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March 20, 2000

Oracle Shifts Strategy, Partners With An ASP
Deal lets Portera offer Oracle financials, human-resources, and procurement apps

By Jennifer Mateyaschuk

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hat a difference five months can make for Oracle CEO and chairman Larry Ellison. At an Oracle event last October, Ellison said: "Unless the board of directors removes me from my job, unless I'm fired, we will never, under any circumstance, sell Oracle applications to other ASPs."

Portera Systems Inc., a provider of professional-services automation software, signed an agreement with Oracle last week under which Portera will rent Oracle financials, human resources, and procurement applications to its customers via the Web, virtual private networks, or wide area networks. It's the first time Oracle has worked a deal to have another provider offer its software in an application service provider model.

Despite his comments in October, Ellison was still on the job last week. An Oracle spokeswoman said Ellison didn't mean to imply that Oracle wouldn't partner with ASPs who develop software for vertical markets.

But analysts say the deal marks a switch in Oracle's strategy. Its ASP division, Oracle Business Online, requires customers to purchase a software license and pay up-front customization and implementation costs. Other ASPs typically let customers finance the software, or they rent it via a monthly subscription, as Portera will do with the Oracle applications it will offer. "Oracle may have realized the small and medium-sized business market is diverse and wants to buy hosted solutions in a variety of ways," says Laurie McCabe, an analyst for Summit Strategies.

Also last week, Portera acquired Invisic Software Inc. for $40 million, providing it with technology for contract administration and invoicing. It plans to integrate those apps into its online offering.

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