Make no mistake about it…Oracle knows its business. Just last week, they announced great Q3 results, with an insightful recap from Jason Wood here. In fact, most guys on Wall Street seem to be sold on Oracle’s acquisition strategy and, for now at least, the strategy seems to be bearing fruit.
From my viewpoint in the industry analyst world, when nearly everyone has criticized and lambasted Fusion, it has become apparent to me that strategy has been absolutely brilliant. Although I am a fan of innovation, and consider Oracle’s acquisition strategy to be very much anti-innovation, the company has maintained a consistent focus to ensure and maintain the lucrative spend in maintenance dollars.
Why I think the Fusion approach has been brilliant…
- Although Oracle announced an impressive growth number in new application license sales during this past quarter, I believe they have also frozen a huge chunk of new application spend especially with existing PeopleSoft customers and prevented mass migration to SAP, Workday, Ultimate, etc. Most PeopleSoft customers I have spoken with over the past 12 months have maintained a holding pattern with their spend. Most are waiting for Fusion, while supplementing their ERP-centric application strategy with SaaS vendors such as Taleo and SuccessFactors and a few brave souls have made upgrade to 8.9, 9.0 and beyond.
- With Apps Unlimited, they have ensured the customer base that they will have unlimited support for their applications. What a great way to ensure the continued dollars going into the maintenance bucket where huge profits reside.
- The lack of clarity around Fusion have set the expectations so low, Oracle only has upside to prove value in the new applications. I believe many wallets will reopen in 2008 and Oracle will have a window of opportunity to reclaim and even grow wallet retention. If they fail though, it could leave the door wide open to the new incumbents and even SAP.
Interesting, I think we saw further escalation in the SAP-Oracle battle last week with Oracle’s lawsuit against SAP for copyright infringement. Although I haven’t read the argument, accusations of stealing will now prevent almost every company that was even consideration maintenance migration from switching to a 3rd party maintenance provider. It seems Oracle will do anything to protect the assets, particularly the maintenance dollars, they have worked so hard to acquire.
