Oracle’s Next Focus - Web 2.0 Apps

Implications: Oracle’s applications have both wide and deep functionality, but that’s not enough anymore.  As younger users move into positions of influence intuitive interfaces and social networking features become increasingly important.  The applications vendor that “gets” this will be in a commanding position.

Analysis: ERP applications in particular have long focused on providing integration and functionality, both things that CIOs and business users have been demanding for many years.  The Holy Grail has been applications that provide every possible function the business users could possibly need, and then tie all those disparate functions together into one cohesive whole.  This is certainly a laudable goal, and remains equally important today, but business users are already starting to move beyond that.

In some functional areas, such as Finance and Manufacturing Operations (not to mention IT) users are accustomed to non-intuitive, complex interfaces.  In many cases the ability to understand and navigate successfully through a succession of complex screens becomes a matter of pride and job security.  In other functional areas, such as Sales, Marketing and HR, users today are less tolerant.  They expect interfaces to be simple, clear and easy to navigate.  This is not an area where the big vendors, such as Oracle and SAP, have been very successful.  Their vast legacy code, combined with the need to provide deep functionality, has made it very difficult for them to provide simple, intuitive interfaces.

Much of the success of the most notable SaaS companies, such as Salesforce.com, has not been because of their service delivery model, but rather because they provided an interface that sales people love.  Business users rarely care whether an application is delivered via a service or a licensed model.  They just want a functional application that’s easy to use.  It’s generally left up to Finance and IT to sort out the delivery model.  Salesforce.com, SuccessFactors and others are making sales because Sales and HR users love working with the applications.  They are stealing sales from Oracle and SAP due to this, and Oracle appears to be finally acknowledging that fact.

At the recent Interop Oracle announced they would be delivering applications with a Web 2.0 focus.  That first of all means a simple, intuitive interface.  Adding still more complexity to today’s overly complex interface will not work, and Oracle realizes that.  That intuitive interface will also provide social networking capability, for example by integrating with Linkedin.  And that’s only the start – once the capability is there viral marketing will likely expand it in ways difficult to predict today.  The Oracle applications will allow mashups, which can be extremely useful in many ways, such as overlaying business data on maps.  Oracle is also promising to deliver a mobile interface for handsets that is actually designed for a small screen, rather than just squashing all the normal information into a smaller font.

It seems questionable whether Oracle can deliver all this within the next 12 months, as they are somewhat promising.  Even if the actual delivery is more like 24 -36 months, however, it promises to give Oracle a remarkably strong position in the enterprise applications market.  Not only will they be a generation ahead of their chief competitors such as SAP, they will also finally have an interface that is competitive with Salesforce.com, SuccessFactors and other SaaS vendors. 

The focus around Oracle for the last 2-3 years has been their acquisitions strategy, so it’s about time the focus shifted back to core applications delivery.