For larger companies, Oracle now offers application, database, and systems management services, administered remotely, letting customers house and manage the servers on which its E-Business Suite Online apps run. Oracle says most software will be delivered as a service within 10 years because that approach lowers maintenance costs. The monthly fee for the service is 3% of software license costs for remote hosting on in-house hardware or 5% of those costs if the hardware is housed at Oracle.
But some customers say that being in charge of the hardware isn't enough. "Software as a service is out of my control," say Pete Sattler, CIO of SPX Corp., a diversified manufacturer in Muskegon, Mich. "I have to continue on their maintenance, and they may do upgrades I don't need."
Since launching in 1998, Oracle's online services have attracted just 125 customers, and been plagued by management and customer turnover as well as schizophrenic relationships with ASPs. "That's not a real good track record," says AMR Research analyst Dave Boulanger. ASPs, including AppShop and Corio, host Oracle applications, but Ellison said last week that such companies "were doomed to failure."