The Insider's Guide to Business and IT Agility
By Tony Baer, Senior Analyst, Ovum , 04/24/2007
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Oracle’s announcement of the Oracle Application Integration Architecture, code-named “Project X,” might have sounded like good news to customers gathered at the International Oracle User Group’s (IOUG) Collaborate user forum in Las Vegas yesterday.
But in point of fact, the announcement was hardly just another exercise in altruism. Over the past year or more, Oracle’s president Charles Phillips has been sounding conciliatory words to the client base about protecting investments, and not requiring forced migrations. But there are cold hard business realities that are driving Oracle to make more nice with its installed base.
The first fact of life is that, when you have a large enough customer base, you’ll attract more flies with honey and that maintenance can become quite a lucrative business. Mike Greenough, who brought SSA Global back from the dead prior to its sale to Infor, made that point quite forcefully when faced with a similar agglomeration of product lines. Until then, conventional wisdom was that maintaining multiple incompatible lines would drain the business. But once you have accumulated such a large chunk of the market and so many product lines, the costs of convergence get far outweighed by the revenue potential of simply maintaining and gradually enhancing them.
Anyway, with Y2K over, customers hardly in the mood to rip and replace once more.
Sure, Oracle could make a lot more money if its customer base (grown much fatter through acquisition) would migrate to some future Fusion application. But even were Oracle to continue pressing full steam ahead with Fusion apps, that product is so many years away that it would face pressures from two constituencies: shareholders that demand continued quarterly growth, and a huge installed base that demands better functionality and interoperability now.
That’s why SOA has become for most corporate customers more than a technology buzzword. And that’s also why Oracle’s so-called Project X might try to accomplish what has so far eluded cross industry organizations like the Open Applications Group (OAG): defining a set of common business objects so one enterprise system could exchange its customer object or order-to-cash process with another.
The dilemma with standards is that, the higher you go up the stack, the more contentious standards efforts become. At that point, that’s where enterprise software vendors contend their value add kicks in. Consequently, it is far easier to define headers for web service descriptions than it is to define a business process. Just look at the acceptance of Oasis with web services standards compared to, say, the Workflow Management Coalition, when it has tried to standardize representations of processes and workflows.
So on this go-round, why should Oracle be able to pick up where OAG has left off? “We have enough of an installed footprint that this could become a de facto standard,” remarked Paco Aubrejuan, Oracle’s vice president of application strategy.
About the Author
Tony Baer is a Senior Analyst at Ovum, covering application lifecycle, SOA, and IT Service Management. Tony is a well-published IT analyst with over 15 years background in enterprise systems and manufacturing. A frequent speaker at IT conferences, Baer focuses on strategic technology utilization for the enterprise. Baer studies implementation issues in distributed data management, application development, data warehousing, and leading enterprise application areas including ERP, supply chain planning, and customer relationship management. As co-author of several books covering J2EE and .NET technologies, Baer is an authority on emerging platforms. Previously chief analyst for Computerwire's Computer Finance, Baer is a leading authority on IT economics and cost of ownership issues.
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