Does Oracle need software partners?

The IT sector is practically the only industry that sells customers unfinished goods. Compared to the closest hot iron makers - the car industry - computer makers are really far behind.

When you buy a car, it comes complete with engine, upholstery and sometimes, even a full tank so that you can drive off when you step into the driver's seat and turn on the ignition. In the IT sector, you have to buy hardware and software separately.

"We have identified some 2.5 million small businesses in Asia that will benefit from direct usage of these two business services via the Net." - Chris Hummel Oracle AP

Why can't software work the same way as buying a car? Well, if Internet computing is the last paradigm for the IT industry, as Oracle chairman Larry Elison puts it, then all our software needs will be met that way. Software delivered like a utility, as many have predicted, could become mainstream earlier than most Asian countries liberalise their power supply markets.

Recently, Oracle claimed to have 2,000 companies in Asia sign up for its free online trial of OracleSalesOnline.com and Support.Oracle.com, letting companies that have never tried Oracle's software to do so.

YES

"We have identified some 2.5 million small businesses in Asia that will benefit from direct usage of these two business services via the Net," Chris Hummel, vice president of Marketing at Oracle Asia Pacific told ZDNet Asia. "These are companies that have 15% of their output directed at the export market and we believe they will reap the quickest ROI using our services because they have little or no legacy systems to worry of."

Hummel added that when Oracle put together a complete integrated suite for their customers, "we hide the complexity from them - that is our mantra. Therefore, it is simpler to implement and faster to roll out, saving our customers both time and money."

By now, most would be familiar with the story of how Oracle claims to have saved US$1 billion last year, and that some are just not convinced.

What you might not know is that when Elison asked his European managers to put on one piece of paper all their customization needs, they came to the same conclusion that it amounted to some 5% of the total features and even that is not what their customers want in the next five years.

"Whether it is in China or Hungary, customers don't have the time to wait for customization anymore when they know they can do procurement over the Internet now," averred Chris Hummel.

Explaining further: "When you're trading data between marketing, sales and distribution, you need one global schema," he asserted, "or else, if you have six different departments or six different companies, you deal with six different entry schemas, multiply this with six different applications like sales, marketing, distribution, human resource plus the occasional upgrade to version 2.x and you will be a complete wreck."

According to Hummel, Oracle needs partners in business consulting - the likes of Big Five consultants - to recommend and simplify the issues for their customers. And Oracle needs implementation partners that know the local markets well and of course, hardware and operating systems platform partners. But software partners are hard to come by when your products are competing against your partners' and also, when you want to deliver directly to customers over the Net.

While all this is good and clear for Oracle's customers, software vendors like SAP, Siebel Systems, PeopleSoft and JD Edwards are voting with their legs by increasing their sales on IBM's DB2 while reducing sales on Oracle databases. Half of these business partners generated more than US$750 million in new revenue for IBM in 2000 alone. Tom Siebel recently stated that their triple digit earnings were in part due to its relationship with IBM, with almost 30% of their revenue growth attributed to the support from IBM.

This has given IBM a great deal of optimism that their data management strategy is on the right track. "Since 1999, IBM has started a partnering initiative where we recognize that we are not an application vendor and ISVs - both global and local - are the best people to do the job for the customer, be it a packaged solution or building it on their own," said Mark Latchford, vice president of Software Sales and Support and general manager of Tivoli at IBM Asia Pacific.

In TCO benchmarks, our products compare very favorably," Mark pointed to recent reports by independent research firms. Michael Mudd, Noble Group's director of rawmart.com, sums it up when he claimed that Oracle 8i was about 20% higher than DB2 Universal Database "and we could not justify the price premium at our launch stage. Moreover, DB2 comes as an integrated solution with WebSphere middleware and the eServer pSeries."

When it comes to enterprise software, Oracle and IBM have their own strengths.

There are many reasons why an Oracle suite works best. Take security, for example. Oracle 9i Database has an option that attaches security directly to the data where it cannot be bypassed, whereas conventional methods require complex application coding. This is particularly useful for ASPs as they no longer need to maintain separate database instances for each customer to achieve secure separation of data.

This option builds on the Virtual Private Database feature which provides server-enforced, fine-grained access control, without having to write any code.

It's fast to implement and there's no tweaking required. This helped data center operators like i-STT to go to market and offer database-on-tap to ASPs and corporations alike.

IBM, on the other hand, has been fortifying its DB2 and Websphere tools and seeking the support of application partners to sell to end users.

"If you're an innovator in Guangzhou, you want to make sure what you're developing is executable around the world, not only in mainland China, and IBM products can help you do that," Latchford said. "You'll be surprised to hear that that CTOs and CIOs don't like us to spend all our time talking about technology - they want us to give them a database product with a competent support team that they can take to their board of directors and say they are doing an e-business solution for the company, and we will make it happen."

"We want to be application-neutral - and we will not compromise on our principles," Latchford affirmed. "We want to be able to look at the developer in the eye and and tell them we can introduce other partners around the world to them and make their products strong."