Oracle: Interest in its ASP service 'disappointing'

Oracle is disappointed by the number of customers using its hosted applications today, but expects half of its users to move to the ASP (application service provider) model within five years, a senior company official said here at Oracle's European AppsWorld conference Wednesday.

Oracle's ASP business offers a managed, hosted version of the Oracle 11i enterprise applications.

"About 150 customers worldwide are using, which is not as big a number as we had hoped a year ago," said Sergio Giacoletto, Oracle's executive vice president for Europe, Middle East and Africa (EMEA). "The take up of is disappointing."

The bulk of the customers are in the U.S., with only 10 in the EMEA region, Giacoletto said. Oracle now has over 12,000 customers worldwide on different versions of its applications software, he said.

Oracle is confident its ASP business will pick up steam, despite today's low take-up rate.

"We expect half our (applications) customer base to use in five years time," said Giacoletto. "There is a move to standardized software. If the software weren't standardized the move (to hosted applications) wouldn't make sense," he added.

Hosted applications can't be customized for each customer, one of the major differences with applications that are installed and managed in-house.

But customization is no longer a factor with many implementations of the Oracle 11i suite of enterprise applications, according to Ron Wohl, executive vice president of applications development at Oracle, also speaking at the conference.

"We now have many customers that are implementing with zero customization. Not that they didn't have to write some code for interfaces, of course they did, but they did not have to change any of our vendor supplied code," he said.

Wohl pitched the hosted applications as a way to save money and have more stable service.

"We can achieve at least a 50 percent cost reduction from a shared online hosted solution. When you can automate more there is less room for manual error, therefore you get much better service," he said.

One member of the audience thought Oracle's long term ASP ambitions would be a tough target to achieve.

"People are not yet comfortable about moving that part of running their business (the enterprise applications) out to a third party," said Jeremy Young, president of the Oracle Applications User Group and a business process manager at Oracle customer DHL Worldwide Network NV in Belgium. "They wonder if they're going to get the service they need. Once people start signing on, it could pick up, but not everyone wants to be a trend setter."

At DHL, Young added, the ASP model is "not the direction the company is headed."

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