Smart SaaS

Wednesday October 14th

During Larry Ellison’s keynote yesterday afternoon, his last topic was probably the most anticipated of the Oracle Open World conference – availability of the new Oracle Fusion Applications.

The day before, Thomas Kurian who is responsible of all of Oracle’s product development, spent his nearly 2 hours of keynote time discussing all the capablities of the Fusion middleware platform, but not a word about applications.  The new Oracle Fusion platform release, 11g, has incorporated many of the leading capabilities of BEA and other acquired assets to create a robust, open standards framework for application development and management.

But What about the New Oracle Fusion apps?

Was the re-write of  PeopleSoft, JD Edwards, Hyperion, Siebel, Retek such a big project that Oracle was only comfortable previewing mashups with some business intelligence mixed in?

Oracle does have a lot on their plate right now, considering they are in the midst of acquiring Sun Microsystems and trying to integrate the $50B worth of acquired assets from the last few years, and continuing to innovate their core database and infrastructure products.  No one was going to be surprised if there was little or no news about the new and improved Fusion applications until next year.  Then Larry made what I would consider a market changing announcement.

The Rope-a-Dope

Much like Muhammad Ali’s famed fight with Joe Frazer, where he hung out on the ropes and let Frazer beat on him until he was worn out and then Ali came out and knocked Frazer out – this Oracle Fusion Application announcement might be a knockout for many software companies.   Here’s why…

1. Oracle will continue to enhance and support their acquired application products (PeopleSoft, JDE, Siebel and Hyperion) for the next decade.  (At least customers can feel like they are getting something for their 20% annual maintenance payments)

2. Customers will not be forced to move to the new Fusion products until they are ready.  This co-existence strategy will allow customers to move when they are ready or stay and add new Fusion capabilities.

3. There will be two types of Fusion applications;  Replacement applications that would be functional equivilants to existing applications, and completely new applications, like Talent Management that are not fully represented by anything currently available in the Oracle application portfolio.

These are the Oracle Fusion application families that will be initially made available:

• Financial Management
• Human Capital Management
• Sales and Marketing
• Supply Chain Management
• Project Portfolio Management
• Procurement
• Government Risk and Compliance

Specific new Oracle Fusion applications that were mentioned include:

4. All of the Oracle Fusion applications are based on open standards – using a Service Oriented Architecture (SOA), they will allow for tight integration with all Oracle products and open integration with 3rd party products.  Using the SOA that Oracle Fusion provides, it will be possible to re-configure components from Oracle and other software companies to create personalized workflows and mashup applications.

5. The ‘native’ Oracle Fusion applications have a newly redesigned User Interface that is based on a business intelligence metaphor.  Oracle’s approach is that many of these applications are used to detect and manage business exceptions, and they will be leveraging their BI product experience in creating this new UI.  Here are some screen shots of the new Oracle Fusion UI.

6. Oracle will offer multiple deployment options for their Fusion applications.  This announcement said that all products will be available for installation on premise but they will also be Software-as-a-Service-ready.  There was nothing further said about the SaaS delivery capability during the keynote.

7. All the Oracle Fusion applications are ‘code complete’, and being currently tested by what appeared to be dozens of customers.  Some of the firms that were listed on the slides included Kraft, Chevron, Nokia, McAfee, LG, Hewlett Packard, Dell, Cummins and ING.  The Oracle Fusion products are scheduled for general availability release sometime in 2010.

Good News for Oracle Customers?

For Oracle customers this probably represents good news because now they have many more choices.  Assuming what we heard is accurate, customers now know that they won’t be forced to move to a new product platform any time in the near future and this should mitigate some risks associated with their legacy products.

It also allows customers to move to Oracle Fusion at their own pace and mix and match capabilities to meet their business needs.  Because the Oracle Fusion middleware infrastructure is based on open standards, it will enable customers to integrate more capabilities from Oracle and other Independent Software Vendors (ISV’s).

Another benefit is that since the Oracle Fusion technology is based on Java, it should be easier to locate development talent to build and maintain on their platform, which should lower costs and risks.

The one note of caution is that we were only shown short demos and screenshots of these products.  The devil is in the details and customers will need to get a lot more information before committing to a future Oracle Fusion course of action.

What Does this Mean for ISVs?

If you are either an Oracle Partner or ISV, this is probably mixed news for you.

The good news is that there is still a lot of work to be done to bring all of these new products to market.  Oracle is just now beta testing the applications with customers and it will probably take them 6 to 12 months to roll them all out.    If your company offers applications that are not on the list of Oracle Fusion products, you are probably safe for now, and depending on how Oracle structures its partner program going forward, there may be co-existence opportunities with the Fusion platform.  Even Larry admitted that they don’t anticipate customers deploying a wall-to-wall Fusion strategy and that they will need to work with 3rd party solution providers.

The bad news is that Oracle really did rewrite all of these applications on Fusion.   This is a huge project (6,000 tables, 6,500 objects, 20,000 views and 10,000 workflows) and  they wouldn’t have made these investments if they weren’t planning on dominating the market.  With their announced decade-long support policy and no forced migration, this might freeze the market for new applications for the next 6 to 12 months as customers adopt a wait-and-see approach until there is more clarity around Fusion.  One thing is clear, the new Oracle Fusion applications will be more challenging to compete with than the older on-premise, legacy solutions that Oracle is offering today.

ISV’s should start building strategies and game plans with an active Oracle competing in the SaaS and Cloud markets as well.  Although there were not a lot of details around the SaaS-readiness of Fusion, now is definitely the time to develop a legitimate SaaS set of offerings (if you don’t have them already) because going into 2010, SaaS will become a must-have for all software companies that want to thrive and survive on a going-forward basis.

The industry has been pounding on Oracle for the last few years about the availability of their new Fusion applications and now they are coming off the ropes,  now let’s see what happens next.

Here are what some other leading reporters and bloggers thought of yesterday’s announcement:

Software Insider’s Point of View – R “Ray” Wang – Oracle Formerly Announces Fusion Apps

Forrester Research – Paul Hamerman – Oracle Finally Takes the Covers Off Fusion Applications

BusinessWeek – Aaron Ricadela – Oracle’s Ellison: Fusion Will Dawn in 2010

The Enterprise System Spectator – Frank Scavo – Oracle’s Roadmap for Fusion Apps

Seeking Alpha - Tony Baer, Ovum – Oracle’s Fusion Apps finally come out from behind the OpenWorld curtin

InfoWorld – Chris Kanaracus – Oracle’s long-awaited Fusion Applications to launch in 2010

Gartner – Jim Holincheck – Oracle Fusion Apps Announced

Tell us what you think about Fusion and what it means to the market…