* Oracle signs outsourcing deal with JDS Uniphase
Almost a year ago, Oracle announced a major push into the outsourcing and application hosting markets. At the time, the announcements were met with a healthy degree of skepticism, but there are some indications now that the company is making some progress in its outsourcing push.
The most important indicator – as with any new product or service – is a growing customer base. In recent weeks, Oracle has signed several outsourcing deals with major corporations, including a five-year deal with optical technology maker JDS Uniphase to manage databases and other applications.
JDS Uniphase is restructuring and consolidating its applications and databases and is hiring Oracle to manage the consolidated application environment. The consolidation project is already under way, and JDS Uniphase has reduced its IT budget by nearly 60%, according to company officials. The restructuring is expected to save JDS Uniphase some $35 million a year in IT costs, the officials said.
While not every enterprise can expect to see such dramatic results from outsourcing their applications, the JDS Uniphase deal does demonstrate Oracle’s ability to bring some order to an often chaotic applications management process. In situations where an Oracle-dominant set of applications exists – or where one is already in place – it makes sense to harness Oracle’s professional services to help integrate and manage it. While Oracle’s ability to manage mixed-vendor application environments may still be a matter of debate, the company could help cut cost and save time for its most deeply entrenched customers.
In addition to bringing more outsourcing customers into the fold, Oracle is making some positive moves to enhance its services. In January, Oracle CEO Larry Ellison announced plans to add disaster recovery capabilities – a key part of any comprehensive application management initiative – to the company’s outsourcing offerings. Ellison also detailed a program to help enterprises calculate the costs of using the Oracle Outsourcing services.
Perhaps most importantly, Ellison said that Oracle is planning to work more closely with other providers of software and hosting services. Although he did not give details, this effort is crucial to Oracle’s success as a provider of enterprise application management services. If Oracle is to be taken seriously as an integrator and manager of mixed-vendor environments – and most large enterprises fall into this category – it must demonstrate the ability to understand and control applications and services offered by other vendors.
In evaluating an outsourcing provider, particularly for applications management services, there are several key factors to consider: functionality, stability and compatibility. In its efforts over the last year, Oracle has demonstrated its ability to deliver functionality, both in terms of range of services and service quality. Oracle also has demonstrated relative financial stability, keeping its head above water as many other ASPs drown in a sea of red ink.
The question now is whether Oracle’s outsourcing offerings are compatible with the customer’s existing environment. Can it be objective, providing the same level of service for non-Oracle applications that it provides for its own software? Can it be trusted to do what’s best for the enterprise, regardless of which applications are involved?
Years ago, IBM’s services organization faced many of the same questions. Some observers believed that IBM could only be an outsourcing provider for “true Blue” IT shops. Over the course of time, IBM has largely dispelled those concerns, and IBM Global Services is now bidding regularly on outsourcing opportunities that involve very little IBM equipment.
Could Oracle make that same leap in the applications management space? It’s still too early to tell. But if the last year is any indication, it is making some steps in the right direction.
