Google's Pixel 7 Event National Taco Day Microsoft Surface Event Xiaomi 12T Pro's 200MP Camera iPhone 14 Pro Action Mode vs. GoPro Hero 11 TikTok Money Advice Hottest Holiday Toys Gifts for Cyclists
Want CNET to notify you of price drops and the latest stories?
No, thank you

Oracle struggles to hold ground

The firm's struggling applications division is launching a full-scale assault on the enterprise resource planning market.

Oracle's struggling applications division is launching a full-scale assault on the enterprise resource planning market in an effort to catch up to seemingly untouchable market leader SAP and stay a step ahead of other competitors like PeopleSoft and its seemingly untethered growth.

The Redwood Shores, California-based firm announced this week that it is doubling the sales force for its application division, expanding its sales efforts and offerings to midsize companies, and beefing up its push into such vertical markets as retail, utilities, healthcare, and telecommunications, as well as international markets.

It is the latest attempt by Oracle to spark a fire under its simmering applications business. The strategy so far has consisted of realigning and streamlining the sales force, shuffling top management, and, perhaps most significantly, turning over command of the division to the company's charismatic chief executive Larry Ellison.

The enterprise resource planning market is one of the hottest industries going today as companies from Fortune 500 status to smaller 300 employee organizations reengineer their processes and install software systems like Oracle's products to manage tasks such as order entry, general ledger accounting, and inventory management.

But Oracle's second place standing in the market has been slipping the past year. It posted less than stellar financial results earlier this year, grew at a lesser rate than predicted, and its applications division is still growing at a slower rate than many of its competitors.

According to Harry Tse, analyst at the Yankee Group in Boston, for the first quarter of 1998 SAP grew 50 percent, J.D. Edwards grew 66 percent, Baan grew 35 percent, and PeopleSoft grew a whopping 64 percent, while Oracle only grew 29 percent.

While it has recovered some of its financial standing, some analysts question if Oracle's focus on its sales division is misdirected.

"I'm not convinced increasing the sales force is going to do much because Oracle has traditionally concentrated on selling technology rather than solutions," said Joshua Greenbaum, analyst at the Hurwitz Group in Framingham, Massachusetts. "I would be much more interested if they increased their research and development investment and fixed problems customers have had with their products. You can't sell the Emperor's new clothes no matter how many sales people you have."

Greenbaum said that Oracle has a long history of changing the architecture of its product on customers, which frustrates users because they have to completely revamp their entire computer system to upgrade their application package.

Oracle applications were initially built in character mode or green screen systems, and then upgraded to SmartClient, a graphical user interface system that was difficult to maintain because software had to be deployed on each user's PC. Now Oracle is moving to its Network Computing Architecture, a system that relies on Internet technology as the networking infrastructure.

"They need to set down in stone their architecture direction, then swear on a stack of Bibles they are going to stick to it and then deliver," Greenbaum said. "Their customers have been whipsawed by changes in their architecture."

An Oracle spokesperson said that the company is "committed to the network architecture and will not be backing away from it."

The spokesperson also said that Oracle is pouring money into research and development and is hiring developers extensively, recently adding 100 new developers to its front office applications unit alone. He also said that under Larry Ellison's stewardship the applications business is getting a lot of focus, pointing to, as an example, Ellison's attempts to meld other Oracle products such as business analysis tools into the applications.