Oracle execs stress ownership costs to developers

SAN DIEGO, Calif. — The tech industry has bottomed out, but success is beginning to rear its head once more.

So said Jeff Henley, executive vice-president and CFO for Oracle Corp., during his speech to delegates at the AppsWorld Conference.

Henley said Oracle endured its share of negative growth over the last two fiscal quarters, but he remains confident the industry (and the company) has weathered the storm.

“”We’re encouraged by some of the things we’re seeing. Things are looking more positive and it appears customer spending is more positive,”” he said. “”Our industry is no different than any other industry . . . there’s a lot of consolidation going on, and the (economic) slowdown has hastened that consolidation.””

Henley said Oracle has been proactive in increasing its developer base and in investing in its technology. The biggest announcement from the enterprise software firm so far has been an upgrade to its 11i e-business suite.

Henley also highlighted Oracle’s efforts to embrace outsourcing services and, along with several Oracle executives, spoke of the merits of supporting the Linux platform.

“”Outsourcing is something you’ll hear a lot about at this conference,”” he told the crowd. “”We’re big on that for both our applications customers and our technology customers. We think the majority of our applications customers will move to an outsourced model with us.

“”Linux is probably the hottest platform out in the market place right now,”” he added. “”We see a lot of our customers moving to Linux due to its low-cost and its robustness and performance.””

Mark Jarvis, Oracle’s chief marketing officer, told the conference delegates an estimated 75 per cent of its enterprise clients are either running or upgrading to Oracle’s 11i suite, compared to a 11 per cent from the previous year.

“”A year ago, (Oracle CEO) Larry (Ellison) said it was too early to be running our applications on Linux. Today, Oracle supports Linux,”” he said. “”We’ve got a partnership in place with Red Hat, and we believe Linux is ready for use for our database and our applications customers.””

Jarvis said much of the thrust behind Oracle’s Linux embrace is the potential to lower an enterprise user’s total cost of ownership (TCO) for hardware and software. Jarvis also discussed Oracle’s 26 “”business flow accelerators””. These are bundled products and services, based on Oracle applications. The collection of integrated application components is designed to enable a smooth end-to-end business process, he said. Upon completion of an implementation of 11i, he said, lowering the maintenance cost of the system is key.

Jarvis quoted a Gartner study which found that about 79 per cent of current budgets are not spent on new systems but on maintaining existing ones. “”Our goal is to take that 79 per cent of your budget and to dramatically lower the cost,”” he said. “”We take the daily maintenance of the system, the monitoring of the system, the management of the system, and the upgrade of the system, allowing your IT department to focus on much more strategic applications to help differentiate your business.””

Jarvis said Oracle now boasts 300 companies outsourcing Oracle’s e-business suite. “”Typically, we’re seeing a 40 per cent increase in performance of their applications,”” he remarked. “”Our outsourcing customers have also seen a dramatic reduction in the time it takes to solve a problem . . . (they’ve) seen a 50 per cent improvement in the time taken for problem detection to problem resolution.””

Plus, Jarvis continued, once a generic problem has been identified across an Oracle application and subsequently remedied for one outsourcing customer, other companies benefit from that fix automatically.

“”With the results, every outsourcing customer has seen approximately a 60 per cent reduction in the number of problems they’ve detected,”” he said. “”We believe that outsourcing will not only improve your e-business suite investment, but it’ll also deliver the cost savings and allow your IT department to focus on things more important.””

Oracle has also embarked upon offering mid-tier companies a fixed set of applications, based on a monthly fee, in an effort to induce outsourcing.

Henley said Oracle considers TCO of its software and hardware products to be the biggest issues for its enterprise clients, along with managing the complexity and cost of implementation.

“”Every year we add more developers, every year we add to the blueprint of our technology business and our applications business and I think that’s what our customers are looking for with enterprise applications,”” Henley said. “”They’ve made a long-term investment and they want a partner that’ll be there for them in the long-term and to continue to evolve their products.””

More than 10,000 delegates and 1,800 Oracle partners were scheduled to attend AppsWorld this week, which includes a trade show floor of 175 exhibits in the San Diego Convention Center. CEO Larry Ellison was expected to give his keynote address Tuesday afternoon.

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