Ellison Forswears Customer Upgrade Coercion

By John Pallatto  |  Posted 2005-09-21

Ellison Forswears Customer Upgrade Coercion

SAN FRANCISCO—Making a rare speech from prepared notes, Oracle Corp. CEO Larry Ellison drove home the theme of this weeks OpenWorld conference: that his company will refrain from dragooning customers into upgrading to the new Fusion products before they are ready to move.

In a year when Oracle purchased 10 large and small companies to swell its application product line, Ellison sought to convince a large population of newly acquired customers that he doesnt intend to alienate them with high-pressure sales tactics.

Ellison keynotes are usually casual, off-the-cuff affairs where he makes a few brief opening remarks before inviting the audience to ask questions. On this occasion he spent more than 45 minutes detailing Oracles technology focus for the next two years before turning to the audience Q&A.

While he said Oracle intends to make upgrades to the next-generation Project Fusion applications "a very attractive destination" for customers, "we have no interest in moving anyone" who isnt ready to upgrade.

Click here to read Lisa Vaas reporters notebook from Oracle OpenWorld.

Nor will Oracle pressure customers to move to newer versions of the PeopleSoft or J.D Edwards applications that are currently in the works. Ellison even extended this pledge to customers using older versions of Oracle applications.

Oracle is going to use its Fusion middleware and open-standards Java technology to enable customers to use whatever combination of Oracle and third-party applications that they want to.

"Maybe you built a bunch of your own applications. We intend to preserve that investment for you by allowing those applications to co-exist with our applications," Ellison said.

While he also reaffirmed the companys pledge to continue IBM DB2 relational database support for the products and customers that currently work with DB2, he said that the company has not decided whether the next-generation Fusion applications will also support the competing database.

Oracle will continue discussions with customers before it decides whether DB2 support will be an essential feature for these new applications. The Fusion products, which are due for release between 2007 and 2008, will be totally new applications that encapsulate the best features of the enterprise resource planning applications that Oracle has acquired this year, according to company officials. This includes ERP and CRM applications from PeopleSoft, J.D. Edwards, Siebel Systems and the rest.

"It surprised a lot of people we intended to certify our applications" for DB2 and WebSphere, Ellison said, observing that he had heard a lot of comments from people who "thought we were going to force, coerce" customers to use Oracles middleware and database.

But he noted that Oracle announced that its recently acquired I-Flex banking applications, which were based on Oracle will offer versions supported DB2. It also confirmed DB2 support for the Retek retail applications that it acquired this spring.

Next Page: Supporting on-demand applications.

Redoubling on

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Ellison also rejected any predictions that Oracle might "kill off" the Siebel CRM OnDemand product after it closes its acquisition of Siebel Systems.

"We want to increase our presence in the on-demand business. We think on-demand is a very important service offering going forward," he said.

"We are going to redouble our efforts in the on-demand business" because the company believes that is what many customers want and because it is very conscious of the competitive challenge posed by pure-play on-demand software companies such as Salesforce.com and NetSuite Inc., he said.

Oracle details its lifetime support policy. Click here to read more.

Its all part of the effort of giving customers another choice of how they want to buy and run business applications, he said. "You can run your entire business on-demand if you like and every flavor in between," he said.

In response to an audience question, Ellison reaffirmed his opposition to processor-based software pricing because it is difficult to verify how many processors or multicore processors a company is actually running.

Instead, he prefers to offer pricing based on the total number of employees, or based on revenue with the flexibility to address annual licensing and maintenance based on whether total headcount or revenue rises or falls during the period, he said.

Open standards, SOA (service-oriented architecture) and security will all be Oracles technology focus for the next two years, Ellison said.

Using open standards and SOA will be the key to enabling customers to choose whether they want to run applications with Oracle or IBM middleware or with different vendors Java tools, Ellison said.

"All of our Fusion applications are going to be built with SOA," he said, to make it easy for customers to use the components and applications that work best for them. "You should be able to unplug our Java container and plug in somebody elses," he said.

Security will continue to be a prime focus for Oracle because the security risks are increasing and will only continue to increase, he said.

One of the key questions for Oracle is whether it should even give customers the option of switching off data encryption when they do database backups, Ellison said. It may be best to assume that every data backup must be encrypted to reduce the chances that customer data will be compromised when storage tapes or removable disk drives are lost in transit, he said.

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