• February 20, 2008
  • By Marshall Lager, founder and managing principal, Third Idea Consulting; contributor, CRM magazine

Oracle Explores the Power of One

Oracle Corporation on Wednesday fired a shot in a battle that many considered resolved long ago: the battle of multitenant versus single-tenant on-demand applications. Oracle's Siebel CRM On Demand - Single Tenant, Enterprise Edition (STEE), a software-as-a-service (SaaS) approach to CRM for large organizations, allows users to access what the company calls a single instance of Siebel CRM On Demand with a fully dedicated database, middleware, and application technology stack. This would seem to flout otherwise accepted practices in SaaS CRM where multitenancy has been the buzzword for several years. The idea behind multitenant application delivery is that a vendor's entire customer base runs on the same instance of the software, while single-tenant deployments provide a single instance for each customer, typically on a server dedicated to that customer. The multitenant delivery model purports to save each subscriber on license fees and the cost of hardware, and goes a long way to explaining the results of a recent informal (and not at all scientific) destinationCRM Pulse poll, in which not a single respondent claimed to be using a single-tenant on-demand CRM system. More than 48 percent claimed multitenant on-demand CRM deployment. And yet Oracle continues to rattle its sabre. "Multitenancy has never provided the customer with any direct benefit whatsoever," contends Anthony Lye, senior vice president of Siebel CRM On Demand. The company boasts that its new offering can provide customers a number of valid options that the market has overlooked, and that even the much-ballyhooed savings of multitenancy are now threatened by Oracle's cost-efficient grid-computing capabilities: Thanks to those efficiencies, Siebel On-Demand-STEE goes for $70 per user, per month, and includes Oracle's full business intelligence (BI) stack behind it, Lye says; he adds that a multitenant competitor's "enterprise edition" costs $125 per user, per month. Further, Oracle's spin on the joys of single tenancy includes the idea that it provides advantages that current SaaS offerings can't. "Most SaaS vendors provision some weekly downtime in their service contracts for maintenance, whether they use it or not; typically this is on the weekend," Lye says. "But a company like [Oracle customer] GMAC does a lot of business on the weekend, especially Saturday, and can't afford downtime when customers are financing car purchases." He says that a single-tenant deployment allows Oracle customers to schedule maintenance when it makes the most sense for their business. Lye also claims greater ability to guarantee data security and overall system availability via Oracle's 20,000-server data center in Austin, Texas. "If one machine goes down, 99 still run; there are no systemwide service outages," he says. Overall data is secure because most security breaches occur through company-specific phishing -- rather than exposing every customer sharing a multitenant instance, a single-tenant system exposes only the one compromised customer and its dedicated server, he says. Does Oracle's Siebel CRM On Demand-STEE present anything new for Oracle beyond the new deployment model? Perhaps not, but that might be enough by itself. "Oracle has, for a long time, offered a facilities management version of [its] products to which this appears to be the latest addition," says Denis Pombriant, founder and managing principal of Beagle Research Group, a CRM consultancy. "I think it's not new for Oracle in that respect, but what is new is the grid computing architecture which opens up a lot of options for companies wanting to try on-demand computing. It also gives Oracle multiple ways to satisfy customer needs." Pombriant's blog includes a more detailed discussion of the pros and cons of Oracle's move. "Grid computing gives Oracle the ability to let some customers use single-tenant solutions while others take advantage of multitenant solutions. This 'have it your way' approach may mean the weakening of the multitenant argument in favor of on-demand computing but in reality, that argument has been weakening for some time," he writes. "As on-demand solutions have become increasingly robust and conventional software has begun to be simpler and easier to integrate, use, and maintain, the two types appear to be converging on a point in the future when business software will be much more intuitive and configurable." Whether the single-tenant seed takes root in a field of multitenancy remains to be seen, but Oracle is one of the companies whose moves will always create a stir. Pombriant writes, "Oracle has done some interesting things in its effort to make single instance something more than the de facto
lemonade you can make with your lemons." Related articles: CRM Drives Down-Market SAP and Microsoft make big moves to embrace smaller customers. Microsoft Hires Callidus Leader Callidus Software President and CEO Robert Youngjohns is heading to Microsoft, but will his stance against multitenant on-demand offerings follow him? SugarCRM's New Spoonful The open-source CRM provider's Version 5.0 focuses enhancements on the platform and architecture; the company also provides a roadmap for going public. Incentives in an On-Demand World When it comes to software-as-a-service, automated incentives are their own reward. Hosted Contact Center Apps For Everyone? Not just for SMBs anymore, organizations of all sizes are now evaluating the potential of hosted contact center solutions. Hosted CRM Cost Analysis META Group compares costs of on-premise with hosted CRM. Salesforce.com Is Profitable Lower attrition rates and new large customer wins helps the company become the first lucrative ASP.
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