SAN FRANCISCO — Oracle is hoping to boost sagging software revenues with a messaging product that will go head to head with Microsoft Exchange and Lotus Notes.
Oracle Collaboration Suite is an alternative back-end for Microsoft Outlook and is based on the Oracle 9i database and application
server, Internet File System and group calendar software.
But if Oracle thinks it’s going to grab market share in a hurry, it has its work cut out for it — at least in the Canadian market, said Warren Shiau, software analyst with IDC Canada.
“”In general, the collaboration software market is mature; most companies bought their infrastructure a while ago,”” said Shiau. “”Right now, users don’t identify this as an area where they’re going to gain competitive advantage.””
In 2001, the corporate messaging and collaboration market reached about $45 million in Canada, with Microsoft and Lotus splitting about 86 per cent of the pie.
Collaboration Suite manages e-mail, voice mail, calendar and faxes from within its database. Companies can retain their Microsoft Outlook E-mail client software and gain the advantages of storing e-mail messages in a SQL-based database, said Barnaby Jeans, Oracle Canada’s national solutions leader of mobile and wireless technology.
“”Oracle provides a huge value proposition around total cost of ownership, lower cost of management and those types of things,”” said Jeans. “”As customers start to look at that, they’re going to realize there’s a good reason to make that change.””
Oracle is hoping to cash in on Microsoft customers considering an upgrade from Exchange 5.5 to Exchange 2000 — something Shiau said will demand implementing both Active Directory and Windows 2000. According to San Francisco-based industry analyst Ferris Research, the typical cost for customers to migrate from Exchange 5.5 to 2000 is US$100 per mailbox for corporations larger than 1,000 seats. Oracle is offering migration assistance from Exchange 5.5 to Oracle Collaboration Suite for about US$30 per user.
Oracle’s value proposition was the message its chief financial officer, Jeff Henley, pushed when he kicked off the conference earlier this month. He said companies that are gun shy about new technology projects in the current economic climate should consider that Oracle can deliver a quick return on investment.
“”We’re seeing in our customer base that everybody is going back to basics and total cost of ownership,”” said Henley. “”The only way people are spending money on new projects and technology is if it delivers a quick ROI, so what you’re seeing at this conference is this value proposition.””
Like most software vendors, Oracle has been hit hard by the economic downturn. In the past four quarters its revenue has fallen 14 per cent from the same period a year earlier — the first year of declining revenue in Oracle’s history, according to Henley. Net income also declined by 14 per cent over the same period, he said.
Shiau said there’s an opportunity for Oracle to get some Microsoft converts because IT shops that are still on older versions of Windows will ultimately move to a different architecture.
“”Every time you do that, you essentially do a re-implementation and there’s an opportunity for another vendor to come in,”” he said.
But Kevin Hunter, Microsoft Canada’s senior marketing manager in its server division, thinks Oracle is simply “”a company in the database business looking for a new space to apply their database technologies,”” whereas Microsoft has demonstrated a more committed approach to customers.
“”You can’t come out with sweeping statements such as ‘we’re cheaper’ without doing a detailed analysis,”” said Hunter.
Oracle will be making a mistake if it chooses to market Collaboration Suite strictly on the basis of its return-on-investment proposition, said Shiau.
“”I’m not so sure if ROI is the most marketable aspect of the offering,”” said Shiau. “”Having an integrated stack from Oracle is more likely the biggest marketplace selling point. From a cost standpoint, it’s more cost-effective to centralize the management of software. It’s also cost-effective to integrate your software.””
That proposition sounds appealing to Mark Sylvester, director of Oracle applications solutions at Montage-DMC, an Ottawa-based systems integrator. He said having an end-to-end stack from one vendor will help keep costs down.
“”Both from an implementation perspective and usage perspective, the single biggest repeating cost of ownership is trying to integrate (disparate) products,”” said Sylvester.
John Tolkamp agreed that an end-to-end stack is the Holy Grail, but he doesn’t think that works in every industry.
“”No single vendor has demonstrated they have a complete solution,”” said Tolkamp, the general manager of information services at Vancouver-based Canadian Forest Products Ltd. “”Our approach to success includes developing a strong integration platform, implementing best of breed applications and business re-engineering. “”
Tolkamp also said he can’t envision his company abandoning its “”significant investment in Microsoft technology.””
“”Microsoft is a market leader and thus the de facto standard which is important for external collaboration and retaining and acquiring staff,”” he said.
Oracle Collaboration Suite version 1 only began shipping in September, but there are no Canadian customers for it so far. The price for a perpetual licence is $60 per named user, less than half the price of Microsoft Exchange.