Oracle Makes A U-Turn At The 'All Things To All People' Exit
In a surprising move for many, Oracle Corporation (NASDAQ:
ORCL), the largest database provider and one of the largest providers
of software applications for e-business, has reportedly reversed its erstwhile
stubborn strategy on avoiding integration of other vendors' software with
its 11i E-Business Applications line. In a briefing with InformationWeek
in late August, Mark Barrenechea, Oracle senior VP of application development,
said integrating the company's applications with others' software has
been "very difficult" and that Oracle was changing its strategy to allow
customers to more easily integrate applications from other vendors.
will therefore publish the Applications Programming Interfaces (APIs),
data definition languages, and data schemas for its 11i suite to ease
integration to its product in a version of the applications due to ship
in September. This is a sudden U-turn, and it could have a major impact
on Oracle customers who have been waiting for Oracle's software products
to match the features and functions of the best-of-breed (BOB) applications
that they already own. It is also the kind of move analysts and users
have been advocating to vendors in this era of multiple systems for a
wide range of needs. Barrenechea said the company realizes that customers
and potential buyers may not be willing to forego supply chain management
(SCM), customer relationship management (CRM), or other applications they
already use in order to install 11i for financials, manufacturing, and
recently as February, Oracle pleaded with 11i users that the product offered
them everything they need "if not everything they want" and advised potential
customers to deploy 11i and wait for any needed functionality rather than
trying to integrate software from other vendors. Now, Oracle will release
its APIs and schemas to anyone who buys the upcoming release, scheduled
for this fall, including competitors who may use them to do their own
said Oracle would rely on feedback from customers and systems integrators
to determine if they need to release additional integration information.
Oracle will also turn to a network of system integrators in order to ensure
that customers correctly use the APIs and schemas. Still, the company
maintains consultants' attempts to connect Oracle applications to other
vendors' software frequently results in malfunctions. Barrenechea says
the company stands by that admonition, warning that customers who rewrite
Oracle code to modify the applications run the risk of changing them so
much that upgrades, enhancements, and bug fixes will not work.
news should be no big surprise considering Oracle's actions in the past.
Despite its inclination to thrive on a moderate amount of controversy
and to fly a number of trial balloons, Oracle, nevertheless, has been
a pragmatic company, and it has often modified its strategy and tried
another tack, with more or less candidness about 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. Oracle simply could not afford any more
dents on its embattled image.
perception that Oracle had won the battle for dominance has slipped. Only
a year ago, the company seemed to have won the battle. Now, PeopleSoft
seems to have stolen its Internet thunder and has been on a strong comeback
trial. IBM and Microsoft have been disputing Oracle's invincibility
in the database market and have forced it to rethink its pricing strategies.
SAP has meanwhile regained any previously lost ground owing to its slow
adoption of the Internet and has also become the proponent of interconnectivity.
Meanwhile there is lingering mixed perception in regard to the quality
of the Oracle 11i Applications suite as well as the public fallout with
its applications user group (OAUG).
seems to be waking up to the reality that the greater part of real-world
IT departments are a medley of enterprise applications - trading exchanges,
Supply Chain Management (SCM), e-collaboration with business partners,
Product Lifecycle Management (PLM), Customer Relationship Management (CRM),
and a number of other components of e-business require disparate systems
to work together. Therefore, Oracle has to play with the other kids in
the neighborhood, as it is unlikely that the high-end market is going
to buy Oracle's integrated solution mantra - flexibility and differentiation
are still the notions more valued in these environments.
fact remains that most of Oracle's potential large customers already possess
heterogeneous solutions for their overall business requirement, at least
because most of them also have a significant man-hours of legacy code
in place that they do not want to throw away. Even in an unlikely scenario
of these customers deciding to replace existing components with Oracle's,
Oracle would face a challenge of integrating with other vendors' software.
It is not likely to expect that all trading exchange participants, for
example, will be using the same ERP backbone. Modern ERP systems must,
therefore, provide a feasible way to hook up to the exchange.
has overstretched itself by trying to be "all things to all people". This
almost autistic stance has put it under siege by a number of formidable
competitors, and brought it to almost a pariah status in the market. To
be fair, other vendors also tout their product portfolio breadth and tight
integration, and clandestinely wish to be the only vendor in the customer's
many vendors have also increasingly been encouraging their prospects to
minimize modifications and implement their software out-of-the-box (in
a 'plain vanilla' mode) regardless of the company size. Indeed, over last
two decades, applications vendors have garnered ever more out-of-the-box
functionality, which makes them suitable to satisfy the customer business
requirements without serious modifications. They have also tailored their
applications for a number of vertical industries/markets. But, none of
them, except Oracle, have vocally advised their large corporate prospects
to put up with sub-optimal functionality (70%-80% of out-of-the-box functionality)
and to wait, possibly indefinitely, until the vendor gets around to delivering
Oracle's eventual willingness to be more flexible and humble in terms
of increasing its products' openness and of reducing module interdependencies
and the product's monolithic nature is commendable, and should help it
succeed in obtaining more projects. While nobody disputes the attractiveness
of simplicity, nobody can forsake flexibility at this stage when individual
products are still far from satisfying all the business requirements of
large global corporations. It would not be a surprise to see Oracle modify
its adamant stance of 'no modifications' too, at least in the high end
of the market. Oracle's move should also drive a slew of similar announcements
from competitors and best-of-breed vendors that have been remiss in products'
ease of integration. Additionally, enterprise application integration
(EAI) vendors may feel the revenue pinch in the long run.
Oracle's new mindset as well as the general promise of leading vendors'
interconnectivity should be regarded favorably. In reality, you will probably
have some best-of-breed components in your overall systems because it
is very rare for a single vendor to meet 100% of a company's needs. You
should strive to minimize the total number of vendors in your total business
solution, though. Also, cast a skeptical eye as Oracle candidly admits
this integration gimmick is merely a "bridging strategy" to accommodate
customers that are not ready to ditch competitors' components at this
stage. Therefore, question the long-term viability of your current best-of-bread
solution involving Oracle products, given that the company does not provide
pre-built interfaces to third-party products and does not have a strong
track record in this area.
a more general note, question the short-term reality of all vendors' interconnectivity
plans. Since most ERP products were traditionally not devised to integrate
externally, do not expect real-time external integration except for an
inquiry level via portals in the short term, despite some vendors' exuberance.
companies with a need to automate many administrative (e.g., financials,
human resources, customer relationship) chores should still 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. While TEC has always endorsed
the "let the best applications component win in each individual selection
case" mantra, in case of opting for a multiple vendor solution ensure
the system's stability and unhampered high-volume transactional throughputs,
as well as the main contact to call in case one vendor's portal is unable
to invoke other vendors' applications. After all, Oracle's caveats and
words of caution might turn out to be more beneficial to some users despite
the fact that the above have not necessarily been driven by altruistic
For more information on the best-of-breed rationale, see Single
Source or Best of Breed - The Debate Continues.