Oracle is pitching its customers on the concept of next generation Fusion applications, but it has a line to walk that could turn into a conundrum in the future. The line: Oracle is launching new releases of existing applications that interoperate with each other, but at some point it will want customers to move toward Fusion.
While today it's not a huge issue--Oracle will gladly take your maintenance fees for whatever application you run--you can project a fork in the road a few years from now. After all, a decade from now it may not make sense to keep building out legacy applications.
At Oracle's Applications Unlimited event in New York, Oracle president Charles Phillips addressed the issue directly in a slide called "Why Upgrade?" The argument is that current applications from Siebel, PeopleSoft and JD Edwards will integrate with each other, but at some point customers need to innovate to what will become an integrated Fusion suite.
To get you to upgrade to Fusion, Oracle will need to innovate to a point where customers can't resist moving to a new platform. Service oriented architecture (SOA) will be a key trigger, as will the need for applications that run on open standards. But Oracle will have to get to the point where upgrading to a unified applications suite is downright easy. "The key thing there is to get rid of the customizations," said Phillips. "Makes easier to upgrade in the future. Customization is the enemy of upgrading."
That's true, but there's a reason for customization--customers can't get the functions they need in an off-the-shelf application.
John Wookey, senior vice president of applications development at Oracle, acknowledges the point. He spent a lot of time talking about how customers on Oracle's CIO advisory board have been telling the company about necessary features. The idea is to build applications that feature "customer driven innovation."
Add it up and Oracle has a soft sell that may get customers to upgrade to some next generation suite in the future--as long as it can innovate to the point where customers see an upgrade as a solid business decision.
"We're not going to drive customers to technology they are not ready for. So we bring innovation to what they are running today. It's not an all-or-nothing scenario. The idea ought to be that you innovate at your own pace. Each of these takes you on a path to next generation technology, but customers determine when they want to embrace it.
When we decide it's time for a new technology we recognize the market may not be ready. At some point, they can choose when or if they will move to the next generation Fusion."
So what will tip Oracle customers toward a next generation suite? Wookey said it'll become apparent to CIOs that they'll have to adapt to Web 2.0 technologies, SOA, flexible middleware and open standards.
That tipping point will happen, but Oracle said it can afford to wait for customers to take their time. When asked whether it will make financial sense for Oracle to continue to develop older applications, Phillips said it makes sense. He said efficiencies of scale from acquiring multiple companies, steady support revenue and operating leverage is funding development of older apps like Siebel and PeopleSoft.