Adam Gifford: Oracle's offer not reason enough for firms to switch

Switch your applications from SAP R/3 to Oracle E-Business suite and get up to 100 per cent off licence fees. Sounds like a deal, right?

The Oracle Fusion for SAP (OFF SAP) offer is the latest episode in the tit-for-tat battle being waged between the two biggest application vendors in the enterprise software world.

But at this stage in the technology cycle, SAP customers will have little to gain from talking to Oracle.

Oracle's problem is actually to find reasons why its PeopleSoft and JD Edwards customers should not talk to the TomorrowNow team when it comes through next week offering to halve their support bills.

In January, when Oracle completed its takeover of PeopleSoft, SAP rolled out its Safe Passage plan to offer a standardised way for organisations using PeopleSoft and JD Edwards software to migrate to SAP.

It also bought TomorrowNow, a company that provides third-party support for PeopleSoft and JD Edwards applications. If SAP can break the support relationship, it will be harder for Oracle to sell those customers more software.

Oracle's argument is that customers upgrading from R/3 to the newer mySAP ERP or mySAP Business Suite products must relicence and reimplement their applications.

Oracle president Charles Phillips said only 6 per cent of SAP's customers had upgraded to mySAP ERP, compared with 94 per cent of Oracle E-Business Suite customers who were running on the latest release, 11i.

"Now they have a low-cost alternative to stop paying for upgrades," Phillips said.

He said SAP customers were faced with complexity, fragmented data, difficult and expensive upgrade processes and managing the legacy ABAP language.

Jim Brodie, New Zealand manager of systems integrator Intelligroup, said being on the latest version wasn't a good enough reason to upgrade. Companies must also offer some benefit to their specific business.

"Upgrades are not horrendous if you plan properly," Brodie said.

While SAP would like its customers to upgrade, the software isn't going to break if they don't, and the company keeps extending its support deadlines.

Brodie said the choice for customers was not just the applications, but the platform they ran on.

"The whole market is moving to enterprise services architectures," he said.

Services is where you look at what a piece of software does, rather than get hung up about the language it is written in. The idea of services-oriented architecture is you should be able to take a bunch of different blocks of code, based on descriptions of their functionality, and run them as a complete application.

Oracle and SAP have slightly different visions of what an enterprise services architecture will look like.

Oracle, which makes much of its money from databases, puts management of information at the top of its list, while also pushing the way its configuration processes mean customers can quickly change the system to match changing business processes.

Oracle also trumpets its open, standards-based environment, which means the company has built its applications using the latest standards, such as Java J2EE.

SAP has its own enterprise services architecture based on NetWeaver, which combines an application server with an integration platform, portal, business intelligence and other middleware elements.

Speaking to the Herald at a Sapphire user conference in Boston last month, SAP technology group president Shai Agassi said Oracle's Fusion architecture proposed two layers of abstraction - the web services definitions and the database.

"You can't say you have a services-oriented architecture, yet all the services will map to a single unified database. It's as if to say you have two hinges on the same door," Agassi said. "Services-oriented architecture or database-oriented architecture - you can't have both."

SAP's vision has been endorsed by other leading industry players such as Adobe, Cisco, EMC and Microsoft, which will publish descriptions of their software as services to be run alongside SAP.

Brodie said that sort of endorsement was compelling for customers, who were looking for stability.

"I have been around SAP for a while, and there are things you believe and things you don't believe. This one will happen," Brodie said.

"We can win a site on the technology. Before, it was an issue. When we pitch to a new customer, we lead with the architecture," he said.

Rather than attempting to poach SAP customers, Oracle might want to concentrate on retaining the customers it acquired with the purchase of Peoplesoft.

Its OFF SAP stunt overshadowed significant news for users of JD Edwards software, which includes about 85 New Zealand firms.

A service pack for World green screen systems includes new cashflow, auditing and reporting tools to help customers meet US and European statutory compliance regimes, and self-service applications that allow customers, employees and vendors to access the systems for tasks such as checking purchase orders and receiving personalised service.