Oracle has added a new wrinkle to its online application hosting service, announcing that users will be able to run the software on their own servers while Oracle handles the administration and support work on a remote basis.
The new offering is designed to make application hosting more appealing to users who don't want important business data to be stored on systems that they don't control, according to Oracle. Companies opting for the new approach would manage the hardware themselves, unlike typical hosting setups in which the servers are run by an application service provider (ASP).
Oracle executives referred to users interested in controlling their own hardware destinies as "server huggers" during a teleconference. "There are still a lot of companies that want to have their data sit on a server close to them," said Timothy Chou, president of the software vendor's Oracle.com hosting unit, in a statement as part of today's announcement.
Like other ASPs, Oracle previously required hosting users to let it house and manage the full hardware/software combination. But the company is now offering certified configurations of its Oracle E-Business Suite applications through server vendors for use in hosting installations within corporate data centers.
Compaq Computer Corp. is the first hardware vendor to make the off-site hosting configuration available, for use with its ProLiant DL580 servers. But Oracle said the software will be supported on servers from Sun Microsystems Inc. within 30 days and on machines from Hewlett-Packard Co. in the next three months.
Joshua Greenbaum, an analyst at Enterprise Applications Consulting in Daly City, California, said Oracle is pushing harder on the ASP front than application rivals such as SAP AG or PeopleSoft Inc. Oracle wants to "get out of the business of selling and supporting multiple installations running on multiple [hardware] platforms," he said.
Oracle's hosting plan is a sound one, Greenbaum said. But to make it work, he added, the software vendor still has to "fight a lot of institutional inertia" on the part of users. Large companies in particular haven't been stampeding to sign up with ASPs, he said.
Oracle boasts that it has 125 hosting customers worldwide, including insurer Cigna Corp. in Philadelphia and the Toronto-based Bank of Montreal. But in a recent survey conducted by Boston-based Aberdeen Group Inc., members of the independent Oracle Applications Users Group (OAUG) indicated a sizeable amount of skepticism about the ASP approach.
In virtually all application categories, more than 60 percent of the users who responded to the survey said they don't have any plans to outsource their software to an ASP. Topping the list of reasons was a concern that relying on a hosting firm would leave companies with no control of critical business processes, according to Aberdeen and the Atlanta-based OAUG. Also cited were cost issues and the need to customize applications to fit individual business needs.
Oracle today also outlined plans to expand its ASP offering to include a series of small-business applications developed by NetLedger Inc. in San Mateo, California. Larry Ellison, Oracle's chairman and chief executive officer (CEO), provided NetLedger with its initial financing and is also chairman of that company, which tailors its applications to businesses with less than 100 employees.