business Suite, JD Edwards, Peoplesoft, and Siebel. JD Edwards requires the smallest number of support staff, with e-Bueinss Suite and Peoplesoft at the other end of the spectrum to operate.
• My thoughts: There is significant value in this section, and in the report recommendations, for Oracle Applications customers.
  

Computer Research has done the industry another mitzvah in sponsoring and executing this research and analysis project. Oracle Applications customers, and #EnSW vendors, would benefit from reading this insightful report.


Links:

• Primary Research: http://en.wikipedia.org/wiki/Primary_research
• #EnSW: http://twitter.com/#!/search/%23EnSW
• Computer Economics: http://www.computereconomics.com/
• Frank Scavo: http://twitter.com/#!/fscavo
• Go-Forward Strategies for Oracle Application Customers: http://www.computereconomics.com/article.cfm?id=1595
• C3, my employer: http://www.c3-e.com/
  

It's Holiday Prediction Time Already

When you get your third request to discuss the outlook for 2010 for our industry, it must be "Holiday Prediction" time. With no further ado, and with two months left in the year, here are my predictions for the enterprise software world for 2010. The predictions marked in red with "Wild Card" are not really predictions, just outlandish guesses of what might happen.

• Oracle releases Fusion Apps (for core functions, plus a few of the composite apps around it). Fusion Apps are missing tons of functionality, but work well with Oracle Apps Unlimited (legacy apps), so customers are comfortable with the upgrade. Oracle also continues to deliver some new functionality for Apps Unlimited, keeping those customers happy. Oracle delivers pre-packaged integration using AIA with Apps Unlimited products and Fusion Apps.
• Wild Card: At OOW10, Oracle announces low-priced maintenance offering for SAP and pre-packaged integration with AIA to SAP 4.6 and 5.0.
• SAP cannot convert many Oracle Apps customers to new SAP licenses, as they are happy to stay with what they have or to wait for or upgrade to Fusion Apps.
• SAP ships Business ByDesign and the Apps are favorably received. SAP finds a nice niche for these apps in divisions of large SAP customers, displacing some legacy apps like Baan and Infor. SAP finds a way to achieve profitability for ByD when it introduces pre-packaged integrations from ByD at the division level to Business Suite at corporate. Customers see real value in ByD and the pre-packaged integration, which SAP sells for tens of thousands of Euro per connected ByD instance (per year).
• SAP announces that it will incorporate several ByD innovations in Business Suite in enhancement packs starting by the end of 2010 and into early 2011.
• Wild Card: SAP license revenue plunges, and margins start to suffer. Long term R&D is cut. By the end of the year, SAP agrees with user groups on specific actions to take to reduce TCO, to justify increasing maintenance fees, which come under increasing pressure.
• Oracle license revenue slides, but margins are maintained as Oracle continues to cut back on Applications Unlimited faster than it grows Fusion Apps. Apps Unlimited staff have to compete with each other for few openings in Fusion Apps.
  
• Microsoft stays in the Apps business, but as a distant "also-ran." Internal discussions begin about exiting the business or taking a significant new direction to try to re-energize the business.
• IBM, which has really been in the Apps business all along, relaunches their Apps business based on project accelerators from Global Business Services, including via Blue Next.
• Wild Card: IBM works hard to convince customers to go off SAP maintenance, remain on 4.6 or other old versions of SAP, where IBM takes over maintenance and develops custom composite applications around the FI/CO core. SAP bulks up consulting (but doesn't buy any consulting companies), and works hard with IBM's competitors to disadvantage IBM in SAP accounts. In the background, towards the end of the year, SAP and IBM begin merger discussions.
  
• Cloud, SaaS, and open source become completely accepted in the enterprise, as companies start to outsource everything that does not deliver competitive advantage, and as integration technology improves. Pre-packaged integrations become common, with go-lives measured in days and weeks instead of months and quarters. Dozens of new Cloud providers enter the market. Substantial new enterprise SaaS solutions come to market in diverse new areas.
• Many open source applications projects reach maturity for "edge" applications such as talent management and enterprise performance management, promoted by systems integrators like Wipro and IBM, with licenses that prevent commercial deployment by enterprises above a certain number of users without buying support from the integrator. These projects are used to contain Oracle and SAP Applications customers on old versions, buying support and maintenance from the integrator.
  
• IT spending grows slightly, but with a focus on "new" things rather than maintenance. Spending on new computers (driven by Windows 7), mobile devices, "edge" applications (e.g., talent management, supplier management, and new analytics) grows substantially. Spending on application maintenance, custom application integration, application upgrades, database upgrades, and server upgrades drops precipitously.
• Enterprise 2.0 backlash leads to significant cutting back on access to time wasters at work, like ESPN.com, Twitter, Facebook, and certainly LinkedIn. Questions about how you will get 20-something employees to give up their access to these tools go away as there are way too few jobs to go around.
  
• Green and sustainability topics grow in importance as legislative/regulatory uncertainty grows worldwide, with some legislation passing and lots of new regulations put in place with no legislative action. Green IT goes mainstream.
• Oracle completes the Sun acquisition, including mySQL. This turns out to be a non-event, as Oracle continues working with HP, IBM, and Dell.
• Wild Card: Oracle also acquires Pillar Data. Oracle launches high performance cloud storage, with innovative integration with on-premise Oracle DBMS and content management services.
  

Basic economic assumption:

• The jobless economy continues. New graduates are unable to find any work. Business profits soar as productivity soars. Commodity prices remain low, though not in dollar terms as the dollar continues to drop precipitously versus other currencies.
• Wild Card: Government intervention grows, but grows in unpopularity while failing to deliver benefits to citizens. A change in governments looms in several large countries.

Wow - that turned out a lot more pessimistic and Malthusian than I thought it would! What do you think will happen in 2010?

Predictions and info for Oracle Fusion Middleware launch, July 1

I saw some interesting tweets and have been hearing other rumors and facts regarding Oracle Fusion Middleware and Applications, and Oracle's upcoming announcement on July 1. Here is what I was able to glean and infer based on this information.

First, my predictions:

• Oracle will explicitly or implicitly reveal its plans (and post-merger org structure) for Java in the post-Sun-acquisition period for Fusion Middleware at the Fusion Middleware (FMW) launch on July 1.
• Oracle will deprecate Eclipse (which they don't control) quickly, trying to move Java developers to JDeveloper (which they control). JDeveloper will have tight links to FMW components as well as generic Java, which Oracle will tout as benefits. My $0.02: this is a futile and silly effort, as Eclipse is so much more than just a Java development environment, with an ecosystem that creates enormous value around it. Oracle should come to some "understanding" with IBM and just adopt Eclipse.
• Oracle will show a lot about how Fusion Apps will adopt FMW on July 1 (especially the Java Platform and WebCenter). This is likely to be a real game-changer. I am not certain that other ERP vendors will be able to deliver anything like the compelling user experience, social capabilities, and productivity which will be available with Oracle's new Fusion Applications. Of course, many application customers will stick with their legacy apps, but new implementations (and license purchases) will likely lean heavily towards Oracle Fusion Applications when they are available for financials/HR, which I predict will be around the end of this year. Incidentally, I heard that something like 1000 applications staff from the "legacy" apps at Oracle had been moved several (6 to 9) months ago to Thomas Kurian's group to work on beefing up the functionality in the Fusion Applications.
• There will be no major pricing changes with the new middleware (as compared to today's pricing). However, customers probably will have to buy new licenses as this will be viewed as new products rather than upgrades.
• There will be a new advanced rules engine included in FMW.
• WebCenter and Portal will be upgraded significantly and well-integrated.
  

Conceptual architecture diagram of Oracle's product offerings (click on it for a larger version):



Presenters at this event:

• Hasan Rizvi: Senior Vice President, Fusion Middleware
• Dave Shaffer: Vice President, Oracle Integration
  
• Duncan Mills: Senior Director, Product Management, Tools
  
• Margaret Lee: Director, Product Management, Tools and Middleware (?)
  
• Ted Farrell: Chief Architect & SVP, Tools & Middleware
• Sue Harper: Senior Principal Product Manager, SQL Developer
• Christina Kolotouros: Director, Product Management, WebCenter and Portal
  
• Forest Yin: Director, Product Management, Identity Management products
• Mike Lehman: Senior Director, Product Management, Java Platform

If you have any additional information or rumors or inferences to share, please twitter me or leave a comment on this blog.