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5/19/2005
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Gartner: Oracle Strong In Databases, But It Must Execute On Applications

Gartner predicts that Oracle's Fusion efforts are likely to be a year later than Oracle has promised.

Oracle, arguably the dominant database vendor, is bent on expanding its sales in middleware and applications. But any stumbles in its plan to merge three sets of business applications will benefit its chief competitor, SAP.

Those were among the conclusions offered by Gartner analysts specializing in enterprise-resource-planning applications and database management. "They have their hands on the tiller, they understand what market segment they are selling into, and they are executing with strong financial management" of the company, Gartner analyst Jeff Comport said at Gartner Symposium ITxpo 2005 Wednesday in San Francisco.

"The challenge for Oracle is to move from individual products into an overall message" that sums up what it does for the customer, Comport said. That message hasn't emerged yet as Oracle engages in acquisition battles, such as the hostile takeover of PeopleSoft Inc. and the bidding war for retail software supplier Retek Inc., then integrates the resulting spoils into the company, he said.

The sometimes-disjointed air of Oracle's initiatives is reflected in the fact that the 11i series of its E-Business application suite hasn't yet been certified internally to run on the Oracle 10g database system, which has been out for a year, Comport pointed out.

But the Oracle brand is strong enough to drive sales beyond the core database system, even through database sales represent 70% of Oracle's revenue. Business applications represent 20%, middleware 8%, and other software products such as tools 2%. While Oracle is consistently strong in database sales, its application revenue has been "up and down, erratic," Comport said.

Oracle's moves to build out its application offerings are not inconsistent with its historic pattern of pulling as much data and content into the database as possible. Applications generate data and need to work closely with a database system. Building a company around the two is a viable strategy, Comport said.

Gartner analyst Lee Geishecker, however, predicted it will take a year longer than Oracle has promised to build out its Fusion framework, which will serve as a melting pot for Oracle's E-Business suite, PeopleSoft's Enterprise, and J.D. Edwards EnterpriseOne applications.

"Right now, Oracle applications are a collection of products, but that's temporary," Geishecker said.

"How temporary is temporary?" Comport asked.

"Oracle says its Fusion framework will be out in 2005. Gartner says 2006," Geishecker answered. "Oracle says the Fusion financial applications will be out in 2007. Gartner says 2008." Oracle will make good on its promise of Fusion financial applications becoming available in 2007, "but they will contain less functionality than current applications. Full-function financial applications won't be out until 2008," she said.

And any additional slippage or uncertainty in Oracle's execution of its application-merger schedule may aid what it sees as its chief competitor, application vendor SAP, Geishecker said in an interview after the session.

"SAP is one of the few companies to truly capitalize on the confusion" that was caused by the extended takeover battle for PeopleSoft, she said. SAP has sold itself as a safe harbor for applications buyers who are buffeted by changes in the market. And it will continue to support PeopleSoft and J.D. Edwards applications through its acquisition of the application service company TomorrowNow. Both moves are signs that it's trying to compete directly with Oracle, she said.

In the area of database scalability and reliability, Oracle is leading the market with its Real Application Clusters, Gartner analyst Donald Feinberg said. RAC lets customers use Oracle on large clusters or grids of low-cost servers, gaining reliability and scalability at a reasonable cost. Instead of getting reliability by backing up an eight-way server with another eight-way server, Feinberg said, a RAC customer can build out a cluster of 10 blade servers and get the same reliability as the eight-way live backup.

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