At a customer event here Wednesday, Oracle executives detailed the components of its Fusion Middleware, which will eventually underpin all its applications. A limited roll-out of the server infrastructure software will kick off toward the end of 2005, they said. The process is expected to take several years.
Oracle refers toas its ongoing initiative to integrate customers from acquired business software makers , Retek and J.D. Edwards, which PeopleSoft had bought before it in turn was purchased by Oracle.
Oracle says its "Fusion Middleware" is a modular, standards-based infrastructure that will help merge its different application lines.
With the Fusion software, Oracle goes head-to-head with SAP's NetWeaver.
The executives said the Fusion middleware is Oracle's answer to NetWeaver, rival business software maker SAP's most strategic development effort.is standards-based infrastructure software, or middleware, designed to ease data interoperability in SAP applications.
Charles Phillips, Oracle's president, said that the company invites the competition from NetWeaver because the Fusion middleware is based onalready used by customers. By contrast, SAP does not have a history of selling middleware.
"If SAP wants to compete by talking about infrastructure, great. We've been doing that for years," Phillips said.
"SAP has done neat packaging (with NetWeaver), and they've talked about it. But very few customers can say, I'm using NetWeaver for 'X,'" he said.
An SAP spokesman on Friday disputed Phillips' claim that SAP had few customers for its NetWeaver product. SAP has 1,500 NetWeaver customers who are using the software to connect to non-SAP systems, spokesman William Wohl said.
In its recent quarter, SAP reported revenue of 26 million euros ($34 million) from NetWeaver-related products and said that it gained market share on its competitors.
"What's very clear in the market today is that customers are looking at what's happening at Oracle, and they are voting with their wallets to go to where there is an existing platform," Wohl said. "Fusion is nothing more than PowerPoint today."
The Fusion middleware consists of several components, including a Java application server, a Web portal, business intelligence software and Oracle's Collaboration suite for e-mail and Web conferencing. The software is based on Java and Web services standards, which will make it easier for customers to modify Oracle programs and share information with non-Oracle-based systems, according to the company.
Next year, two major upgrades of Oracle's packaged applications--Oracle eBusiness 11.i.12 and PeopleSoft--will be certified to run on the middleware suite, said John Wookey, senior vice president of applications at Oracle. Other lineups, such as the J.D. Edwards range, will have new products certified for Fusion as they are released, he said.
Fusion will also cover Oracle's, which is software meant to make information easier to track by providing a single instance of data for many applications. The company expects to release a data hub for companies to track products next month.
Eyeing SAP customers
Although Oracle has its hands full trying to retain thousands of newly acquired customers, the company has its sights on SAP customers with wandering eyes.
Oracle recently launched an internal program called SAP Battle Desk that is designed to nab SAP customers who may be considering their options during a significant application upgrade, Phillips said.
In particular, Oracle is targeting those businesses that may need to install SAP's NetWeaver infrastructure software during an upgrade project.
"SAP is changing its architecture, and that will require some major changes. So if they're going through such a hard upgrade, they might as well look at what else is out there," Phillips said.
SAP is counting on NetWeaver to ease integration between outside products and its applications. This year, the German software maker plans to begin publishing the interfaces of NetWeaver and inviting third-party companies to build add-ons to the SAP applications.
Wookey said that Oracle has software for automating business processes using industry standards, but that SAP does not. Oracle purchased a small company last year calledthat has developed a business process "engine" based on a Web services specification called BPEL, for Business Process Execution Language.
Wookey said the name "Fusion" came from a former PeopleSoft engineer who noted that before the merger, both Oracle and PeopleSoft had projects under way to create standards-based infrastructure and tools. The initiatives were called People Tools X and Oracle 11i X, Wookey said.
Oracle executives did not single out Microsoft as a competitor in discussions with customers, but Microsoft is working on a project analogous to Oracle Fusion and SAP NetWeaver., which had its introduction delayed again earlier this year, is designed to provide a common platform across Microsoft's packaged applications.
In addition to common software, Oracle intends to provide a more common pricing scheme for its different applications, executives said. The company expects to eventually publicly publish pricing for PeopleSoft and J.D. Edwards, as it does for Oracle eBusiness suite.
Another way Oracle can compete against SAP is to beef up via acquisitions, notably by buying application providers focused on specific industries. The purchase of retail application specialist Retek could provide a model for other deals, although Oracle does not rule out acquisitions in other areas, Phillips said.
Although Oracle has historically been known as a database company, the company's strategy is to bulk up its applications business as rapidly as it can. That's because an application customer will "drag" sales of the Fusion software and Oracle database.
"What's not widely understood is that being successful in the applications business is probably the best thing for our database business," Phillips said. "If you want to grow the database business, you'd better own the applications."