Oracle last week redefined itself as a provider of application services based on its 9i database, which the company previewed at Oracle OpenWorld in San Francisco.
An integrated database and application server, 9i has features designed for hosted environments, notably Oracle's AppsNet program.
According to Mark Jarvis, Oracle's vice president of worldwide marketing, the company's shift in strategy is focused on three things: providing customers with an e-business infrastructure, offering a complete suite of e-business applications, and offering hosted versions of its entire product suite.
"I'd say our story hasn't changed, but the point we're at in that evolution has changed dramatically in the last two or three months," Jarvis said. "In the last four months, we've gone from zero to more than 32,000 application customers now in our AppsNet program online."
Jarvis said that Oracle has been providing hosted applications for some time now, and already has more than 100 customers.
Analysts say that Oracle sees an opportunity to become a dominant provider of software services, standing in sharp contrast to competitors that have opted to align themselves with a range of ASP (application service provider) partners.
"The competitors that partnered with ASPs basically handed over the entire services opportunity to ASPs," said Colleen Niven, an analyst at consultancy AMR Research.
Instead of handing over its services, Oracle created Oracle Online to host Oracle 11i, as well as CRM (customer relationship management) and sales automation software.
"Oracle realised it was late to market with CRM because Siebel was already there, so it began giving it away," Niven added. "And it decided it could really open up a new market opportunity."
Oracle's plan is to extend its existing ASP framework using the 9i database and upgrade its integrated Oracle applications.
"In the next three months we're going to see the maturity of Business OnLine, in terms of how, not only do you get HR or manufacturing as an application online, but [how] they will be totally integrated together online with your Internet and intranet content," Jarvis said.
Oracle's Sales Online, for example, is currently a stand-alone application. But it will integrate with the general ledger product, with the HR product, and with the other products that Oracle offers as well, according to Jarvis.
Oracle is in a good position to lead this shift, said Mike Schiff, an analyst at Current Analysis.
"[The move] will be successful for the company because of its position in the market," Schiff said.
Oracle is not the only company morphing itself into a provider of software as a service. Microsoft is building its .Net strategy, which will result in back-end middleware services and its Office desktop application suite being offered online.
But most of the other companies heading down this road have opted to partner with existing ASPs, which then provide the vendor's software as a service.
Oracle believes that today's exchanges need to be further integrated to design, manufacture, and ship goods collaboratively online rather than simply procure products. As a result, Oracle will be adding enterprise resource planning and supply-chain application functionality to its own exchange.
"In five years time, the software industry will be completely different. People are no longer going to buy products; they are going to buy software as a service over the Internet," Oracle's Jarvis said. "So all the software companies out there need to change to provide software as a service over the Internet, and if they don't they'll be extinct."