Customers
with legacy J.D. Edwards and PeopleSoft applications have some big decisions to
make about Oracle Fusion in the coming year, and many of them will be looking
beyond the enterprise software giant out of feelings of frustration and lockdown,
according to a new Computer Economics report titled "Go Forward Strategies for Oracle Application
Customers."
Ironically,
customers who are most frustrated with Oracle’s licensing and support practices
contend they will keep with or
even invest more with the company. Roughly 58 percent of Oracle clients in this
report are frustrated; Yet, 37 percent are planning to invest more in Oracle
products in the next three years.
What
choice do some of these companies have? It depends on which applications and
technologies you are speaking about, said Frank Scavo, president of Computer
Economics, in an interview with eWEEK.
“Hardware
and even databases are easier to migrate, but vendor lockdown for application
software is not easy to change,” said Scavo in a November 19 phone interview.
“The heart of Oracle’s business is the maintenance business ... Oracle has
publicly said it makes 90 percent margins in maintenance.”
In
maintenance? What other business has that kind of margin in maintaining its
products? Perhaps a car dealership, but customers don’t have to go to a dealer
for service.
At
issue aren’t just the exorbitant maintenance costs, but also how maintenance is
bundled with future upgrades of the software. To get those upgrades, you have
to buy maintenance, said Scavo, who made a point of saying that this is not
unique to Oracle. Most enterprise software vendors practice this upgrade
product strategy.
But
for those customers able to make a move, see what a few of them have to say in
the same report.
“Expensive
maintenance with marginal value equates to questions for the future,” wrote a distribution
industry customer. “Oracle is the big guy and wants to claim customer service,
but in reality it is all about how much they can make and very little about
customer loyalty. I hope their model works for them, but I’m not sure midtier
customers are enamored with the model.”
A
manufacturing industry executive wrote: “I expect to migrate away from Oracle
as much as possible because they are not very helpful.”
“JD
Edwards is being phased out in favor of internally developed tools,” wrote a
housing industry manager. “These systems cost so much to put and embed into an
organization that you feel trapped and incapable of considering the
alternative. We ... [decided] to develop an application tailored to our needs,
which slowly eats away at our dependence on JD Edwards.”
“We
expect the maintenance and other ongoing costs to continue escalating as that
appears to be Oracle’s strategy,” wrote a CIO in the automotive
industry.
For
software customers who are locked in, there is a lot of “inertia in the sunk
cost,” and it is incredibly challenging to switch out, said Scavo.
“Fusion
applications represent the point at which a customer is able to look at
options,” said Scavo. “If I’m on a legacy JD Edwards system from eight years
ago, it is an opportunity to ask ‘Do I double down with Oracle or do I look elsewhere?’
and consider SAAS [software as a service] options, SAP, Microsoft and others.
Oracle customers have big decisions to make.”
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