Oracle To Sell To ASPs? Over Ellison's Dead Body
Fleshing out the company's software hosting vision, Oracle Corp. CEO Larry Ellison today announced Oracle will not sell any of its applications, other than its database, to application service providers (ASPs).
Instead, Oracle will focus its Business OnLine strategy on partnerships between Oracle, backend datacenter providers, independent software vendors and systems integrators. And Oracle will be its own, sole ASP, Ellison said.
Ellison detailed some of Oracle's latest thinking on its Business OnLine (BOL) initiative on Tuesday, on the eve of Internet World, at a press conference in New York at the World Trade Center.
"Unless the board removes me from my job...over my dead body will we sell our applications to other ASPs," Ellison quipped.
He noted that Oracle plans to push its development tools and 8i database to any interested partners. But the guaranteed service levels required to make software hosting successful preclude Oracle relying on other ASPs to host its back-end applications, Ellison told press and analysts attending the BOL announcement today.
Datacenter Providers, ISVs, Integrators Line Up
Oracle announced on Tuesday a number of new partnerships around its BOL hosting initiative. Ellison announced last year Oracle's intent to play in the hosting space, and the company rolled out its first Business OnLine pilot test in September 1998.
On Tuesday, Oracle announced it has selected British Telecommunications, Exodus Communications Inc. and Bell Canada as its preferred service providers. These sites, like all of Oracle's data centers, will run exclusively on Sun Microsystems Inc. Solaris, Hewlett-Packard Corp. HP-UX and Linux on PCs, Ellison said.
Oracle also unveiled it will host not only Oracle's own customer relationship management, ERP and other related applications via Business OnLine, but also a number of third-party applications. Oracle already had announced it planned to host NetLedger's QuickBooks-like application on BOL. Today, it announced it also will host applications from Agile Software Corp., BPA Systems, Portera Systems, Syntra Technologies and Vertex Inc.
In addition, Oracle released the names of ten systems integrators with which it intends to accelerate BOL implementations. These are: Braun Consulting, Credence Automations Systems, Grant Thornton LLP, OTP Group, Simplify, Solix Systems, Spectrum Group, Trans-Tech, Ultimedia and Vertex Systems. Other systems integrators will be added to the lineup over time, according to Oracle officials.
'Everyone Else Is Wrong'
Ellison spent little time during Tuesday's event focusing on any of these recently signed deals, however. Instead, he expounded at length on why Oracle is banking on web hosting as the new wave in software delivery.
In typical Ellison fashion, Oracle's CEO claimed Oracle is single-handedly leading the software hosting charge.
"We're the only software company that's our own ASP. Everyone else has it wrong. We have it right. That's why all the dot-coms are coming to us."
Ellison called hosting "a fundamental change in the delivery platform for software." He said the evolving hosting paradigm represents the antithesis of the existing delivery vehicle, which he characterized as "Microsoft, with little Windows servers everywhere and desktops becoming more complex" with more and more complex versions of Windows and Office.
Ellison blamed this old "distributed complexity" paradigm for everything from clutter to the current computing labor shortage. He claimed complex applications running locally at enterprises throughout the world require increasingly hard-to-find computing professionals to keep them all running. Hosting will reduce companies' needs for computing experts, he said.
Big Plans Ahead
It's not just Ellison's vision that's behind Oracle's web-hosting focus, Ellison told the press-conference audience. Ellison said he expects half of all of Oracle's customers to select the BOL versions, as opposed to the locally-run versions of Oracle's applications within the next two years. Currently, however, Oracle has only 100 customers, or 2,000 users, for BOL, Ellison acknowledged. But he claims the company will have "thousands" of BOL users by Christmas this year.
Ellison said Oracle has found a way to integrate the BOL pricing model into its existing sales structure in a way as not to impact adversely company sales. "We ask customers whether they want to run applications on BOL or their own computer. The salesforce gets paid for selling licenses, but they get more for selling BOL [versions]," Ellison explained.
On average, customers selecting BOL versions of Oracle's applications are paying $400 to $500 per month per seat. Ellison added that Oracle has plans in the works for supplementing these revenues with Oracle Consulting packages aimed specifically with small- and medium-sized businesses. It also is investigating how to capitalize on advertising targeted to the needs of customers in specific verticals, such as aerospace, electronics and retail.