Oracle Brings ASPs Back From the Dead

Oracle is promising customers a choice about what can be outsourced and is guaranteeing costs, but its model also reeks of marketing.

SAN DIEGO—As the city prepped for the Super Bowl, workers were rushing to build temporary platforms and property demarcations presumably for impromptu celebrations.

Those in IT who have seen one "platform" after another come and go might make a quick analogy. At least one company here certainly hoped this wasnt the case. Oracle, at its Appsworld conference here, hoped that its platform for building applications was solid and permanent.

For the most part, Oracle concentrated not on the platform aspect of its applications strategy, but on costs. The company had two major announcements at the show. The first was on Business Flow Accelerators—a combination of technology and outsourcing arrangements designed to give midsize-to-large organizations instant gratification. Oracle claims Business Flow Accelerators reduce implementation time by 60 percent and reduce costs by 30 percent.

Next, Oracle pumped up Oracle Outsourcing, itself a revival and rebuilding of the ASP business model, in which a vendor offloads the administration and maintenance costs of business applications. In this case, that business application revolves around Oracle E-Business Suite 11i.

For the most part, none of this sounds any different from the ASP market of yore—the one that promised reduced costs and reduced headaches, yet for the most part failed miserably.

Whats different is not the ASP market, but Oracles approach to flexibility. Oracle is promising that unlike the bad old days, this time customers have the choice about what can be outsourced and what remains organic. Oracle also says it will provide for free an overview of the costs of any contract upfront and stick by them—a guarantee, in other words.

This is a fantastic start to a nagging problem in the tech sector: the ability of companies to measure ROI, set budgets and get what they pay for.

Unfortunately, it reeks of marketing. Oracles campaign applies only to Oracle products, especially those built around E-Business Suite. Oracle officials claim Oracle has no intention to step into areas away from its core competence.

While Oracle says 75 percent of its applications customers are "engaged" with 11i, its not clear how many companies actually use Oracle applications in the first place.

Though the ASP market was plagued with flaws, overhyping the business model is one of the biggest. Oracle has some critical announcements buried behind the hyperbole. For the new model of ASPs to succeed, Oracle should be understating and overdelivering in order for its new ASP model to succeed.

Can Oracle understate anything? Write to me at john_taschek@ziffdavis.com.