Oracle's Vision Of The Future

Oracle has a new vision of the future. CEO Larry Ellison and a host of Oracle executives who were on hand Tuesday in Redwood Shores, Calif., to discuss the company's application hosting business, believe that in 10 years all business applications will be delivered via the Web as a software service, rather than shipped as a product that customers must implement, manage, and maintain. To that end, the company Tuesday introduced a suite of hosted accounting applications for small businesses, developed by NetLedger Inc. The service, renamed Oracle Small Business Suite, is available for $99 a month to companies with fewer than 100 employees.

NetLedger, a startup in which Ellison holds a majority stake, already has 3,000 small-business customers that use its payroll, accounting, and Web-store applications. Oracle says the application service is a direct attack on Microsoft's bCentral, a small-business portal, and Intuit QuickBooks, also available through the Web. Microsoft invaded Oracle's territory in April with its acquisition of accounting applications vendor Great Plains Software Inc. for $1.1 billion in stock.

In addition, Oracle unveiled a new deployment option for its E-Business Suite Online, formerly Oracle Business Online. The hosting service offers Oracle's suite of enterprise-resource planning, customer-relationship management, and E-business applications via the Web for a monthly fee. Customers now have the option of housing the hardware on which Oracle's applications run in their own buildings, rather than at Oracle. Oracle will provide application, database, and system management and support remotely, as long as customers use an Oracle certified hardware configuration and don't customize the software. Oracle charges a monthly fee of 5% of the total software license costs for the remote hosting service, and a 3% fee if the hardware is housed at Oracle.

Oracle has 125 Business Online customers and believes that within five years revenue from its hosting business will surpass its traditional software-licensing business. The feisty Ellison attacked the application service provider and Web-hosting market, pointing to struggling ASPs such as Corio and Web-hosting companies such as Exodus Communications. Software vendors are best suited to host their own applications, he says, because they have the scale and expertise to do it more affordably than anyone else. "It's just the software industry," says Ellison. "There is no hosting industry or ASP industry."