Warnings, advice issued at Oracle OpenWorld
Oracle President Ray Lane warns companies to shed whatever preconceived notions they have about how to manage their businesses to succeed in the new Internet economy.
"This is going to turn into a very competitive and vicious environment," Lane told an audience of customers, partners and developers during Oracle OpenWorld, which kicked off this morning. Lane said the Net culture will make the smallest company become global and companies "can't run away from it."
About 20,000 people are expected to attend OpenWorld this week, the database giant's largest annual U.S. show. Lane predicted a future where many companies will rent software to manage their mundane business tasks to free them up for doing what they do best: building their businesses.
Oracle's main business is selling database software. Also, like competitors SAP, PeopleSoft, J.D. Edwards and others, Oracle makes business management software that automates everything from order entry to human resources to financial data tracking. Business software makers are reinventing their core products to make better use of the Internet, and to make it easier for customers to get software up and running.
The idea is that instead of buying software, corporate customers will rent it on a subscription basis from the traditional business software makers--which either rent it themselves or partner with an application service provider (ASP). Oracle, for one, has 30 customers renting its software through Oracle Business OnLine, its own ASP. Lane argued that renting and using Web-based software applications saves a company both time and money.
"If it costs $100 to process an order, with an Internet application it should cost $10," he said.
Forrester Research expects the so-called "apps on tap" market to grow from $90 million in 1998 to about $21 billion in 2001.
In a keynote address following Lane this morning, Ann Livermore, Hewlett-Packard's president of business customer solutions, said the company will continue to work with Oracle to provide products and services that customers of both companies will use to rent applications, including email, procurement and others.
"Fifteen to 20 percent of new applications will be bought on a pay-as-you-go basis by 2001," she said, quoting a Gartner Group statistic. Outsource and "imagine the capital you will have available to work on strategic initiatives," she added.
By moving management and hosting of back-office tasks to a Net-based model, companies can focus on their core competencies: making cars or building computers, for example. And their information technology departments can concentrate on developing new competitive technologies, Lane said.
Lane said companies fail to budget for innovation today and instead "maintain old systems because we need to keep the trains running on time."
Once businesses are freed up, Livermore said they can focus on expanding their partnerships across the Web to provide goods and services to a whole new group of consumers. Working with Oracle, HP is offering software for building marketplaces, where companies will buy and sell goods and services from a corporate portal. Companies will be able to bid on services or host auctions from their portals.
"The new game is not about forcing people to come to a Web site," Livermore said. It's about making "it easy to find your products across a variety of sites."
"We're turning the business model upside down," she said.