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July 22, 1997updated 05 Sep 2016 12:00pm

ORACLE SAYS APPS REVENUES WILL OUTSTRIP DATABASE SALES SOON

By CBR Staff Writer

Continuing the Computer Business Review series highlighting the leading players in the business applications software field, we look at the prospects for the industry giant Oracle Corp.

Oracle chief operating officer Ray Lane is planning for a radical shift in the way Oracle is perceived. While today more than 70% of the company’s software revenues come from database sales, Lane expects that in the early years of the new century Oracle will be better known for its applications software. In the next five years, applications software will become Oracle’s largest business, he predicts. Its easy to see how he is running the numbers. The database market is expected to grow by between 15% and 20% compound over the next five years; Oracle at best can hope for 20% to 30%. In contrast, the leading vendors in the applications market are likely to continue growing at between 50% and 100% over the next few years. That’s the way the business is going, says Lane. The pattern is already well established. Revenues at Oracle’s applications division, which are expected to total $1.1bn for the company’s fiscal year to 31 May, now account for 20% of the company’s total business – that’s up from 16% just a year ago. But only a portion of that is actually from software sales. While Oracle is expected to report that it sold around $450 million worth of applications software in fiscal 1997, its revenues from related consulting and implementation services are forecast to be about $650m. That in-house approach – the antithesis of SAP’s use of partners for implementation – coupled with the less complex nature of the Oracle products means that its software can be implemented in a third to a half the time of rival products, the company contends.

Prompted to rethink

The Oracle Applications suite, currently on version 10.7, covers all the normal bases – finance, human resources, manufacturing and logistics, as well as supporting discrete, process and project manufacturing. But while the market for such broad solutions continues to thrive, customers in certain industries have been seeking offerings that are more closely tailored to their sector. That has prompted Oracle over the past year to rethink how it packages and distributes its applications. The company has been putting together bundles of software that are more attractive to vertical markets, targeting specific sectors, such as consumer packaged goods, financial services, telecoms, healthcare, energy and government, with a mixture of its own software and products from specialist developers which have integrated their software with the Oracle core modules. Oracle, like its rivals, is also gearing up for the push to web-enable applications. As an opening gambit, the company has release three ‘self service’ modules – Web Employees, Web Suppliers and Web Customers – which allow users to view and interact with a company’s databases through web browsers. The next phase will be the implementation of intranet and extranet software that allows employees, customers and suppliers to launch transactions remotely.

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