Oracle To Offer SaaS To Midsize Customers

Mid-market software-as-a-service will include the option of subscription-based pricing, the software company said.

Mary Hayes Weier, Contributor

September 22, 2009

3 Min Read

Oracle on Tuesday launched new software tools and services to help with application deployments in the midmarket, which makes up an important and growing segment of its customer base.

As part of the announcement, Oracle said mid-market software will include the option of subscription-based pricing.

This is important, because so far, subscription-based pricing has been limited to Oracle On Demand CRM and Oracle Beehive, its relatively new collaboration software. Unlike traditional hosting, subscription-based software -- also known as software-as-a-service (SaaS) -- usually includes a predictable per-seat price each month and is based on a multi-tenant architecture.

Much of Oracle's software is available as so-called "Oracle On Demand," but that's typically a single-tenant hosting model in which a customer pays license and maintenance fees, and Oracle hosts the software in its own data center. But now Oracle seems to be moving to true SaaS as an alternative, at least in the midmarket.

"That whole [On Demand] program is being reviewed right now" by top-level executives, said Mark Keever, VP of Oracle's midsize application program. For example, subscription-based pricing is under consideration for mid-market JD Edwards. Apparently, the buck stops with Oracle President Safra Catz, the top money mind at Oracle. "It's on Safra's desk," Keever said. "It's something we're interested in doing at Oracle."

In a conference call with financial analysts in June, CEO Larry Ellison emphasized the importance of Oracle having a presence in the on-demand software market, although he didn't specify as to whether it would adopt the less-profitable, multi-tenant subscription model. " 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 had said. This will require a "very gradual shift over a period of a decade," he said, but Oracle expects its on-demand business to grow faster than its on-premises business.

In the midmarket, customers are clamoring for on-demand options, Keever said. In fact, the company's largest midmarket integration partner in the U.S., DAZ, reports that between 70 percent and 80 percent of its customers are requesting that their Oracle software be hosted. "[Customers] don't want to be in the data center business," Keever said.

Oracle reports that it has 25,000 midsize companies as business application customers, up from 17,000 two years ago. It credits much of this boost to Oracle Accelerate, a program it launched two years ago that's designed to give integration partners the resources and software tools they need to develop industry-specific application and consulting packages that are attractive and affordable for midsize companies.

The Accelerate program includes Oracle Business Accelerators, software tools and templates designed to facilitate quick deployments. On Tuesday, Oracle announced new Accelerator toolsets for its Demantra demand -- planning software, its Agile product-lifecycle management solutions, Siebel CRM, and Transportation Management.

Oracle also announced it was teaming with HP to offer consulting services for midmarket industrial manufacturing companies deploying Oracle apps, and Accelerator tools for Oracle E-Business Suite running on Sun 64-bit/Solaris 10 systems.

InformationWeek has published an in-depth report on Sun's future under Oracle. Download the report here (registration required).

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