Oracle articles and financials. Oracle's NCI sees bright tomorrow Network World, 3/24/98

By Torsten Busse
IDG News Service, 4/10/98

No longer satisfied with being No. 2, Oracle Corp. is turbocharging its packaged applications business, with company chairman Larry Ellison now firmly in the driver seat.

With an ambitious goal of trying to double its enterprise resource planning (ERP) applications business to reach $3 billion by 2001, Oracle will start its next fiscal year on June 1 with a new sales and marketing strategy intended to catch up with market leader SAP AG. The German company earned more than $3.31 billion last year.

While continuing its focus on manufacturing, financial and certain vertical markets, Oracle will now pay special attention to beefing up its front office applications including marketing, sales and customer services automation applications, Nimish Mehta, senior vice president of the industry applications division, said in an interview at Oracle.

"We plan to increase funding of front office applications," Mehta said. Supplying better data warehouse and decision support applications, sets Oracle's applications strategy apart from the competition. "That is purely Larry [Ellison]," Mehta said. "What we can do better is provide you with data that helps you make decisions. That's where Larry comes from."

Ellison recently took charge of the company's applications business, which has not grown as fast as Oracle's tools and database business and is lagging behind SAP's, which has grown its revenue by an average of more than 60% in recent years.

With SAP being "years away from rolling out decent [front office] applications," Mehta said, Oracle is sniffing an opportunity.

The other element in Oracle's new strategy is a tighter, more streamlined sales approach with fewer people involved in a bid and only one rather than many sales representatives being in charge of a global account, Mehta said.

Unaffected by the new approach are Oracle's back office ERP applications such as its financial management systems, Mehta said.

"We have been and will continue to build financial and manufacturing applications and there are no changes to that," Mehta said.

Oracle's focus on vertical industries is in line with its competition, but what sets Oracle apart is that it has actual customers up and running in key industries, while SAP has been building its industry solutions for years now with no customers to show for it, Mehta claimed.

Other advantages Oracle will exploit in its quest to take the lead in the ERP market are its partnerships with specialized applications vendors such as supply-chain management systems makers Manugistics, Inc., i2 Technologies, Inc. and others, Mehta said.

"We don't claim to have all the expertise in all areas," Mehta said. Unlike SAP, which follows a do-it-all-alone approach, Oracle will continue to partner with best-of-breed vendors, Mehta said.

He also said the availability of many skilled developers trained in using Oracle's development tools who can integrate Oracle's ERP with third-party applications will help to drive the company's sales pitch.

Furthermore, while SAP and other competitors such as Baan Co. are currently breaking their ERP packages into object components to make them more modular and easier to upgrade, Oracle's applications are already written to an object model, Mehta said.

That allows for the replacement of individual parts of the system with new elements, Mehta said, as Oracle has done with its order entry systems, which it replaced with one made by Industri-Matematik International (IMI) in Tarrytown, N.Y.

"We continue to believe that customers want fewer rather than more upgrades, maybe one every three years," Mehta said, adding that Oracle will continue to offer big bang release upgrades.

But despite all the benefits and advantages Mehta lists, Oracle has its work cut out for it.

"Customers generally don't argue with Oracle's technology," Mehta said. "What we have not done so well is address certain industries."

Specifically, Oracle has to deliver applications geared toward the telecommunications industry and the financial services sector, while for the time being Oracle will stay out of the transportation and health care industry, Mehta said.

As for the small to midsize business market, which is a major focus for all ERP vendors now, Oracle does not offer preconfigured hardware and software bundles. However, under its "Fast Forward" program, customers can get evaluations of their requirements and buy the appropriate applications that fit their business needs, Mehta said.

Also in the works are hosted business services, called Oracle Online, which are outsourcing services geared to the small to medium business market.

Following release 11 of Oracle Applications due this quarter, Oracle will integrate more and more Java code into the server portion of its ERP package using the Enterprise Java Beans technology. Mehta said.