Oracle details postmerger plans

Speaking at San Francisco City Hall, Oracle's top brass focused on the company's efforts to overhaul its business applications software, incorporating the best technology from more than a dozen companies it acquired during the past year or so. That initiative, called Project Fusion, began about a year ago, when Oracle completed its $10 billion buyout of PeopleSoft.

Video: Clearing up some myths
Oracle President Charles Phillips talks about what his company is up to.

Oracle President Charles Phillips said the company is already half done with its work on Fusion and will no longer refer to the effort as a "project." Oracle executives also said the company is on track to deliver its first Fusion applications release in 2008, as previously promised.

"Oracle is halfway to Fusion," Phillips said. "A year later, we're 50 percent done and that's the tough half. (We're) pretty proud of that."

Notably missing from the evening's event was Oracle Chief Executive Officer Larry Ellison, who was scheduled to speak. The audience was told he had come down with the flu and, at the last minute, canceled his appearance.

Among the tasks Oracle checked off in 2005 were defining the Fusion architecture, certifying numerous products on Fusion middleware, defining new product requirements, enhancing support and building upgrade tools, executives said. It also delivered white papers and blueprints on these topics.

In 2006, the company plans to release new versions of three major sets of applications: Oracle E-business Suite 12, PeopleSoft 9 and JD Edwards 8.12. Each will incorporate Fusion components, including application integration tools, business reporting programs and workflow.

Phillips sought to downplay the difficulty of the Fusion redesign, calling the concern that Oracle is attempting to do something unprecedented and risky a "myth." "This is just a new product; we do it all the time," he said. "We've done this before."

Executives said another myth it would like to dispel is that the redesign will force customers to upgrade to Fusion products. On the contrary, upgrades are optional because Oracle offers lifetime support for its current generation of products, they said. But the company urged customers to upgrade to new interim releases it introduces this year and "retire" custom-built applications that may not work with Fusion technology if they want to have the latest technology.

"There's a path to Fusion applications," said John Wookey, Oracle's senior vice president in charge of applications. "But you need to take that step."

Since acquiring PeopleSoft, Oracle has scooped up a bunch of smaller software companies, including retail software specialists Retek and Profit Logic, in a bold effort to overtake SAP in the $50 billion global market for business applications, which help companies automate factory, sales and back office tasks. It also agreed to purchase Siebel Systems, a major rival in the sales automation market, for $5.8 billion--a deal it expects to close in the coming weeks.

The buyout strategy, a $19 billion gamble, has attracted a lot of attention. But investors remain uncertain. Oracle's stock has hovered between $12 and $14 over the past year, a long way from the $30 price it fetched about five years ago. Last month's earnings reports did little to help the situation. The company reported a lower quarterly profit, citing costs related to PeopleSoft, and slowing sales growth in its database business.

Meanwhile SAP, its chief rival on the applications front, is thriving. The company reported last week it grew overall revenue by an estimated 13 percent in 2005 and that lucrative software revenue grew by 18 percent. The news sent the German firm's shares up close to a one-year high.