Oracle Fusion - The emerging truth, part I

The concept of Fusion came from a reactionary and hostile acquisition of PeopleSoft, after PeopleSoft itself acquired JD Edwards and the Oracle applications business was therefore relegated to third or even fourth place in the global applications...

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The concept of Fusion came from a reactionary and hostile acquisition of PeopleSoft, after PeopleSoft itself acquired JD Edwards and the Oracle applications business was therefore relegated to third or even fourth place in the global applications vendor league.

Even though it was a knee jerk reaction, it was executed superbly in retrospect. Oracle realised that through acquisition, it could achieve its two primary goals:

  1. global domination (naturally), and
  2. enhanced profit margin through recurring contracted support and maintenance fees.

By aggressively stripping out superfluous and duplicate cost, it could gain IP, increase market share, grow client revenues and enhance earnings. Oracle also realised that by applying its own commercial, licensing and support practices, it could retain client support fees even when clients were inclined towards de-support or migrating away.

This success led onto further acquisitions in the application space, such as Retek and Siebel, and started a trend into all areas of technology including core databases, Open Source, unstructured data, analytics and industry specific leadership. Today, after more than 75+ acquisitions, clients that have previously kept Oracle in the pure database technology stack, now find themselves totally dependent on Oracle for all mission critical business systems including servers, operating systems and storage.

This transformation in dependency has left many clients struggling to change their vendor management style towards this feisty, often difficult, complex and aggressive vendor.

In addition to clients being frustrated about vendor lock-in, the other irritation was uncertainty surrounding the product roadmap for Oracle’s own products and then acquired tool set. To appease client concerns and therefore reduce support and maintenance churn, Oracle had to design a future that would please its clients and make sense of an increasingly confused patchwork of application components.

It did this magnificently. In a two pronged attack, it firstly promoted the concept of lifetime support such that it would continue developing products like JD Edwards on an ongoing basis. Secondly, it architected a vision of how the best features, functionality and technology of its acquired IP would be engineered into a product that would offer the best of everything. This fusion of technologies was to be called ‘Fusion’, and at least on PowerPoint, seemed to keep spectators, analysts and clients happy.

Clearly as the pace of acquisitions continued, the delivery of Fusion products inevitably slipped in traditional Oracle style. However, at this year’s Oracle OpenWorld we saw the arrival of the first Fusion products, notably in the HCMS space. This timing is perhaps unfortunate, particularly for clients on r11 of Oracle E-Business Suite with end of support looming. Clients are being financially pushed into upgrading to r12 or being asked to wait for Fusion, which is not filling many with confidence.

At a time when economic pressures are restricting budgets and putting more emphasis on value, nimbleness and competitiveness through business systems, this tension is exacerbated by the arrival of the real cloud. By this we mean the very rapid explosion of cloud-based winners including Salesforce.com, Success Factors and Workday, who are earning the hearts and minds of clients looking for utility licensing, application agility and social media integrated functionality.

In Part II, I’ll discuss how the emergence of cloud has impacted Oracle’s application strategy, and we consider the future of Fusion.

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