APPSWORLD - Oracle promises exact cost of ownership

Oracle's oft-repeated promise that its applications can slash costs while boosting efficiency is striking home with a number of users.

At the Oracle AppsWorld Conference this week, eight users said that their installations of the E-Business Suite 11i had allowed them to automate and improve processes and, in some cases, start to achieve a return on investment. Oracle helps make that possible by offering a single, integrated technology stack, CEO Larry Ellison pointed out in his keynote address Tuesday.

In that speech, Ellison also blasted rival customer relationship management (CRM) software maker Siebel Systems Inc. "It's impossible for Siebel or any customer relationship management system to give you a 360-degree view of the customer," he said.

Complete customer interactions go beyond CRM applications to other systems, such as finance, and the data is scattered in multiple places through the enterprise, he said. "One thing we focused on is reducing the cost of the implementation and trying to make it predictable [so we can] tell you before we begin how much it will cost to run it every day," Ellison said.

The promise marks a bit of a change for Oracle. "Providing complete total cost of ownership [numbers] for all new deals will be hard to do, but it's doable," said Joshua Greenbaum, an analyst at Daly City, Calif.-based Enterprise Applications Consulting. "And I think it's going to be an important competitive advantage that will force the other vendors into promoting better understanding of the lifetime costs of their software."

A number of users also testified to the benefits of their 11i investments. Moving to a hosted version of 11i CRM call center, finance and other applications saved United Asset Coverage Inc. more than US$3 million in efficiency increases over the course of a year, said Brad Snook, vice president of client relationship management at the Naperville, Ill.-based telecommunications service provider. Before going live with 11i in August 2001, UAC ran a hodgepodge of applications, including business applications from Microsoft Great Plains. Then it decided to go with a single integrated contracts, billing and CRM platform. That integrated platform boosted the efficiency of call center workers and enabled them to handle more calls.

"We made up what we spent in about a year," Snook said.

Walnut, Calif.-based LCD panel maker ViewSonic Corp. has seen a payback on its investment in 11i, along with various other efficiencies such as being able to close the company's financial books rapidly, according to CIO Robert Moon. Still, it took ViewSonic two attempts to install Oracle software before it achieved success, he said.

Four years ago, the company tried to roll out a heavily customized version of 10.7 that cost $4.5 million in the U.S. alone. But that effort lacked end-user participation.

"It was a mess," Moon said. "We were running a $1 billion business on Excel spreadsheets." ViewSonic scrapped that system and the company reimplemented Oracle, this time using 11i, at a cost of about $750,000. That second try went live in November 2001 after a five-month installation. Since then ViewSonic has seen a drop in hardware and support costs of about $2.5 million a year.

William Lawson, CIO at Paoli, Pa.-based industrial goods manufacturer Ametek Corp., which runs multiple versions of Oracle, including 10.7, 11.03 and 11i, said he's intrigued by Oracle's promises of how it can boost efficiency. But he said Oracle needs to be more company-specific.

"I need to know what it means to me," Lawson said. "They need to say it in my words and in my terms."

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