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Oracle reorganizes business apps unit

Analysts say the reshuffling is an attempt to compete against rivals after the company suffered slow sales on the release of a particularly buggy version of its product.

Oracle is reorganizing its business applications unit this week in what analysts said is an attempt to compete more effectively against rivals.

Oracle is merging two groups--application development for its customer relationship management and enterprise resource planning products--under the direction of Executive Vice President Ron Wohl.

Senior Vice President Mark Barrenechea, who had overseen CRM development, will head up a newly created group at Oracle focused on incorporating customer feedback and requests into future product development. The group also will work with Oracle customer service and support to ensure customers successfully install the applications, Oracle spokeswoman Kristin Hollins said.

"The longer-term effects are aimed to put Oracle back on the playing field to compete effectively against SAP, PeopleSoft and Siebel," stated a report issued Wednesday by securities analyst firm Credit Suisse First Boston.

Sales of Oracle's business applications have slowed since it released a particularly buggy version of the product over a year ago. Despite the company's prediction over the last couple of years that business applications would drive its growth, databases remain the biggest component of its business. Oracle missed both database and business application revenue targets for the third quarter ended Feb. 28.

Oracle sent e-mail to employees Wednesday alerting them to the change, which affects development and testing groups, not sales. The reason for the change, the company said, is a need for greater efficiency and because Oracle is selling so-called front- and back-office applications together as one package.

"The distinction between ERP and CRM is fading," Hollins said. Oracle's CRM products are a set of sales and marketing applications, and its ERP products are applications for accounting, human resources and manufacturing. "We had two separate development organizations, which created inefficiencies and redundant activities."

Oracle does not plan to lay off any staff as a result of the reorganization, Hollins said.