Fusion Apps questions Oracle should answer

Pricing, deployment and compatibility unknowns loom as OpenWorld approaches

Oracle appears set to deliver more information than ever before about its long-awaited Fusion Applications at the OpenWorld conference in September, with more than 30 sessions listed as of Tuesday.

Fusion Applications are supposed to combine the best attributes of Oracle's various application lines into a next-generation suite. Oracle CEO Larry Ellison has said they will make their initial debut sometime this year, and many observers are expecting a release announcement at OpenWorld.

The conference sessions include deep-dives into individual Fusion modules, the suite's architectural underpinnings and its pervasive use of BI (business intelligence).

While the presentations will apparently include a wealth of granular detail about the software, OpenWorld also presents a crucial opportunity for Oracle to educate customers on some broader aspects of the Fusion launch, according to some users and analysts.

"The big thing for me is the deployment strategy," said Forrester Research analyst Paul Hamerman.

Ellison told last year's OpenWorld audience that Fusion Applications are built to be deliverable as SaaS (software as a service). But it is not clear if Oracle itself will sell all the applications this way, Hamerman said.

"I think that Oracle's just not ready to jump into SaaS too much, really, for financial reasons," he said. "Ellison's on record saying nobody's making any money with SaaS, and it's pretty much true."

Fusion Applications will obviously be sold in on-premises form as well as via hosting services like Oracle's own On Demand division, Hamerman added. But it may be up to partners to deliver the software as true multi-tenant SaaS, which provides cost savings and cuts management chores, since multiple customers share the same application instance.

Oracle would definitely do well to further spell out the deployment options for Fusion, said Floyd Teter, vice president of the Oracle Applications Users Group. Teter is also on the group's Fusion Council, which has served as a liaison between Oracle and customers regarding the applications.

Teter, who works as director of the program management office for system integrator Innowave Technologies, comes in contact with many small and medium-sized companies, he said.

"One of the things they're interested in terms of Fusion Apps is, 'Do I really have to host this environment myself,'" Teter said. "[Oracle needs] to be explicit about that."

Fusion Applications' technical underpinnings, which include Oracle Fusion Middleware and the JDeveloper toolkit, may result in change for many users of Oracle's existing ERP (enterprise resource planning) products, which include JD Edwards, PeopleSoft and E-Business Suite.

The SaaS deployment option may therefore be more attractive to smaller companies with fewer resources and desire to make such a transition.

There's also the possibility of Fusion Applications being delivered in appliance form, perhaps powered by Oracle's Exadata platform.

But users can't make any substantial decisions until the software is actually released.

At the least, Hamerman is expecting Oracle to announce a general-availability date for Fusion's first wave at OpenWorld. While few customers may leap to buy it, Oracle still needs to set some expectations for the market, he said.

"Let them lay out the adoption curve," he said. "Where do they expect to be in a year or two years? For this product, it's key to have live customers in volume on payroll or general ledger, to prove out its ability to handle large companies."

Insight into when the second wave of Fusion will be released would also be helpful to users, since the initial launch will not include a complete set of ERP modules.

"Not all the verticals will be delivered," said Altimeter Group analyst Ray Wang. "It's important for Oracle to show what that road map is."

That said, Oracle has clearly positioned Fusion Applications as something users can adopt in modular fashion, at their own pace.

"We don't think all customers are going to replace what they have today with Fusion," Ellison said during his OpenWorld speech last year. "We think they will augment what they have with some Fusion. Fusion is designed to be delivered that way. ... We have replacement applications and then we have net-new applications."

But the company could do more to cement this message, as many customers seem to be under the impression that moving to Fusion Applications will be like other upgrades, according to another user.

"It's far more of a mix-and-match [situation]. You'll decide what you want. It's a different scenario for every user," said Debra Lilley, deputy chairwoman of the UK Oracle User Group and another key liaison to Oracle regarding Fusion.

It would help if Oracle began weaving Fusion Applications information into its presentations for E-Business Suite, PeopleSoft and JD Edwards customers, she said.

In fairness, Cliff Godwin, the Oracle executive in charge of E-Business Suite, did just that during a recent event Lilley attended, she added.

Meanwhile, Fusion's licensing model is a "phenomenally important" area for Oracle to clarify, Teter said. "We need to hear how that's going to work. What I've been told is we'll get 'like-for-like.' If we're upgrading from [E-Business Suite] financials to Fusion financials that should be a no-cost upgrade. But if it's a new module, that will cost you."

Lilley has a similar understanding. "In our conversations, they've been quite clear that if you own that process now, you'll own that process in Fusion," she said.

But the usability improvements in Fusion Applications are so strong that many companies will likely add user licenses, according to Lilley, who has had extensive hands-on experience with the software.

Another mystery is how open Fusion Applications will be to other vendors' technologies, such as databases.

This is an important point for some Oracle customers. About one-third of PeopleSoft shops are databases other than Oracle, Hamerman estimated. Moving to Fusion therefore potentially entails expensive new license purchases.

Wang expects Oracle to provide some measure of cross-platform compatibility.

"Like any good vendor they will be optimized for their own stack, but that doesn't mean they can't work with others," he said. "The market will dictate that Oracle has to be open enough to participate in other ecosystems."

Oracle did not respond to a request for comment about its plans for Fusion Applications at OpenWorld.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris's e-mail address is Chris_Kanaracus@idg.com

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Chris Kanaracus

IDG News Service
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