Oracle's 'simple product making life tough?

For months, the database software giant has been touting the newest version of its Oracle Applications business software, dubbed release 11i, as a one-size-fits-all package for managing a company's marketing efforts, sales force, manufacturing, financials and Internet business activities.

And though the company is promoting the new suite as "complete, simple" and "at Internet speed," early customers of the software say that's not the case.

Early bugs have made installations difficult, some customers report. In addition, companies upgrading from existing applications may have to work harder than new customers starting from scratch to make 11i function as advertised. Meanwhile, companies that need to customize 11i to meet their unique business needs may have to work hardest of all.

"It has been a slow and arduous process," said Todd Langille, an associate director in Dartmouth College's administrative computing department. "It would be nicer if the early versions of the software were more stable coming out of the box."

Langille's comments won't please Oracle management. The company is counting on a broad acceptance of 11i applications to drive future revenue growth. Oracle still relies on its database software for the bulk of its sales. But database software sales have slowed dramatically in recent months.

On Thursday, Oracle reported that database sales grew only 6 percent in the third quarter, compared with 32 percent a year ago. Worse, application software sales, which include 11i sales as well as deliveries of older versions of the software, grew only 25 percent--or roughly 50 percent less than expected.

A contradiction of sorts
Reports of a painful installation process also contradict Oracle's claims. During Oracle's recent AppsWorld conference, Chief Executive Larry Ellison said only a modest amount of systems integration work is needed to install 11i. He also trumpeted the software as simpler and cheaper than rival offerings from SAP, PeopleSoft and others, and reiterated Oracle's goal of saving $1 billion this year by using its own software.

Langille, who sits on the New England board of the Oracle Applications User Group, called his experience upgrading to 11i "frustrating." Dartmouth, which is upgrading from an older version of Oracle software, intends to use the financials applications including purchasing, accounts payable and inventory control, along with installing for the first time Oracle 11i human resources, payroll and labor distribution software.

Oracle said the latest release of 11i, the company's third incremental release of improvements and software patches to the e-business suite, is stable and gaining more traction.

The suite "is at a really rock-solid stage and really gaining a high acceptance rate with our customers," said Lisa Arthur, Oracle vice president of e-business suite marketing.

But, like other customers, Langille said that because the quality and performance of earlier releases of 11i have been "choppy," he plans to slowly upgrade, testing the system several times before going live.

Shipping behemoth DHL Worldwide, which began implementing the earliest release of 11i eight months ago, also reported trouble installing the software, primarily because of bugs.

DHL, which is installing financials and purchasing applications in its European, African and 10 other locations overseas, called the process a "struggle," but said Oracle has been quick to respond to the issues.

"We were getting concerned that (the bugs) were going to impact our deployment schedule," said Jeremy Young, former board president of the Oracle Applications User Group, who is overseeing the 11i installation at DHL. "They fixed the bugs and corrected the problems and issues. That gives me confidence that (Oracle) is responsive and that they put resources together to resolve the issues."

A waiting game
Frances Morrier, a director at Concentra Managed Care who is also a member of the New England OAUG board, said: "Many customers are moving a bit slowly to (install) 11i and I get the general sense that it's still problematic to install because of (the software) bugs. We're waiting to upgrade."

Installing 11i "is a major change and involves a big investment," she said.

Oracle said upgrading to 11i can involve a different process for each company depending on several factors, including the type of systems they are running as well as whether they have the appropriate hardware to support the new Net-based architecture. But the company said customers will reap the benefits of reduced maintenance costs and access to a complete suite of business management software--from applications that run the front office to the back end of a company's business.

For Concentra, a health care and insurance provider that intends to use 11i financials and billing, the biggest challenge will be customizing the software to fit its specific business requirements.

"This is going to be a major project," Morrier said. "Managing the receivables and billing in (the health insurance) environment is not easily handled in any off-the-shelf accounts receivable and billing package.

"The plan is to upgrade (to 11i) but the question is when we'd actually do it," she added. "We'll be more comfortable when more people are comfortably upgrading."

A smooth ride--for some
For customers installing Oracle applications for the first time, as opposed to upgrading from older software, the process appears to be much smoother. Tropian, a wireless chip start-up, was up and running on 11i financials software in 90 days, the company said. The Cupertino, Calif.-based company touted the easy installation of 11i, the fact that it is all Internet-based, and Oracle's quick response to fix software bugs.

Gartner analyst Karen Peterson said that while customers have had initial difficulties installing the software, 11i overall is a solid concept and in the long run is poised to be a worthwhile investment for many companies.

"The cost of maintenance of a single complete application suite is definitely going to be lower" compared with paying a hefty amount for systems integration work to "cobble various applications together," Peterson said.

Oracle said 210 customers have already gone live with the 11i suite, and about 3,000 software implementations are under way. Companies that have finished their implementations include Compaq Computer, JDS Uniphase, Barclays Bank, Staff Leasing and Tropian.

It's not that customers are not attracted to Oracle's suite, it's just that for the time being, many are taking the wait-and-see approach.

"In general, 11i is still not mature in all areas," Gartner's Peterson said. "Customers are waiting to adopt 11i. The vision is very compelling, but execution of that vision still has to catch up, and that will take some time."