APPSWORLD - Oracle tempts users to upgrade with services

Oracle will announce packaged service offerings at its AppsWorld show in San Diego this week designed to make it easier for companies to use its E-Business Suite 11i, part of an ongoing effort to encourage more of its customers to upgrade to the software.

The company will also announce a program from Hewlett-Packard Co. that includes discounts on hardware and tools, along with equipment trade-ins, for customers upgrading from version 10.7 of the suite, an HP spokesman said. Oracle has said that it will stop supporting the roughly 2,300 customers still using version 10.7 in June.

Called Business Flow Accelerators, the packaged offerings include software, implementation services, training and on-going maintenance for deploying applications that can automate certain business processes. They'll be offered at a fixed price depending on the size of the job and the number of flows a customer implements, said Fred Studer, Oracle vice president for E-Business Suite marketing.

For example, an offering called Citizen Contact to Resolution includes software and services for setting up a system that lets federal government agencies process call center queries from the public. Others include a project management system called Project to Closeout for the higher education market, and Accounting to Financial Reports for heath care providers.

The offerings aren't exactly new -- they expand on a similar effort launched two years ago called Oracle Fast Forward. The difference is that Oracle's applications have matured and can be customized more easily, and the service offerings have been tailored for more specific business processes, according to Studer.

"Fast Forward flows were more focused on general domains, like HR or manufacturing. These are specific to certain processes where customers see a lot of opportunity in automation. And our ability to fine tune has come a long way," he said.

The offerings won't cater to all the unique needs of enterprises, and Oracle can't predict how business processes will evolve over time, Studer acknowledged. But he said the applications can be modified as needs change.

AppsWorld kicks off Monday, where executives will also outline future plans for the E-Business Suite. Oracle Chairman and Chief Executive Officer Larry Ellison will beam in via satellite to address the crowd Tuesday afternoon. He is in New Zealand taking part in the Louis Vuitton Cup.

Oracle launched E-Business Suite 11i in May 2000, pitching it as a product with all the applications an enterprise needs to run its business, covering areas like supply chain management, sales and marketing, finance and human resources. By standardizing on a single suite, Oracle argued, businesses could tie applications together more easily and reduce the cost of supporting multiple software platforms.

What's more, it said, because the applications link back to a single Oracle database, businesses would find it easy to find information about their company quickly, such as the performance of a regional sales team in a given quarter, or the types of customers buying a particular product.

Things didn't go quite according to plan. Early customers reported finding numerous bugs in the software, making it hard to install, upgrade to or customize. Two and a half years later, only about half of Oracle's 13,000 applications customers have gone live with the software, officials acknowledge.

At least two customers Friday said Oracle has ironed out most of the bugs in E-Business Suite 11i, and said that, eventually at least, their experiences with the software have been positive.

PaeTec Communications Inc., a competitive local exchange carrier in Fairport, New York, was among the first customers to implement 11i and had to deal with "hundreds and hundreds" of patches when it installed the software. In the long run it's pleased it picked the product, in part because it's easier to support a single applications infrastructure, said Bob Moore, PaeTec's vice president for information technology.

PaeTec uses Oracle Financials and is just now going live with iProcurement and Expenses. The applications make it easier to keep tabs on what's going on inside the company, Moore said. For example, IT managers can approve purchases more easily because expenses are handled electronically, and iProcurement will make it easier to find information such as a department's year-to-date capital expenses, he said.

"Before, we had to go to disparate sources to do that," he said.

The Financials application was also relatively easy to integrate with PaeTec's billing software, he said.

"Oracle Financials makes it very easy because of the interface tables. Any time we tried to push something to the database or pull from the database it's been very easy," Moore said.

Telmar Network Technology Inc., an Irvine, California-based company that sells carrier equipment to telecommunications companies, spent much of 2001 researching the E-Business Suite by talking to other customers.

"We learned that Oracle had some big challenges when the software first came out, but they made a big turn with (version) 11.5.4. People on 11.5.4 were having much better experiences, it was more stable. Customers on 11.5.3 or earlier were still struggling. We talked to 12 different reference accounts and that was the common theme," said Jon Hahn, Telmar's chief information officer.

In January last year the company began a six-month project to implement Oracle's Financials, Order Management, and Purchasing applications. They replaced six or seven existing programs including software built in-house and packaged applications from Navision (now part of Microsoft Corp.) and others.

"Before, we had problems because we were running software on multiple platforms. Just having one platform has delivered tremendous benefits in terms of query capabilities. Reporting through Oracle Discoverer has given people in all levels -- operations, sales, right up to top management -- easy access to information they need," he said.

It picked Oracle because the software can scale to handle large workloads, and because it wanted a large, financially viable vendor that it felt would continue to develop its software over time, he said.

Both PaeTec and Telmar are using a version of Oracle 8 and running their software on Unix servers from Sun Microsystems Inc.

Laurie Orlov, a research director with Forrester Research Inc., Cambridge, Massachusetts, agreed that Oracle has "pretty much overcome its bug problems with 11i." But the company still isn't selling as much of the software as it would like, she said.

About 5,200 of Oracle's applications customers have gone "live" with E-Business Suite 11i, while a further 1,600 have started to make the switch, according to Studer. About 3,500 customers are on some other version of 11, while 2,300 customers are on 10.7.

That less than half of Oracle's customers have gone live on E-Business Suite 11i is "not the most admirable track record," Orlov said.

Another analyst disagreed.

"That's anything from good to average," said Dennis Byron, vice president for enterprise applications research at IDC, in Framingham, Massachusetts. "They had about 1,000 upgrades in the first year. Presumably their customers are talking to one another, so both metrics tell me they have some fairly happy customers."

Orlov offered a handful of suggestions as to why more Oracle customers haven't upgraded. Spending on enterprise applications is down in general, and competitors like PeopleSoft and SAP AG have been doing well in areas like CRM and supply chain management, she said. Oracle also hasn't done a great job forging partnerships with consulting firms, she said, and the company faces the challenge of trying to develop and market multiple products simultaneously.

Users of 10.7 will have little choice but to upgrade if Oracle goes through with its plan to cut support for that version in June, but Forrester's Orlov said that may not happen.

"At AppsWorld their customers will scream and scream at them and they'll back off: that's my prediction. Oracle doesn't want to lose the maintenance revenue," she said.

Oracle's Studer maintained that E-Business Suite 11i has come along way since its launch.

"E-Business Suite was probably the biggest software undertaking ever done," he said. "This was a hard thing to do and, no questions, there were concerns about quality. In the last year and a half Ron Wohl (Oracle executive vice president in change of applications development) and others have really got behind improving the quality."

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