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Demand Isn't High For Database Software


Few companies plan new purchases; most run the products they own

By Rick Whiting
InformationWeek
June 17, 2002 12:00 AM (From the June 17, 2002 issue)

The demand for database software will remain low for the near term, according to a recent survey of more than 600 business-technology professionals conducted by InformationWeek and Morgan Stanley Dean Witter. Nearly three out of four respondents have no immediate plans to buy database software or are limiting purchases to upgrades of what they already own. Only 27% need new database licenses to support growth or new applications.

Most companies are running the database software they own, rather than relegating it to "shelfware" status. Seventy-five percent of respondents say they're using all the database software they've purchased, while only 14% have unused database software sitting on shelves.

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Eric Rubin, CEO of Dreamfactory, talks about the company's Business Essentials, a suite of software services, including project management and business intelligence, that runs on the Salesforce.com AppExchange platform.
Those results suggest there could be pent-up demand for new database software and put into question speculation that companies have a glut of unused database licenses, either because they bought more than they needed before the 2001 recession, or because the economic slowdown has reduced the amount of database capacity businesses need today.

The survey findings are somewhat more optimistic than the results of a survey of Oracle database customers that Morgan Stanley conducted earlier this year. That survey found that only 6% had immediate need for new database licenses and 15% might buy new licenses if the economy improved.

But Charles Phillips, a Morgan Stanley software analyst, cautions against reading too much into the new results. Companies might not be using licenses to their full capacity, running a database licensed for 1,500 seats with just 1,000 users, for example. "That's common, especially since so many companies have had layoffs," Phillips says. "I'd be hesitant to say there's pent-up demand."

Loyalty ReignsThere are two ways to explain the 38% of survey respondents who plan to upgrade their database software, Phillips says. It could mean they plan to adopt a more expensive version of a database, such as moving from Oracle's Standard Edition to its Enterprise Edition, or add an option such as Oracle Real Application Clusters. But it might also mean they're simply planning to upgrade to the newest version of a particular product, Phillips says. That's usually covered by annual maintenance fees.

AngioDynamics Inc., a Queensbury, N.Y., medical-device manufacturer, last week licensed Microsoft's SQL Server for a data warehouse that will support competitive study, intellectual-property management, and sales-force automation applications the company is developing, IT manager John Logan says.

Why get more database software now? "We're developing applications that improve efficiencies and gathering data for sales and marketing," Logan says. And why SQL Server? "Cost," he says, referring to both the software's initial price tag and the cost to implement and manage it. AngioDynamics also has lots of in-house expertise with Microsoft technology, Logan says, which keeps training expenses down.

Demand ExpectationsThe survey has some good news for Oracle: 39% of respondents name the vendor as their "strategic database standard," followed by 27% for IBM's DB2 database for mainframes, 12% for Microsoft SQL Server, and 4% for DB2 for distributed systems. That contrasts with a Gartner Dataquest report issued in May, which found that IBM's database sales in 2001 eclipsed Oracle's for the first time, 34.6% to 32%, and that Microsoft held 16.3% of the market. Some analysts question those numbers, because IBM and Microsoft don't disclose database-sales figures.

Business-technology professionals are generally reluctant to switch database suppliers, the InformationWeek-Morgan Stanley survey finds. Eighty-five percent of respondents are either "unlikely" or "highly unlikely" to change vendors in the next 12 months, while 7% are "likely" to change and 8% are "definitely evaluating switching." The survey results also show that Oracle, IBM, and Microsoft customers are no more or less likely to be contemplating abandoning their current supplier.

Business-technology managers are more concerned with the performance of a vendor's product than with the vendor. Asked which attributes they consider most important for future database purchases, survey respondents list, in order of importance, reliability, price and performance, scalability, and ease of administration. Vendor reputation is dead last.



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