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6/24/2009
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Ellison: Oracle Plans To Be No. 1 In On-Demand Software

It may take 10 years, the CEO acknowledges, noting that Oracle is currently only "a little bit" involved in cloud computing.

Oracle's goal is to one day become the No. 1 supplier of on-demand software, CEO Larry Ellison said in a quarterly conference call with analysts Tuesday.

Still, Ellison acknowledged that Oracle isn't a big player in cloud computing, and quarterly earnings show the company still highly reliant on the fees it collects from software Oracle customers purchase and install on their own premises.

In terms of software-delivery models, Ellison strived to position Oracle as a provider of whatever customers want: On-premises software managed by customers, on-demand software hosted and managed by Oracle, and on-premises software managed by Oracle.

When Morgan Stanley analyst Kash Rangan said that sounded like Oracle was getting into cloud computing, Ellison answered, "A little bit."

While Oracle has beefed up data center capacity in the past few years, it's always offered both hosted and on-premises software. The question is how its approach to cloud computing and/or software as a service will change with Fusion, a next-generation suite that Oracle said represents the best of all its software acquisitions.

"We are code-complete on Fusion applications," Ellison said. "We'll be announcing them later this year. Customers are trying them out, and we'll start delivering next year."

Ellison added that "all of our Fusion applications are on-demand ready ... so we see all of our application software, not just sales-force automation, but all of our application software going forward being sold in two ways."

Ellison did not specify how Fusion applications will be "on-demand ready." Some of that could be related to the applications' architecture.

Fusion applications were built along a model-view-controller architecture, which separates data from business logic and user presentation. In addition, Oracle is using Service Data Objects, a simplified approach to architecting Java objects for use as services.

The result will be "less monolithic" applications that are easier to change and customize, Oracle senior VP Thomas Kurian said in an InformationWeek interview earlier this year.

Still, sales-force automation continues to be a strong spot for Oracle in the SaaS world. "We think with virtually every time we compete with [Salesforce.com] on large deals with large customers we win, and in some cases we even replace them," Ellison said. "We think we can be the No. 1 supplier of on-demand software in that particular space."

Ultimately, Oracle's goal is to be the "No. 1 applications company, the No. 1 on-premises application company, and the No. 1 on-demand application company," Ellison said. This will require a "very gradual shift over a period of a decade," but Oracle expects its on-demand business to grow faster than its on-premises business, Ellison said.

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