Oracle preps expanded SLAs for outsourcing offer

Oracle Corp. is preparing a document that more clearly explains what level of service customers of its hosted software and remote software management services can expect, Oracle Outsourcing President Tim Chou said in an interview.

"We are getting ready to set service-level standards that not only describe what standard we are at today, but also where we will go next year. We will be much more specific with people about what our service-level standards are," said Chou. The service-level document should be out by the end of the year, he said.

The move is in response to customer and analyst comments, Chou said. Oracle's current single line service promise -- "if you are unhappy for any reason, we will rebate you 20 percent of your fee that month" -- is clear, but may in fact deter customers from complaining about service issues, users and analysts say.

"It puts the onus on the customer in a way to complain," said Amy Mizoras, program manager at research firm IDC in Framingham, Massachusetts. "I think Oracle needs something more structured, especially if it wants to attract larger customers. A contract that specifies availability is easier for the customer to bring up and get reimbursed for."

Chou agreed, saying he had noticed that customers are used to lengthy service level agreements (SLAs).

"There is definitely an acculturation based on the traditional world of 200 pages of paper," he said.

The Oracle service level document will have metrics in five categories: availability, security, performance, problem management, and change or configuration management, said Chou. The metrics will be based on industry standards and "cold hard numbers," he said.

"What we are trying to do is set the standard for what service level is going to mean in a world where the software company is outsourcing the software. The reason why the traditional IT outsourcer has to write all of this language in their SLA is because they don't control the software. Nine-tenths of the language is to protect them," said Chou.

"As the software company, I control the software. That is a totally different world than the world the traditional guy lives in," he said, adding that Oracle won't pull its 20 percent rebate promise. A traditional outsourcer would be Electronic Data Systems Corp. (EDS), for example.

A more structured SLA is indeed what customers want, said Oracle Applications Users Group (OAUG) President Tom Wyatt.

"SLAs are an important measure for any company to present. It is a quantifiable measurement of expectations. It is a good thing that Oracle's proposed SLA is not as broad a statement as it was before," he said.

Wyatt, whose main job is director of Oracle systems at SITEL Corp. in Baltimore, Maryland, takes a wait-and-see position and won't judge Oracle's effort until the vendor presents its service-levels work.

"The devil is in the details. Once we have the opportunity to measure the outcome, we can say if it makes sense," he said.

Ian Haddleton, integrated systems and solutions manager at Oracle customer BAE Systems PLC, of Farnborough, England, said the added service level information would almost be a prerequisite.

"I would expect it to be there," he said.

BAE Systems does not currently use Oracle's outsourcing services because of security restrictions; the company makes vehicles for the world's armed forces. "There is a potential (to use outsourcing), but the issue is that any Oracle staff involved would need to be cleared by the government," said Haddleton.

In addition to its service level standards, Oracle is getting ready to publish an E-Business Suite outsourcing reference guide, Chou announced. This document, which will be over 100 pages, will describe in detail the Oracle outsourcing service, he said.

Oracle today has over 500 outsourcing customers worldwide. The Redwood Shores, California, software maker distinguishes between three models of outsourcing: At Customer, At Oracle and At Partner. The software, either database, application software, or application server, is managed by Oracle in all models, but the difference is where the software is installed or hosted, which can be either at the customer's site, in Oracle's data center or in a data center operated by an Oracle partner.

About three-quarters of today's customers are hosted "at Oracle," according to Chou. Oracle has said it expects 25 percent of its applications customers to have their software delivered on an outsourced model by 2005. The company has about 13,000 applications customers.

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