Oracle Claims The Worst Is Over And Turns To KISS For A Boost
3: The Challenge of Gaining Competitive Advantage
In June Oracle Corporation (NASDAQ: ORCL), the largest database
provider and one of the largest providers of software applications for
e-business, unveiled a new suite of online services aimed at capturing
the small business market. It also announced changes to appeal to its
larger customers, as well as its quarterly financial results.
is Part Three of a three-part article on recent Oracle announcements.
Part One contained the details of
the announcements. Part Two began
an analysis of the Market Impact. This part continues the analysis and
adds User Recommendations.
Challenge of Gaining Competitive Advantage
The question is "where can any one gain the competitive advantage and
differentiation if all the peers are using the same business processes?"
Therefore, as other established players will have made every effort to
deliver integrated hybrid bundles of best-of-breed point solutions, it
is unlikely that the high-end market is going to buy Oracle's integrated
solution mantra - flexibility and differentiation are still the words
more valued in this environment. The fact remains that most of Oracle's
potential large customers already possess heterogeneous solutions for
their overall business requirement; most of them also have significant
man-hours invested in legacy code they are not willing to throw away.
Even in the unlikely scenario of these customers deciding to replace existing
components with Oracle's, Oracle would face a challenge of integrating
with other vendors' software.
however, has been a pragmatic company, and it will likely modify its strategy
and try another tack, although not necessarily publicly acknowledging
it. Departing from the controversial processor power unit pricing or from
its initial insistence on hosting servers for its customers are good examples
of the company listening to the market buzz. It would not be a surprise
to see Oracle modify its adamant stance of 'no modifications', at least
in the high end of the market. Just do not expect Oracle to port its applications
to other database platforms.
fact that Oracle's database still maintains the lion share amongst the
SAP or Siebel customer base despite these vendors announcing
IBM DB2 as their primary database may indicate the strength
of the product. It is not completely inconceivable to see some Oracle-technology
'religious' users opting for going for Oracle Applications due to their
seamless integration to the database and due to a strong development environment,
on condition that Oracle commits to delivering the needed product enhancements
within a reasonable period of time. Some components of the Oracle 11i
suite may already provide a good fit for some industries without the need
for any modifications, as illustrated in the above customer case studies.
However, Oracle will have to maintain much closer ties with its customers
and to listen to their voices, which has not been the case yet despite
encouraging steps to bridge the gap with the independent Oracle Applications
User Group (OAUG) (for more information, see Oracle
(Finally) Learning and Applying Its Own CRM).
the other hand, Oracle's 'one-stop' shop mantra should be a compelling
message for the lower-end of the market. We were made aware of Oracle's
success within the mid-market with its Fast Forward Flows programs. The
fact that first-time Oracle users experienced smooth 11i implementations
may be encouraging for other prospects, too. Smaller and fledgling enterprises
often have undeveloped or sub-optimally developed processes and, therefore,
they might benefit from leveraging Oracle's experiences in refining these
and might find the Oracle Small Business Suite attractive. One should
expect more fine-tuning iterations of this strategy in the future though,
since the magic formula of the applications hosting success (in terms
of pricing, service level agreements (SLA), etc.) has not yet been discovered.
But, the move is strategically wise - it is better to fight Microsoft's
bCentral offering on its ground before it comes to the enterprise
market with its recent acquisition of Great Plains (see Microsoft
And Great Plains - A Friendship That Turned Into A Marriage). The
move is also a counteractive measure to SAP's and PeopleSoft's apparent
onslaught on the lower-end of the market (see SAP
Claims Big Gains In The Low-End Battleground and PeopleSoft Joins The
Hunt For SMEs).
a summary, increased competitive pressure on many fronts, and lingering
mixed perceptions about the 11i Applications suite, leaves Oracle at a
crossroads for sustaining the momentum it had the last year. Should 11i.4
demonstrate maturity and should Oracle start orchestrating its product
releases in smaller, more manageable chunks and improve relationships
with OAUG, system integrators and consulting partners, Oracle's prospects
will continue to be rosy, although probably less glowing than a year ago.
Oracle product strategy, marketing and execution will have to be clear
and spot on though. To that end, look for Oracle's more aggressive 'the
turnkey e-business' message (and a tacit soul-searching continuation)
for some time to come.
It remains to be seen how the market will take the new Oracle products.
The company disposes with gigantic resources and will keep on trying to
find new ways to capture the market. The scope of Oracle offerings is
attractive and compelling at first sight as an e-business provider must
be able to address all major aspects of a company's business. But, one
should observe how well Oracle's sales and service force can demonstrate
the benefits of its Internet architecture-based products and fast-track
implementations to the prospect or customer.
companies with a need to automate many administrative (e.g., financials,
human resources, customer relationship) chores may benefit from evaluating
Oracle Fast Forward Flows or Oracle Small Business Suite. But, make sure
to carefully read the fine print on the contract to discern all the probable
limitations and exclusions.
reported improvements in 11i stability, beware of possible functional
gaps and implementation issues. Existing users of earlier Oracle's instances
should diligently inform themselves about their peers' experiences. Potential
customers should vigorously demand a reference site with a similar company
profile. In any case, insist on an SLA that will unequivocally identify
either Oracle or its implementation partner responsible for fixing any
comprehensive recommendations for both current and potential Oracle users
can be found in Oracle
Applications - An Internet-Reinvented Feisty Challenger.
concludes a three-part article on recent announcements by Oracle. For
details on the announcements see Part
One. For an analysis of the Market Impact, see Part