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October 7, 1998

ORACLE TO SPIN OFF OUTSOURCING DIVISION BY YEAR END

By CBR Staff Writer

Oracle Corp plans to spin off its newly-announced Business OnLine division into a separate company with its own profit and loss responsibility, CEO Larry Ellison revealed at the Fall Internet World show in New York yesterday. Speaking at a press conference, Ellison said it was more than likely that Oracle would also seek partners and private investment for the new venture but that the software giant would maintain a majority ownership and absolute power, in the business. Although he couldn’t comment on potential partners just yet, he said a decision would be made within the next couple of months. Business OnLine, announced at the end of September (CI No 3,505), is an outsourcing service whereby customers buy their software from Oracle in the standard way but then hand over the management of the servers, software and connectivity to Oracle, for an additional fee. Initially just its financials, manufacturing, distribution and human resources apps will be on offer, but the company intends to roll out its entire ERP portfolio by next year. The benefit, said Ellison, is that customers won’t have to invest in any hardware, management tools or network infrastructure. Users only require a browser and telephone connection to access their applications. No one’s providing this business to business on-line service at the moment, Ellison said, we view it as an enormously profitable area. Ellison said Oracle was investing almost nothing into Business OnLine, not even one tenth of 1% of our R&D budget. He said the service was effectively an extension of its datacenter. The beauty of the internet computing model is that its very cheap to set up this kind of service and add new users. It’s the whole Yahoo! model, he said, we expect to be able to comfortably support around 10,000 users per server.

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