Oracle plans major push into e-commerce market

Oracle is expected to explain today how it's already the leader in electronic business software. No matter how you define e-business.

The strategy announcement is likely to be a characteristic blend of bravado, bravura and bluster.

Oracle made its name and its fortune by selling databases and consulting services, and to a lesser degree business applications. Now, like every other company, it wants to cash in on the Internet craze.

It plans to do that, initially, more or less by fiat -- by simply declaring its software already is the Internet platform of choice for lots of Web sites. There is some truth to this.

"Oracle already is an important e-commerce player," says Bob Chatham, a senior analyst with Forrester Research in Cambridge, Massachusetts. "Many of the big Web sites are, and will be, run on Oracle databases."

But that hasn't translated into notable success for other Oracle software. According to Chatham, Oracle's recent Oracle Applications for the Web, which let browser users create purchase requisitions for goods and services, expense reports and so on, are unproven in a nascent market. "The biggest player here is Ariba, and its revenue last year was only about $US20 million," Chatham says.

Oracle's suite of e-commerce applications, which lets customers create an online store complete with Web-based ordering, billing and payment features, battles an array of competitors, as do yet another set of applications designed for such diverse activities as field service support, service contracts, customer management, product repairs and others.

"Based on the status of these efforts, you can see the need for shakeup in Oracle's e-commerce strategy," Chatham says.

Oracle executives have been hammering for months at the idea that e-commerce hinges on the database. "(Oracle Chairman) Larry Ellison wants you to believe that the database is the centre of everything," says Steve Robins, senior analyst with Yankee Group in Boston, Massachusetts. "It is critical. But you also have the need for connections to legacy data, to back-end ERP (enterprise resource planning) applications -- to all the things that have to happen in a Web-based commercial site. All of these parts need to be scalable, robust and well integrated with the Web-commerce system."

Oracle cites numerous e-business success stories, but many of these claims appear to be based on the fact that customers buy a product that Oracle considers to be part of its e-commerce product line.

Gates Rubber in Denver is a major manufacturer of automotive and industrial hoses, belts and similar products. Gates Rubber is listed on Oracle's e-business Web site because the company uses the Oracle database and is rolling out Oracle's ERP applications. But the company, which bought several of the Web-based modules for a planned e-business project, has shelved those plans for now. Instead, the company will continue to rely on its 15-year-old electronic data interchange system, which creates highly automated business connections with customers such as Ford Motor, says Caryl Foley, Gates' manager of applications services.

"The Web systems are glitzy and 'out there,' but what's the return on investment?" Foley asks. For Gates and its business partners right now, at least, the answer is "not enough."

It's this kind of bracing skepticism and hardheaded reality that Oracle's e-business strategy will have to address.

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