Big Red Roundup
From quarterly financials to executive shakeups to technology announcements, there's been a lot of chatter lately regarding software megavendor Oracle.
The company reported that net income for the fourth quarter fell 7 percent, to $1.89 billion, or 38 cents a share -- a year ago, it was just above $2 billion, or 39 cents a share. Sales for the period dropped to $6.86 billion, from $7.24 billion in the year-ago quarter. Oracle executives attributed the lower numbers to a weakened dollar and an overall slowdown in corporate software investments, according to a transcript of the company's conference call cited by the Associated Press.
Although earnings fell year-over-year, the quarterly results were better than expected: Analysts polled by Thomson Reuters had expected sales of only $6.47 billion, according to the AP. Oracle President Safra Catz credited some of the better-than-expected results to growth in revenue from software maintenance rather than from new licenses, according to the AP. "Clearly maintenance, which has continued to grow, plays an important part in the Oracle margin-improvement story," points out Michael Fauscette, group vice president of business solutions at IDC. "That said, you also have to look at the excellent way they have continued to cut costs and manage expenses while continuing to grow a healthy business -- especially considering the current economy."
In other Oracle news, Senior Vice President of Application Development Ed Abbo quietly announced his resignation, effective at the end of June. Representatives from Oracle declined comment on the departure of the vice president, who earned a nod as one of CRM magazine's "Influential Leaders" in 2006. Abbo's three-year stint at Oracle is nearly coincident with the company's development of Oracle Fusion Apps, with Abbo having supervised the development of Fusion from its birth. "[Abbo] is a very strong [executive] and has done an excellent job with the Fusion Middleware team," Fauscette says. "While certainly he'll be missed, the rest of the team will pick up and continue to execute. Steve Miranda, who has direct responsibility for the Fusion Apps, is more than capable."
Interestingly, Oracle's Fusion Apps are soon set to take on a new form. During the quarterly earnings conference call, Larry Ellison, Oracle's cofounder, chairman, and chief executive officer, spoke about Big Red's activity in the cloud, revealed for the first time that Oracle Fusion Applications will be available as software-as-a-service, multitenant offerings, in addition to previously announced on-premises versions.
According to a transcript of the call, Ellison stated: "All of our Fusion Applications are on-demand ready. They are designed to be not only on-premise but ground-up designed to be [SaaS]."
Oracle's original single-tenant delivery model stood as a differentiator between the vendor and competitor Salesforce.com. CRM reported in April 2008 that, with the announcement of Oracle's Siebel On Demand – Single Tenant, Enterprise Edition (STEE), the company aimed to shed new light on the concept of single tenancy. Customers who signed on for single tenancy got a "pod" on Oracle's grid, which runs in the company's Austin, Texas, data center. Apparently, Oracle's intended multitenancy delivery doesn't mean the vendor is scrapping the single-tenancy option. Ellison went on to say, "So we see all of our application software, not just on sales force automation but all of our application software going forward, being sold in two ways: both on-demand/software-as-a-service and on-premise with the same code base. We think we can be the number-one applications company, the number-one on-premise application company, and the number-one on-demand application company."
Fauscette says that the move toward multitenancy is a smart one, rounding out Oracle's commitment to offer flexibility to customers. "Fusion Apps can run on-premise, as [software-as-a-service], or in an appliance -- which is interesting considering the Sun acquisition and the opportunity to bundle with [its] own hardware," he says. "More and more, Oracle apps will be offered in an on-demand, subscription option, even if not multitenant -- multitenancy really only benefits the vendor, anyway."
In addition to Oracle's financial and internal announcements, the company unveiled an update of one of its Fusion Middleware Applications, a 3.0 version of its Real-Time Decisions (RTD) offering that promises users more control, broader functionality, and more-powerful automation. Gartner analyst Gareth Herschel says that the most significant part of the release is the fact that Oracle continues to focus on the area of decision management in the first place. "Obviously [Oracle] has got a wide product range and analytical capabilities to integrate with and to continue to develop on in the performance management area," Herschel notes. "And yet they are still making advances in Real-Time Decisions. Oracle sees it as a market that's worth pursuing and as an opportunity to differentiate capabilities that will help most of the product lines."
Oracle acquired the RTD product through its 2006 acquisition of Sigma Dynamics, the first time Oracle had dipped its toe into the enterprise decision management (EDM) space. The vendor has since worked on strengthening RTD into a platform that claims to deliver targeted recommendations during customer interactions -- or whenever an important and complex decision needs to be made. The tools often come into play with risk management, retention management, and in cross-selling and upselling. According to Nicolas Bonnet, a director of product management at Oracle, early interest in RTD came primarily from contact centers, but demand is now growing within the retail and e-commerce sectors.
"We have seen an evolution in terms of channels," Bonnet says. "We definitely started more with contact center, inbound, [and] administrative interactions. [But Oracle has seen] an enormous shift in the last two years in e-commerce optimization." Many e-commerce sites, such as Amazon.com, provide visitors with smart recommendations, but Bonnet says that few take the recommendations to an additional level of sophistication that Oracle RTD offers. RTD users can not only recommend products, he says, but are able to predict which rendering of the product the customer will react to. As a result, Bonnet says, RTD users tend to see significant return on investment.
The focus, Bonnet says, is really on affecting processes -- not data. "As opposed to the idea of modeling the enterprise for empowering analysts to make decisions, [Real-Time Decisions] empowers processes by way of closed-loop embedded transactional analytics," he says.
"Anywhere you've got product complexity and different relationships with customers, that's where this is a good fit," Herschel says.
According to Oracle, the RTD 3.0 release includes the following improvements:
- More control in the decision framework: Enables users to further extend controls with explicit logic, without having to turn to the technology department for support.
- Prepackaged components of decision logic: In order to reduce complexity and provide best practices, Oracle RTD includes decision templates that can be used "to make recommendations for best product, best content, best offer, or best advertisement into customer service and e-commerce channels," according to a company statement. James Taylor, principal and cofounder of Smart (enough) Systems, an EDM consultancy, says he thinks that Oracle is offering these prepackaged components because of the perceived complexity of real-time decisioning. "What [Oracle executives] see right now is people asking for capabilities that you can only deliver if you have a focus on real-time decisions," Taylor says. "But they don't yet have clients that say, 'I need a decisioning engine.' " As demand grows for features such as real-time recommendations, Oracle RTD provides not only process templates that make those features user-friendly, but also an opportunity for the overall platform gain some much-needed traction. This way, Taylor notes, "people get what they think they need, while at the same time [they're] delivered infrastructure [for real-time decisioning] across the board."
- Batch processing: Taylor says that although there's a lot of buzz around real-time decisions, the days of batch processing are far from over. "The reality is that while everyone is moving toward individual, interactive decision-making, many organizations still need to do batch things like email or print campaigns."
Taylor applauds Oracle's decision to include RTD as part of the Fusion family, a move that he says enables users to access much of the Oracle technology stack. "Decisioning tends to work better when [users] can draw information and content from a wide range of sources...and then push the answers back out to a wide range of delivery channels," he says, adding that the Fusion Applications' shift to multitenancy especially makes sense for RTD. "Decisioning in particular lends itself to being hosted in that way because if you're doing it right, you have this separation of decisions from other parts of the system and from other processes," he says. Taylor says he expects to see many users end up deploying both hosted and on-demand applications.
Gartner's Herschel says that, although Oracle RTD is a solid EDM offering, there are plenty of decisioning aspects that the software doesn't touch on. "If I [were] Oracle I would think, 'Where do I want this solution to be in a few years?' Even if they're doing great things in CRM and e-commerce, if they haven't figured out [a] good place for this in other business functions...before others do...they'll kicking themselves."
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