Enterprise turf war breeds innovation

In my first blog for the year, I noted how cloud computing can be a force to be reckoned with, leveling the playing field between old school software companies and Web 2.0 ones.
Written by Edwin Yapp, Contributor

In my first blog for the year, I noted how cloud computing can be a force to be reckoned with, leveling the playing field between old school software companies and Web 2.0 ones.

Since then, I've been tracking a number of developments in the enterprise software world but one that caught my eye recently is how two old school giants are going at each other once again.

The suspects? Walldorf, German-based SAP and Redwood Shores, California-based Oracle.

In a weekend story by Reuters, the newswire noted that SAP aimed to become a major database software maker, effectively taking the fight to Oracle's backyard, a company that has been the undisputed leader in database software and systems.

SAP continues to be the number one business applications provider, offering software that runs everything from large payroll systems, to accounting and finance, and to human resource systems.

But as successful as it has been at the top of the software stack, its Achilles' heel is that it has always been dependent on a lowest layer of that same stack -- the database and its associated management systems. Reuters noted that the bulk of today's SAP applications currently run on Oracle database software, and the company is [still] the biggest reseller of that product.

However, this could change if SAP manages to get into the database game with its own technology, bridging that long awaited missing link in its software offerings.

SAP is scheduled to disclose its plans at an Apr. 10 news conference in downtown San Francisco, where it is scheduled to unveil its unified data management portfolio and demonstrate how we will become a leading database vendor, noted Reuters.

Of particular interest is how SAP would bring its industry validated "in-memory" database proposition -- a specialized database technology in which data resides in the main memory of processing systems rather than on hard disks and used to sort out the vast amounts of unstructured data in the world -- into the regular enterprise database world.

SAP's foray into the in-memory world began when one of its founders, Hasso Plattner, began researching into such technology as far back as 2006.

Today, SAP's in-memory technology dubbed Hana, short for Hasso New Architecture, has earned the German giant 160 million euros (US$208 million) in sales in its first two quarters on the market, Reuters noted.

Meanwhile Oracle founder Larry Ellison isn't resting on his laurels either. In an earnings statement released on Mac. 21, the combative 68-year-old chief fired a large warning shot across SAP's bow saying in a statement that Oracle's in-memory offering, Exalytics database technology "is capable of instantaneous big data analysis; questions are answered at the speed of thought."

[And] unlike SAP's Hana in-memory applicance, Oracle's Exalytics runs your existing applications," he was quoted, by PC World as saying.

And as busy as SAP is coming down the stack to the database layer, Oracle is progressing up the stack with its Fusion Applications, ostensibly an attack at SAP's bread and butter.

"In applications, Fusion in the cloud is winning with great success against niche human capital management cloud vendors in the US and worldwide," noted Oracle co-president Mark Hurd as saying in PC World.

But convincing the market of its Fusion applications proposition isn't only a headache Oracle has to deal with. While SAP has the database component as its Achilles heel, sagging sales of Oracle hardware division inherited from the deal that took over Sun Microsystems for US$5.6 billion in 2010 may be Oracle's stumbling block.

Despite beating Wall Street's target on Mac. 20, analysts were still less than optimistic about Oracle's hardware sales, attributing most of the positive earnings to its software component rather than hardware.

That said, while it's easy to get caught up in rhetorical name calling and public relations spin, the more important point is to go beyond the headlines.

After all, if you think about it, such moves by both companies are inevitable because there are only so many business applications or database licenses both companies can sell to the market.

And when both companies reach saturation points, they would then have to outdo the other in each other's traditional strongholds.

But as I've said time-and-time again, this kind of competition is good for the industry, as it essentially breeds seeds of innovation. As companies battle it out to come up tops against the other, more innovative products and services will be born as a result.

May the best company win.

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