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Oracle Legacy Apps Holding Fusion Back, Says Forrester

Oracle customers are standing pat with E-Business Suite, PeopleSoft, Siebel and other legacy apps, shortchanging the chances of success for Oracle Fusion Applications.

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What do Oracle Fusion Applications and Prince Charles have in common? They're both direct heirs to the throne, but it doesn't seem like either one will ever get a chance to wear the crown. At least that's an analogy you might draw reading "Oracle's Dilemma: Applications Unlimited Versus Oracle Fusion Applications," a report released on Monday by Forrester Research.

Applications Unlimited is a policy Oracle adopted way back in 2006 as a promise to keep supporting and updating applications including Oracle e-Business Suite, PeopleSoft, JD Edwards and Siebel CRM. Fusion Applications were in early development at the time, but they were being touted as the next-generation application suite that would bring together the best of Oracle's own enterprise applications and those it had acquired. The Apps Unlimited policy was intended to allay customer concerns that Oracle might kill their incumbent products off and force them to upgrade to Fusion.

That was seven years ago, and Oracle has done a good enough job of keeping its various legacy apps up to date that a majority of customers want to keep them going, according to Forrester. In a survey of 139 Oracle applications customers, Forrester found that 64% intend to upgrade to the next generation of one of those legacy apps while 25% said they plan to keep them running without ever upgrading them.

The bottom line, according to Forrester, is that too many Oracle customers are standing pat, and not enough are embracing Fusion as the future. As a result, "Oracle's application revenue growth has underperformed both the overall software market and SAP, resulting from slowing growth in existing apps and too little revenue from its Oracle Fusion Applications," Forrester wrote.

[ Is Oracle really serious about the public cloud? Read Oracle Wants Cloud Cake And Hardware Wins. ]

So what about the Oracle customers who are prepared to migrate to new apps? Cloud-based applications, or software as a service, is the leading option, but 17% of respondents in Forrester's survey said they would seek such applications from third-party vendors while only 11% said they would seek cloud apps from Oracle -- the options here being Fusion, plus acquired apps such as RightNow CRM and Taleo human capital management (HCM). Upgrading to new on-premises applications is another option, but here, 12% said they would migrate to apps from third party vendors while only 8% said they would choose new packaged apps from Oracle.

The higher stats for third-party apps should be alarming to Oracle, and there's anecdotal evidence that pure-play vendors, such as Salesforce.com, Workday and others, are getting most of the cloud business, according to Forrester analyst and report co-author Andrew Bartels. Part of the problem, Bartels told InformationWeek, is that Fusion Applications aren't all ready for prime time. "Some Fusion apps are quite good and others are less mature," he said. "And in some instances, Fusion Apps are being developed to supplement, rather than replace, legacy transactional applications." Fusion HCM and financials apps, for example, are actively promoted by Oracle as cloud-based add-on apps for Oracle E-Business Suite or PeopleSoft.

The "dilemma" Forrester references in the title of its report is that Oracle, and its customers, must reconcile the tension between the Applications Unlimited policy and the desirability of having a single, modern go-forward applications portfolio that will benefit from focused research and investment so it can outclass competitive offerings. As Forrester sees it, Oracle will either have to move away from Applications Unlimited and more forcefully toward Fusion or it will have to go the other way and continue to update legacy apps while treating Fusion as just another app rather than the application suite of the future.

It's Forrester's bet that Oracle will eventually have to push Fusion and other cloud apps, and that will be through a combination of carrots and sticks. The carrots are the new features and innovations built into the new apps, such as collaboration, contextual business intelligence and exception-management features. What might be the sticks?

"They might not end Apps Unlimited but rather whittle it down a bit by, for example, going to longer release cycles, increasing the cost of support or reducing the level of support," Bartels speculates.

Oracle did not respond to requests for comment in time for this story, but in recent statements and interviews it seemed to be sticking by the current, middle-ground strategy of continuing to support Apps Unlimited while also touting Fusion and newly acquired cloud products as the next-generation apps.

The risk in change is that Oracle will face a backlash if it backs away from Applications Unlimited too quickly. On the other hand, there's only so much you can do to update aging products, so customers would face increasingly stodgy products if they stick with the old. And Oracle will continue to stifle growth and shortchange its future, Forrester warns, if it doesn't move more aggressively toward the future.

Betting that Oracle, will, in fact, step up efforts to move customers toward Fusion, Forrester's report make four recommendations to customers:

1. Assess the long-term sustainability of each of your enterprise apps.

2. Develop a plan for replacing, upgrading and adding applications.

3. Strike best-possible deals with Oracle for Fusion migration.

4. "Shift to the cadence of the cloud" when embracing new apps.

That last point means you should "embrace the cloud's managed services model to keep applications up-to-date, whether you opt for a pure-cloud model or a hybrid delivery model."

Technology industry analysts aren't the only ones raising warnings about Oracle's current path. Nomura equities analyst Rick Sherlund made a similar point about "Fusion confusion" in a research note last year. Unless Oracle posts strong software growth numbers in the quarters ahead, you can bet that these voices for change will grow louder.

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GaneshS687
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GaneshS687,
User Rank: Apprentice
8/29/2014 | 8:29:53 AM
re: Oracle Legacy Apps Holding Fusion Back, Says Forrester
Just because some of these apps are so old does not mean they are not delivering what the business needs. Many of these so called legacy apps are built using powerful 4GL tools in the 90s and the current crop of web applications are pathetic including Fusion apps. The problem is with the media hype which categorizes a technology as legacy without looking at the maturity of the tool and the ease of development. I would strongly recommend reinventing Oracle D2k as the tool stack for developing new applications instead of wasting on Oracle fusion which is based on a Java framework which is a 3GL and will be one step backward. Also, do not look at web applications to solve your ERP requirements as they are all based on these amateur web development tools.
GaneshS687
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GaneshS687,
User Rank: Apprentice
8/29/2014 | 8:19:32 AM
re: Oracle Legacy Apps Holding Fusion Back, Says Forrester
Fusion apps are not proven yet. Moreover, they are based on a Java framework and Java itself, even after 20 years, is still not in the same maturity level which a 4GL so called Legacy tool back then in the 90's. Let's face it, if a tool lacks the capability of being a RAD, it is never going to be accepted by the Business users. Java development has never been at 4GL standards and this explains why Oracle Forms is still preferred. I would strongly recommend Oracle to look at the 4GL tools and reinvent them for the current age. They can look at investing on Oracle D2k as a viable technology framework instead of frittering away their energy on Java which is never going to make the cut. Oracle should realize the futility of investing in Fusion which is never going to be a true 4GL.
negi86
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negi86,
User Rank: Apprentice
3/6/2013 | 8:15:01 AM
re: Oracle Legacy Apps Holding Fusion Back, Says Forrester
EvosysG«÷ HCM practice is an experienced team of Oracle practitioners with depth and breadth across the suite of Oracle Human Capital Management modules.

About Evosys: Evosys is an Oracle Partner providing consulting services for implementation and maintenance of Oracle Applications. We are a market-focused, process-centric organization that develops and delivers innovative solutions to our customers, consistently outshining other market players. http://www.evosys.co.in/HumanC...

For any Oracle Service, Business Partnerships, Sales Referrals, Collaborations & Tieups, Please contact business@evosys.co.in & we shall contact you immediately.

Contact Business@evosys.co.in
lgarey@techweb.com
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lgarey@techweb.com,
User Rank: Apprentice
2/13/2013 | 3:21:44 PM
re: Oracle Legacy Apps Holding Fusion Back, Says Forrester
Or, by stopping support at some point, Oracle could move some savings to dev, as Doug sggests, and use some to lower costs so that its new suites can compete with SaaS offerings. It does not seem sustainable to support everything forever. IT will get over it with Win XP, they'll get over it with Oracle. Lorna Garey, IW Reports
D. Henschen
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D. Henschen,
User Rank: Author
2/12/2013 | 7:52:25 PM
re: Oracle Legacy Apps Holding Fusion Back, Says Forrester
I can't agree that it's the right move to promise unending support for apps developed as long ago at 1977 (JD Edwards), 1987 (PeopleSoft), or even 1993 (Siebel). Supporting and upgrading applications costs a lot of money, and each dollar spent on new development could go toward new cloud apps that could carry Oracle past 2020. The Apps Unlimited Promise should have been "Apps Until 2015." Maybe SAP will discover the downside of the "Business Suite 7 until 2020" strategy. But then, SAP has only one suite to keep up to date.
FritzNelson
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FritzNelson,
User Rank: Apprentice
2/12/2013 | 6:00:54 PM
re: Oracle Legacy Apps Holding Fusion Back, Says Forrester
It feels like Oracle is between a rock and a hard place here, but it also seems like they've done everything they can, supporting legacy apps, offering new apps, allowing application delivery in every possible form. In short, they've made all the right moves. That's all assuming that Fusion applications are worth the price of admission. If so, Oracle will see success eventually, I believe. But at the same time, there's tremendous risk: Customers who may consider change will also consider alternatives, and that could mean success for players like Workday and Salesforce, as well as SAP. It's all there on the line for Oracle to win or lose.
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