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The great middleware debate: Oracle versus SAP

How important is middleware to the applications business? Depending on who you ask and how you define terms, you may get vastly different answers.

Oracle's grand plan in buying packaged application companies is to create a single set of infrastructure software -- Fusion Middleware -- to underpin all its disparate applications with components like portals, application servers, business workflow as well as a range of business intelligence tools. The pay off to customers is more flexible businesses and reliable, consistent information across all their applications.

"Middleware has become more strategic and crucial to how we build applications," said Oracle president Charles Phillips at a customer event in Boston on Thursday.

In fact, said Phillips, Oracle's middleware business could one day be larger than its multi-billion database franchise. The company made $800 million in middleware sales last year and is aiming to top $1 billion this year, he said.

By contrast, SAP, Oracle's main application rival, argues that the future of the applications business is not a middleware discussion.

"The truth is SAP's approach to the future of software is 180 degrees different from Oracle. We want to co-innovate on a common platform - they're consolidating the past," said Peter Graf, SAP's executive vice president of solution marketing, who said that Oracle's middleware-centric approach is not viable.

SAP this week announced the Enterprise Services Community Process, a forum for third-party ISVs and customers to define and build add-ons for SAP's application suite.

The certification program for third parties is called Powered by NetWeaver; NetWeaver is Java-based infrastructure software which ships with all mySAP applications now and used by 1,500 customers to link to non-SAP systems.

But to SAP, the "business semantics" which describe business process information, such as how to handle a purchase order, are more important than the "wires" to integrate applications. "Process innovation," or how companies can improve their processes with software, is the key to being competitive, according to SAP executives.

Oracle counters that customers need both process improvements and good information at their fingertips which is why Oracle includes business intelligence tools with its middleware.

Meanwhile, IBM is sitting on the sidelines of the application business in order to sell more middleware.

On Thursday, it published a document describing its application strategy to its investor Web site. It argues that IBM can sell more middleware, a nearly $9 billion market, to ISVs than it could ever sell applications.