InformationWeek
Defining The Business Value Of Technology
February 7, 2000
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Business Online Transforms Oracle Software Sales
By Jeff Sweat
Business Online alters the way in which Oracle sells its software: big, up-front costs are giving way to periodic subscription fees. That, combined with the system's minimum impact on an IT department, gets Oracle into smaller businesses that it couldn't previously approach.
When PointClick.com Inc., an E-commerce vendor, was looking for financial applications last summer, the American Fork, Utah, startup was reluctant to approach Oracle because the price of its traditional applications was too high. "There's no way I could have afforded to buy Oracle financials wholesale. It would have taken my entire budget," says Craig Brown, PointClick.com's chief technology officer. But Oracle Business Online saved the company 50% to 60% in licensing costs up front. And it had the ability to handle the millions of transactions PointClick.com anticipates getting.
The approach isn't without its disadvantages. Because it's hosted by Oracle over the Internet, the strength of PointClick.com's Internet connection is critical. And since Oracle controls the applications, PointClick.com doesn't have full access to the configuration features that would make integration easier.
Oracle is also dropping its Oracle8i database prices to a fixed lower price in an attempt to expand sales and speed up the sales cycle by eliminating the negotiating of software prices. "We're making it easier to do business with us," CEO Larry Ellison says.
The 25% to 30% price cut will also serve to push more Oracle business to its Web store, where Ellison says the company hopes to route all its software sales by year's end. But the new model is still limited--Oracle says the fixed prices will apply only to sales of less than $500,000, and it won't apply to applications at all.
racle isn't just selling to E-businesses--it's becoming an E-business, too. The vendor was one of the first software providers to enter the application service provider market when it launched its Business Online hosting service roughly 20 months ago as an alternative to lengthy, costly application implementations.
Return to main story, "Oracle's Talking: Should You Be Listening?"
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