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October 12, 1998

Oracle Bets On The Net

CEO Larry Ellison says upcoming products will make computing easier and cheaper, but customers will have the final word

By John Foley

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racle's database business is under pressure. Its enterprise applications unit is underperforming competitors. Its electronic-commerce strategy has yet to strike a chord with customers. And its network computer concept has fallen flat. So why does CEO Larry Ellison think Oracle is in just the right place at the right time? Because everything Oracle does is tied to the Internet-and Ellison says customers are finally ready to turn to the Net to transform the way they do enterprise computing.

Seven months after overhauling its enterprise resource planning applications for Web access, and three weeks after unveiling plans to manage applications over the Web for certain customers, Oracle is about to roll out Web-ready versions of its database management system and front-office applications. The company is also incorporating Internet protocols into its messaging software, which will be relaunched next week as a high-end system for the Net. While Ellison concedes that Oracle's Network Computing Architecture has been a marketing flop, he argues forcefully that the technical and business merits of the company's two-year-old strategy are as sound as ever.

These new products and services, along with others in Oracle's portfolio, provide all that's needed to run an enterprise computing environment that resembles the Internet, says Ellison. The potential advantages include easy data access from virtually anywhere; the ability to automate business functions, such as purchasing, via "self-service" applications; and lower system administration costs. Ellison estimates an application can be deployed on an intranet at about one-tenth the cost of a client-server application.

pie chart But will companies buy into the concept-which Ellison now calls "Internet computing"-with its emphasis on big, centrally managed servers that support browser-based thin clients, PCs, and mobile devices? It's far from certain. While many companies are doing business on the Web, few are ready to cast aside all their client-server applications in favor of corporatewide intranets.

"We've got to make sure everything works as advertised," says Robert Moon, VP and CIO of Micros Systems Inc. in Beltsville, Md., which provides point-of-sale systems and other technology to restaurant and hotel chains. Micros Systems runs Oracle's financial and order-entry applications, which are available to about 800 of the company's employees equipped with fully configured PCs. But if Internet computing works as Ellison says it will-and Moon intends to test it-Micros Systems will probably move in that direction. "I would much rather have people access [the apps] by browser," says Moon.

Oracle has a lot to prove. The network computer market, which Ellison a couple of years ago predicted would reach 100 million units by 2000, is trending toward about 10 million, according to Zona Research. Oracle's Web-ready ERP applications, introduced in April, aren't widely used, with many customers still in the evaluation stage. Micros Systems' Moon says deployment of those apps requires a "big bang" approach when migrating from a client-server environment. But Ellison is undeterred. "All corporate networks will be Internets," he says. "Oracle's future is the Internet."

Two products intended to make Internet computing a reality are an upgrade to Oracle's flagship database management system, Oracle8i, and a new release of its Front Office applications, version 3.0. Oracle8i, in beta tests now and scheduled for release by year's end, comes with a Java virtual machine, support for Java stored procedures and HTTP, Web development tools, and a file system for data stored in Internet formats-all designed to make it easier to use an Oracle database in a Web environment. Oracle is "embracing open standards" with Oracle8i, says Merv Adrian, an analyst with Giga Information Group. "It's a very important release vis-à-vis Oracle's role on the Internet." Rather than being required to use Oracle's proprietary PL-SQL language for database programming, developers will have the option of working in Java.

Oracle's Front Office 3.0 applications, due this month, are equally important. It's Oracle's first Front Office release built completely around the thin-client model. New features in the release include call-center and marketing automation applications, E-commerce functionality, and sales and service capabilities for the Palm Pilot. Those apps will complement the Web-ready versions of Oracle's ERP applications, which are among the first on the market to be accessible via browsers.

Oracle's Web-based applications outsourcing service, Business Online, is being tested now and is slated for availability early next year. For a monthly fee, Oracle will manage application servers for other companies, making it possible for employees to access sales forecasting or order-management applications, and eventually other kinds of apps, over the Web. "A lot of people don't want to maintain their own servers," says Ellison. "It just seems obvious this is a cheaper, more reliable, and more feature-rich way of delivering applications."

Core Product
Perhaps no product is more central to Oracle's thrust than its database. Oracle8i should spur more companies to deploy databases on the Web and could keep the company's database-related revenue grow- ing in the 15% to 20% range-not bad for a market that some analysts say is saturated. "This is far from a mature market," Ellison insists.

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