Oracle Applications - An Internet-Reinvented Feisty Challenger

Oracle Applications - An Internet-Reinvented Feisty Challenger
P.J. Jakovljevic - September 19, 2000

Vendor Summary

Founded in 1977 and headquartered in Redwood City, CA, Oracle Corporation is still the No.1 database software vendor, and is the world's second largest independent software company (after Microsoft). Oracle is also the second largest enterprise applications vendor (after SAP) with $2.7 billion revenue in its fiscal 2000 (slightly over 14% of global ERP market), and over 6000 installations worldwide. It maintains a presence in over 160 countries, with close to 50% of its revenue derived from the international market. The Company went public in 1986 and currently trades on NASDAQ.

The Company's software products can be categorized into two broad product families: System Software, and Business Applications Software. Systems software provides a platform to develop and deploy applications for computing on the Internet and corporate Intranets. The Internet platform includes database management systems (DBMS) and development tools, which enable users to create, retrieve and modify the various types of data stored in a computer system. Business applications software automates the performance of specific business data processing functions for customer relationship management (CRM), supply chain management (SCM), financial management, procurement, project management, human resources (HR) management, and business intelligence (BI).

Business applications are available in more than 30 languages and run on a wide range of hardware and operating systems. Oracle is one of the first software companies to implement the Internet computing architecture (ICA) for developing and deploying enterprise software across its entire product line. ICA is an architecture comprised of data servers, application servers and computers or devices running a web browser. Oracle claims that ICA centralizes business information and applications, allowing them to be managed more easily and efficiently.

The Company offers consulting, education, support, and systems integration services in support of its customers' use of its products and derives 56% of its revenue from these services. For customers who choose not to install their own applications, Oracle's Business On-Line offers a hosting service that delivers enterprise applications across a network that can be accessed using a browser.

In the US, Oracle markets its products and services primarily through its own direct sales and service organization located in approximately 90 metropolitan areas. Internationally, the Company markets its products primarily through the sales and service organizations of approximately 60 subsidiaries. The Company also markets its products through indirect channels, which are called Oracle Alliance partners, and through independent distributors in international territories not covered by its subsidiaries' direct sales organizations.

In June 2000, Oracle announced the departure of Ray Lane, Oracle's President and Chief Operating Officer. Lane managed the company's day-to-day operations since 1992, a critical time in Oracle's history. During Lane's eight-year tenure, Oracle's database business began to dominate the market, while its application business captured the No. 2 spot. While Oracle's CEO and Chairman Larry Ellison is seen as the visionary, Lane was regarded by Wall Street and many industry analysts as Oracle's ballast, the one who translates the vision into execution. (See "How Detrimental Can a 2nd-In-Charge's Departure Be?")

Vendor Trajectory and Strategy

It is remarkable how much has changed in Oracle's applications business during the last two years. Oracle is indisputably the most reformed applications vendor, having achieved significant growth in total revenue, license revenue and net income during that period. Oracle has recently been addressing past issues like improvement of relationships with its systems integration and technology partners, some of whom remain wary and at arm's length owing to Oracle's direct competition with them. That the latest Oracle earnings showed only a modest increase in its consulting revenue might be an indication of Oracle's fairer treatment of its consulting partners.

Times have drastically changed, and applications are now the driving force of the company's business. At the same time, Oracle has relied significantly less on its direct sales force, since customers can purchase its products through a number of additional channels, including the Internet.

After years of a power struggle with its independent applications user group (OAUG), Oracle Corporation is to host its own application user group conference in early 2001. Being an aspirant for the applications market throne without being in control of its users association would be a daunting undertaking. The company that claims to be the leader in the CRM market would be hard pressed to explain how it does not listen more closely to its customers' voices. (See "Oracle (Finally) Learning and Applying Its Own CRM")

Oracle had suffered initial setbacks as it moved its entire enterprise product line to the Internet and was losing customers that were not ready to buy into the vision. However, we believe that Oracle's far-sighted strategy will pay off in the future through increased sale of its enterprise applications beyond its core ERP product.

Following is a summary of major developments for Oracle during the past year with respect to the following areas:

  • New Web-based Products Developments

  • Acquisition

  • Partnership

  • Competition

New Web-based Products Developments

Oracle integrates front and back office with Applications 11i
In September 1999, Oracle took a major step towards providing a fully integrated front and back office applications suite by launching Oracle Applications 11i at its Applications' User Group conference in Orlando, Florida. (See "Oracle integrates front and back office with Applications 11i")

Oracle laid out the details of its Oracle 11i application suite, which adds new application modules and integrates enterprise resource planning, customer-relationship management, supply-chain, and E-business applications in a single database. In 1997, Oracle began its first endeavors to deliver front-office applications, with a handful of unimpressive tools and a few dozen developers. Two years, several acquisitions, 900 new developers, and a third of Oracle's humongous R&D budget later -the front-office strategy is paying off better than anyone could have expected.

The new release will do away with the company's separate releases for ERP and CRM. By linking all applications together, Oracle claims that companies can now get a complete view of company operations and customer interactions. This is coupled with order management in an enhanced supply-chain management suite. The suite pulls together applications that have traditionally addressed only individual links of the supply chain, such as demand planning, logistics, and manufacturing resource planning.

The vendor also announced a business intelligence suite revolving almost entirely around customer-relationship management, including Marketing Intelligence, Customer Intelligence, Sales Intelligence, Call-Center Intelligence, and E-commerce Intelligence. The suite will analyze sales and marketing campaign success, customer cost and profitability, sales pipelines, and customer service, allowing companies to not only track what customers have done, but also why they did it. Despite the new features, the enthusiasm was tempered somewhat by the timing of the release. It was originally intended for release in the fourth-quarter 1999, but slipped to the first quarter 2000 for financials, projects, human resources, supply chain, and manufacturing, and the second quarter for the CRM and order-management applications.

Oracle Data Warehouse Builder
Oracle announced Oracle Warehouse Builder, an extensible easy-to-use data warehouse design and deployment framework. This is part of Oracle's Intelligent WebHouse Initiative. It automates much of the work that goes into creating a powerful single data store for e-business analysis. It has the ability to integrate historical data with the massive daily influxes of online data from web sites. (For more information, see "Oracle Warehouse Builder: Better Late than Never?".)

Oracle8i Release 2
With the release of Oracle 8i, Oracle has made great progress in turning their flagship database product into a Web-enabled technology. (For more information, see "Oracle8i Release 2 - Ready to Storm the Web".)

Oracle Jumps Into the SCM Market
In May 2000 Oracle released its Advanced Planning and Scheduling (APS) applications as a new addition to its e-business suite, Oracle Applications Release 11i. This application targets companies with extended supply chains that wish to collaborate with business partners via online trading marketplaces. (For more information see "Oracle APS Makes Its Debut" and "Oracle Proud To Be Number Two".)


Oracle Buys Carleton Corporation to Enhance Data Warehouse Offering
In November 1999 Oracle enhanced its Data Warehouse offering by purchasing Carleton Corporation. Carleton was an early innovator of data quality and mainframe data extraction software for customer-focused data warehousing applications. (For more information see "Oracle Buys Carleton Corporation to Enhance Warehouse Offering".)


Oracle Makes a Foray Into B2B Marketplaces
Oracle has been forming partnerships that can establish it as the destination for Web-based enterprise software. Central to this approach has been the formation of Internet trading exchanges, which companies in vertical industries can use to share information from suppliers. So far, Oracle has signed on as a principal technology provider for the following exchanges: GlobalNetXchange, which serves the retail industry, and RetailMarketXchange, for convenience stores.

In November 1999 Oracle and Ford Motor Company joined to create an automotive online supply chain, dubbed AutoXchange. AutoXchange is expected to handle Ford's $80 billion in annual purchasing transactions, involving more than 30,000 suppliers, as well as its total $300 billion extended supply chain. (For more details see "Oracle is Word One at Ford".)

Oracle also had plans to open its own business-to-business marketplace for office supplies, services, and information, called Oracle Exchange, after the launch of AutoXchange. So far, the company has signed up several hundreds companies to participate, including renowned names like, Boise Cascade Office Products, Compaq, Dun & Bradstreet, Office Depot, and Staples.


Oracle Gets SAP'ed by IBM
SAP has abandoned Oracle and is standardizing on DB2. IBM's DB2 is strong competition for Oracle - DB2 is faster. Further in many cases SAP applications are already adapted to IBM products. Siebel already prefers IBM. (For more information see "Oracle Gets SAP'ed by IBM".)

Oracle Loses Again
In January 2000, SAP AG chose SQL Server 7.0 as its strategic database for the Windows 2000 platform. SAP and Microsoft will cooperate to make the Windows 2000 OS available as a platform choice for customers wishing to implement solutions. (For additional details see "Oracle Loses Again".)

Enterprise Financial Application Software: How Some of the Big ERP Vendors Stack Up
To learn how Oracle fared in a case study of four major ERP vendors, J.D. Edwards, Lawson, Oracle, and PeopleSoft, which is based on a software selection effort that was facilitated by TEC during the second half of 1999, see "Enterprise Financial Application Software: How Some of the Big ERP Vendors Stack Up"

More Vendors Bail on Oracle in Favor of IBM
For a discussion of the trend toward IBM DB2 and the resultant lost business for Oracle's data warehousing products, see "More Vendors Bail on Oracle in Favor of IBM"


Vendor Strengths

Corporate Viability: Oracle has a substantial lead over most of its peers in terms of income, growth and profitability track (See Figures 1 - 3), with sustained investment in R&D in terms of raw dollars of the R&D amount. Furthermore, Oracle's large worldwide sales and professional services resources provide it with a balanced revenue mix, which additionally contributes to enviable corporate viability. Oracle has been one of the first ERP vendors to acknowledge consultancy services as a major revenue contributor. Its consulting organization provides much more focused implementation than most of other ERP or CRM players. In addition, having been able to provide a complete solution with a minimum reliance on 3rd-party products (and, consequently, with a lesser cost of software license), Oracle should continue to post very high margins and profits.

Figure 1

Figure 2

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Figure 4

Brand Recognition and "Mind Share" Momentum: Oracle has recently made inroads into SAP's and Siebel's absolute leadership in their respective markets by increasing its overall applications market share by at least 2%. It has particularly been successful in creating respectful name recognition in the manufacturing sector (with its flow manufacturing and process manufacturing modules) and in building vertical Internet marketplaces. It has also made a foray in the mid-market with its FastForward and Oracle Business OnLine applications leasing initiatives. With an extensive user base spanning industries such as aerospace, automotive, retail, financial and manufacturing (to name but a few), Oracle can develop and deliver solutions to a wealth of industry verticals, especially by offering them extended ERP components and providing participation in Internet exchanges. Moreover, for "religiously" Oracle-centric customers, the company is able to provide the desired technology infrastructure and simplicity of the environment.

Product Horizontal Breadth and Scalability: The Company may have an answer for many aspects of e-business besides online shopping. Oracle offers sales force automation (SFA), customer service, order fulfillment, and supplier relationship management, along with databases & data warehousing, online exchanges, e-procurement applications, front-office tools, business intelligence, and enterprise resource planning (ERP) applications. Few, if any, vendors can provide tightly integrated and fully configurable applications of this magnitude under one umbrella. Oracle's functional scope has also been significantly increased across the board, particularly with its CRM suite that Oracle claims to have fully integrated with the back-office.

Consequently, Oracle offers its eBusiness Suite as a solution that could bundle necessary application components within a single integrated product (a "one-stop shop"), thereby avoiding the middleware porting and connectivity standards issues. A consistent database schema across the entire suite may avoid the data duplication required when implementing a multi-vendor best-of-breed solution. Avoiding the need for integration between disparate components reduces the cost and risk associated with implementation and maintenance and the product can be implemented more quickly. The approach can also lead to more effective customer relationship management since the customers should obtain the identical response from the business application regardless of which communication channel they use (Internet, call-center, direct mail, etc.).

Early Adoption of Internet Strategy and Current Market Visionary Perception: While it has possibly not pioneered the notion of tapping into complex corporate information through a Web browser, Oracle, notwithstanding, has a head start on most of its competition pertaining to Internet-based applications, and the company still leads the ERP pack both on product technology vision and execution. Where Oracle is apparently winning, is in its quest to prove a point that the business application market's move toward e-business and the Internet is a prerequisite for survival and any subsequent success. To that end, the company has radically changed its product architecture within a short time bracket. Only three years ago, it was struggling with its fat client architecture, and had a significant Y2K compliance issue. Today, through Web-based technologies and simplified screens its applications have also appealed to a great number of casual users. The system also provides an event-driven, graphical workflow tool that uses procedural modeling.

Demonstrating "Eating Its Own Dog Food" Example: Oracle has also undisputedly succeeded in its declared objective of saving internal costs by deploying its own eBusiness and CRM products. It has unified many of its sales and administrative processes and has reduced overhead by over 44% as a result. While the aim was to reduce cost by $1 billion, the actual savings have almost reached double that figure. Would anybody need a better proof of what Oracle products could possibly do for another similar global corporation? However, Oracle will have to ensure spotless performance of its applications on the company intranet, since any glitches would be embarrassingly public.

Vendor Challenges

Product Immaturity, Uneven Functional Depth and Vertical Focus: The Oracle Applications 11i product portfolio, achieved through a number of acquisitions (Datalogix, TSC, Geodan, Tinoway, Versatility, Concentra), has seen hefty delays resulting from resolving integration issues and reworking disparate pieces into a single schema/data model. There are still indications of the products having different "look-and-feel" across the range. The number of acquisitions over the last few years has created the clutter of many different technologies and applications that required true integration.

The delay in launching the Oracle Applications 11i speaks in that regard. It should have been made available by the end of 1999, which did not happen and which suggests that there have been glitches with integrating the diverse software packages. Presumably, a lot of the time has gone into upgrading the existing products to ensure compatibility within the entire suite. How good the integration is remains to be seen. Moreover, if one should judge the past, it is to expect product quality problems with its immature product release as well as uneven functionality across the functional breadth.

Oracle still may not have the maturity and depth of more-established CRM vendors such as Siebel, Vantive and Clarify. For instance, Oracle's call center is missing several key pieces, including blended call support and predictive dialing. Some users and analysts also say Oracle's marketing-campaign-management component is weak. As for Oracle's SCM product, while Oracle handles well the order management and fulfillment needs of the supply-chain process, some features are still missing. For example, there is limited support for warehouse management and layout optimization as well as strategic route planning to optimize fixed routes or to optimize fleet size. Furthermore, its B2B sell side product has been both late-to-market and still has inferior functionality compared to equivalent niche players' products (Ariba and Commerce One).

Moreover, Oracle functionality is still very horizontal except in its traditionally strong verticals like telecommunications, U.S. federal government, and manufacturing. Oracle did, notwithstanding, deliver a number of business models for its CRM product in the hope of streamlining the implementation process. These particular Oracle Business Models (OBM) are focused on what Oracle regards as four core customer facing activities, namely: Customer Interaction Management, Customer Service Management, Sales Management and Marketing Management. We consider this somewhat insufficient. Although these OBM's will provide some help to implementation, Oracle should have focused on vertical industries, like Siebel, and SAP typically do, rather than task specific, horizontal functionality.

Confinement to Oracle Database: Virtually all Oracle applications require a runtime version of the Oracle RDBMS. While this is beneficial for any enterprise that has standardized on Oracle, because the Oracle applications are optimized to run on its database, some companies may find this religious approach restrictive and deterring. This may become an even greater challenge in the future should IBM and Microsoft continue to gain market share in the database market.

Possibly Risky Strategy of Abandoning Client/Server Architecture: Oracle's business may be hurt by the market's generally low awareness of the Internet computing architecture advantages. An initially low response of Oracle customers (less than 40%) to switch to ICA speaks in that regard. At this stage, users mainly require the look and feel of the Internet and, therefore, other Web-enabled products may not be seriously disadvantaged while competing against Oracle Applications 11i.

Furthermore, the client/server architecture is still far from being dead. There is a great likelihood that client/server and Internet architectures will coexist for the long time to come until interruptions and Internet instability are tremendously curbed. Like its direct competitors, Oracle should also carefully reevaluate its product migration strategy from current product instances (10.7 and earlier), in order not to alienate and disillusion its customer base.

Uncertain Market Acceptance of Oracle's 'One-Stop Shop' Mantra: While Oracle's 'one-stop' shop mantra is a compelling message, other established players, such as SAP, J.D. Edwards, and PeopleSoft will not sit still - they will make every effort to deliver a seamlessly integrated bundle of point solutions. It is unlikely that the high-end of market is going to buy Oracle's integrated solution mantra. Flexibility is the word often associated with the New Economy. The fact remains that most of Oracle's potential large customers will have already invested in other solutions for some parts of their overall business requirement. Even in an unlikely scenario of these customers jumping on replacing existing components with the Oracle's, Oracle would face a challenge of integrating with other vendors' software.

Meanwhile SAP has changed its strategy of developing CRM and B2B solutions in-house and signed a reseller agreement with Nortel/Clarify and product alliance with Commerce One. Expecting large numbers of these customers to replace SAP's endorsed solution with Oracle is unrealistic. Oracle may respond that its individual components are based on open standards so that integration would not be an issue. While some may see contradiction in a proposition that attempts to cover the integrated solution and best of breed religion at the same time, we would support Oracle's open systems intentions if that were the case.

Oracle is openly anti-Microsoft and not overly friendly to the IBM standards either, which is not exactly the ideal attitude for interconnectivity. As a matter of fact, we believe that showing some humility and willingness to compete on a component per component merit basis against Siebel, SAP, PeopleSoft or any other competitor instead of its current 'product totalitarian' approach should not hurt Oracle unless there is a significant lack of functionality. The reality is that, at this stage, Oracle CRM components are dependent on its back-office system, with some exception to SAP R/3 system for which interfacing Oracle has made some orchestrated effort.

While the sole source message may strike a chord with a number of CIOs tired of integrating multiple technologies, particularly in the mid-market (where, on the other hand, Oracle's liability lies in lack of support for MS SQL Server), there are also a number of savvy users who know that not all CRM components have to be necessarily tightly integrated with the back-office; the functionality is what matters much more in some instances. An integrated suite of this nature may raise the proprietary software issue, which more and more companies are trying not to get locked into. This could indeed be a difficult long-term obstacle for Oracle to surmount.

Fierce Competition and Concerns About Oracle's Business Ethics: Bitter and relentless competition, often involving hostile rhetoric, on concurrent fronts against the other software giants, some of them still strange bedfellows (Microsoft, IBM, SAP, Siebel) may lead to a lack of focus on execution. The market has recently witnessed a very public disagreement of Oracle with both SAP and Siebel, which have consequently chosen IBM as their preferred database partner. The market was even more flabbergasted with the very recent "trash-gate" scandal when Oracle was caught offering cleaning staff cash for shredded trash in its spying campaign against pet peeve Microsoft Corporation. That seriously questions Oracle's position on privacy protections for customers and on intellectual property theft for competition, which can seriously hinder its ability to attract customers to its product offering.

While Oracle has been addressing the improvement of relationships with its systems integration and technology partners, some of those remain spotty and at arm's length, owing to the fact that the company has provided an immense toolset and application suite that brings it into direct competition with its traditional partners. There have also been a number of disgruntled customers in the past that felt that the company took them for a "one implementation stand" stint, and was more interested in its success at the time than for a true partnership and customer success.

Management Shakeup, Alleged Unfair Dismissals' Bad Publicity, and History of Failed Management Decisions: Oracle has also experienced a notable exodus of key personnel, its president Ray Lane, and the head of its European operations Pier Carlo Falotti, to name but a few. The long-term impact of the departure of Ray Lane has yet to be determined. His successor needs to provide the stability to counterbalance Oracle CEO's visionary, but also whimsical and willful leadership, with a propensity to occasionally take a totalitarian approach in managing day-to-day company business.

The company has a history of management decisions that have earned it the reputation of "vaporware" leader (See Hoover's Online Company Profile). It has been lambasted by a competitor's CEO as the company that "can no longer tell the difference between fact and fiction". The recent attempt to resurrect a former vanity project, the failed Network Computer (NC) initiative in 1996, with still little evidence of any serious demand, might be a forewarning of recidivism. On the other hand, Oracle's chairman and CEO insisted last year that Oracle would never license its enterprise applications to third-party application service providers. The recent departure from that stance may be an indication of Oracle learning pragmatism.

Sales force orientation: The Oracle sales force will need to embrace a "service" sales model as the company has began supporting hosted applications and Internet solutions. This is a departure from the license-based architecture the company has traditionally sold. Oracle will also have to carefully execute its continued direct sales force reduction, since there is a limit to the potential of selling expensive, mission critical software products via DIY Oraclestore Web site. The idea of placing $millions order without a personal touch is not very plausible.


Vendor Predictions

We envision a healthy annual Oracle applications growth (25%-45%) in 2000, higher than those of main competitors, particularly owing to its association with Internet exchanges. However, toppling SAP's ERP market share remains a very tall order (20% probability within 5 years time).

CRM and strategic procurement will be significant contributors to Oracle Applications sales revenue (up to 35% within next 3 years). While overthrowing Siebel's leadership in CRM arena may be achievable within 3 years time (35% probability), we believe Oracle CRM and SCM applications will not match the functionality of best-of-breed CRM and SCM vendors within the next 3 years (60% probability). We also predict that Oracle Business OnLine has a potential of reaching 15%-25% of total Oracle applications sales revenue within next 5 years (70% probability).

While we believe Oracle will continue to post strong results and generate strong new sales, its competition will inevitably rebound and become reciprocally hostile. Oracle will not create many friends with its swashbuckling rhetoric. We predict a slew of other vendors (at least 5) will opt to support IBM DB2 database within the next 12 months, while not necessarily abandoning an Oracle database (60% probability).

We believe that, within the next 12 months, the company will have to officially announce an alliance with (40% probability) or the acquisition (60% probability) of a vendor whose products would provide it deeper B2B e-commerce selling and vertical marketplaces capabilities (70% probability). Potential candidates are the likes of RightWorks and NetVendor.

Vendor Recommendations

Oracle should target the Small-to-Medium Enterprises (SME) market segment with the entire product portfolio of component applications, mainly through the Oracle Business OnLine option and through distributors' channel. Furthermore, it should use its direct sales force to expand business in its existing customer base, by offering enterprise applications beyond traditional ERP solutions (Front-Office, Business Intelligence, Supply Chain, E-Commerce) and Vertical Industry-Specific products.

The company should remain committed to timely new product introductions, particularly to an enhanced supply chain execution suite and B2B sell side product, by maintaining the R&D budget for next year to be at least 12% of sales revenue.

Further, Oracle will also have to be careful in how it continues its direct sales force reduction, since there is a limit to the potential of selling expensive, mission critical software products without a personal touch. Therefore, Oracle will have to maintain sales force efficiency particularly in terms of the quality of pre-sales client scripted scenario system demonstrations. As for its online e-store, the company will have to standardize its pricing and provide discount incentives, in order to give the same opportunity to small companies as the larger ones and to reaching more customers than its sales force could possibly do. There should also be standardized options and contracts available for the sales force to utilize when negotiating larger deals.

Oracle has to be willing to be more flexible and humble in terms of its products' openness if it is going to succeed in the new economy where flexibility is highly valued. With the excess of integration products on the market and improved interconnectivity, users are becoming much less wary of piecing together best-of-breed solutions. Ground-up development of a complete end-to-end e-business solution spanning all functions of the front and back office is undisputedly a major mission.

While Oracle can effectively manage large human and financial resources functions, it may not suffice; coordination and time constraints play a major role too. Much of the best or most innovative software comes from more aggressive and entrepreneurial start-up software companies. Without working with smaller companies, a large vendor such as Oracle can lag months or years in terms of innovation and leading edge products or ideas.

Oracle should also attempt to be more accommodating towards potential customers of its hosted products in terms of providing them with application integration and with a certain level of customization. There are also indications from the past that there is room for improvement in ASP service and support.

User Recommendations

Existing Oracle customers should certainly consider the new offering, but avoid selecting it without looking at what the other vendors have to offer. We recommend identifying your clear e-business strategy and conducting a thorough comparison-shopping, at least for the negotiation leverage sake. Contact an Oracle sales representative for more information on Oracle Applications 11i and request a list of recent customers and ask them about the product. Understand what functionality you're interested in and investigate what Oracle Applications 11i can offer. Identify the requirements and related costs to upgrade your systems to support the added functionality. Be wary of pre-selling efforts and focus on the current release version. Existing users of Oracle's client/server-based products may want to inquire about Oracle's future product support and/or migration strategy. Beware of the potentially hidden cost of a migration.

As for potential customers, Oracle Applications are worth considering in the vast majority of selections of enterprise business applications for global organizations due to the attractive product portfolio and outstanding global service and support. We generally recommend including Oracle in an enterprise application selection long list for enterprises with more than $500 million in revenues and within the following industries: telecommunications, utilities, service providers, financial institutions, public sector, and manufacturing. Remotely hosted Internet solutions may offer cost effective applications to small or mid-sized organizations. Consider all options. Most importantly identify what needs are "must have" requirements and a timeline for additional components. Once identified, comparison-shop and use the related information to negotiate the best price for the solution.

Use the existence of other alternative, e-procurement, marketplaces and CRM applications to leverage the best price. If you already have a significant investment in Oracle technology, then pursue the Oracle option. However, do not hesitate to venture elsewhere. Improvements in products interconnectivity make going beyond Oracle Applications a more viable option than in the past.

If Oracle Business OnLine seems attractive as a low-cost solution now, negotiate the possibility of switching to conventional consulting and support, in case the remote outsourcing option is unsuccessful. Organizations seeking a Web-based solution and out-of-box functionality with little or no re-engineering effort may benefit from evaluating Oracle's ASP offering. Support, connectivity, ease of use, security, acceptance, and scalability are only a few of the regular considerations. Companies with more intricate business processes may want to inquire how Oracle would deal with the issues of customizations and/or 3rd-party products bundling in an ASP setup.

Existing and potential users currently evaluating Oracle products, particularly its eCRM suite of products, will have to decide between opting for the 'one-stop' shop hype (which means integrated suite and possibly sub-optimal functionality) and considering disparate but fully functional products from other vendors. Oracle-centric and enterprises looking for commodity CRM products integrated with the ERP system may find the Oracle product very attractive. Users are also advised to consider both the maturity and the functionality of the product in their evaluations and make comparisons to competitive offerings.

Future clients are also advised to request Oracle's written commitment to promised functionality, length of implementation, and seamless future upgrades, particularly for the recently released products and the products whose release dates are due shortly. Moreover, companies within industries for which Oracle has not developed vertical solutions may want to inquire about impending customization ramifications.

On a more general note, we would strongly advise anyone considering an e-business product to define the requirement very meticulously before making any decision. Each component should be put through its paces using a well-documented set of requirements, scripted scenarios demonstrations and rigorous reference checking.

Customers interested in Oracle's assistance in connecting them to digital market places (Internet exchanges) should have answers to the following questions: What methodology does (or will) the company use? Will Oracle map customers' schemas to those of the marketplace?

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