The Leap from Illusion to Fusion
- By Alan R. Earls
- November 1, 2005
The Big Idea
- Traditional software development will almost entirely be supplanted by
a virtual paradigm in which Web services are orchestrated dynamically to power
- Bring in WSDL files from Web servers, and you create pipelines of activity.
If you string enough of those routing and transformations together, pretty
soon you have an entire enterprise application infrastructure.
- Organizations automate many once-manual business processes; simplify their
app dev and maintenance by introducing modularity and effective reuse; and
optimize their business processes to ensure they align with IT.
As the great English lexicographer Samuel Johnson once noted, "A second marriage is the triumph of hope over experience." Oracle, now well past its acquisition of Siebel and PeopleSoft/J.D. Edwards,
is pinning its hopes for a successful marriage on a strategy it calls Project
Fusion. Oracle aims to eventually rationalize its sprawling product line by
combining all the best features of each constituent product into a new and much
By some accounts, it's an overly ambitious goal, but many analysts-and those
close to the user community-are optimistic Oracle will pull the rabbit out of
the hat. For one thing, as Oracle is happy to point out, it will leverage a
wide range of existing Oracle middleware products, recently renamed Fusion middleware.
Beyond that, Oracle hopes to fund the development effort with ongoing maintenance
revenue from its greatly enlarged customer base.
The skeptics, not surprisingly, include competitors such as BEA's VP of Solutions
and Product Marketing Bill Roth, who says, "It is going to take nothing short
of nuclear fusion to bring all those products together." Roth says he bases
his opinion on the extensive differences among the existing products, starting
with the user interface and extending deep into the code. "I know a company
that had a terrible time just integrating PeopleSoft with their own apps, and
everyone has heard Siebel horror stories," he says.
"Our perspective," Roth adds, "is that you need to start with integration as
your design center and then build the applications, not the other way around."
SAP's Peter Graf, product marketing executive VP, is equally critical. To him
Project Fusion is a "chameleon" that has continued to change its colors to fit
Oracle's marketing needs since the original Webcast in which it was announced.
"At first they were talking about an all new Java-based platform with Java-based
functionality, but everyone who knows this software knows there is no way you
can do it that way, especially in the time they are promising," he says. So
Graf asserts, behind the curtains, Project Fusion had a metamorphosis and "those
original promises are now being contradicted."
Big, really big, job
In fact, Oracle's message has shifted somewhat. However, for analysts and the
leadership of Oracle's major user groups, that's just a result of Oracle's coming
to grips with what by all accounts is a gargantuan undertaking.
"I think they will accomplish what they are setting out to do, the question
is when and how much will it cost to follow that path," says Paul Hamerman,
an analyst at Forrester Research.
Hamerman agrees there will be challenges for Oracle in integrating the functionality
and in combining the products into a unified whole, but, he notes, "Oracle will
not be rewriting from scratch." Instead, he says, Oracle leadership tells him
it plans to use Oracle's E-Business Suite schema and its functions and then
pull in elements from other products.
"Their latest acquisition complicates things a bit because they are now saying
that Siebel will be the centerpiece of their future CRM strategy because it
is a more comprehensive offering," Hamerman says.
And while getting all the pieces to fit might seem almost impossible to some,
Hamerman says he believes the approach will work. "They are working within a
fairly standard architecture based on J2EE as well as their middleware-though
they have indicated they will also support Web- Sphere middleware," he says.
That boils down to what Hamerman sees as a reasonable combination of Oracle
proprietary and open-standard elements.
In general, Hamerman says the most stable elements are likely to be the financial
and HR functionality. Much will depend, he says, on "the functional footprint"
of E-Business Suite, and especially the Oracle E-Business Suite Human Resources
Management component. What will change is the user interface because, "Oracle
knows that's a weak spot in terms of usability, and they have indicated that
what will eventually emerge will look more like PeopleSoft," Hamerman believes.
Although some question how Oracle will pay for all this, when they have also
committed to maintaining and upgrading their existing offerings, Hamerman doesn't
believe that's an issue. "The whole rationale of the acquisitions was customer
retention, which means customers will continue to fund a high-margin revenue
stream." What's more, Hamerman says, Oracle can begin to look at that customer
base as almost a private market to which it can sell other Oracle products.
"I think the success of this effort will be based on how quickly they can get
customers to adopt it," he says. Customers will be reluctant to be early adopters,
especially if the new products appear to be buggy. So Oracle must prove out
what it is offering, he says. Still, customers are likely to come aboard only
gradually, Hamerman believes.
First, do no harm
Like Hamerman, Denis Pombriant, managing principal at Beagle Research, is trying
to figure out what Project Fusion is about, based on limited information. "It
is not real concrete at this point, and if you listened closely to the press
conference at which they announced the Siebel acquisition, it seems that they
don't have a coherent vision themselves," he says. However, adds Pombriant,
that's because what they are working with is "still wet clay."
For Oracle, he says, the prime directive is to do no harm. The existing products
have to work because there are too many big companies that aren't willing to
simply write off their existing software and go to whatever Oracle suggests.
More to the point, he notes, the software that's out there still works just
fine. "I'm fond of reminding people that the Oracle announcement didn't cancel
anyone's software license-people will go through a normal process of using their
products, and at the appropriate time they will take another look at what to
buy next." And that, he argues, is actually good for Oracle because "if they
were asked to sell a Fusion product in the next 10 minutes, they couldn't."
Putting the mojo to work
But Oracle can sell middleware. "In classical Oracle form, they have managed
to mystify the entire market by naming everything Fusion," says Jim Shepherd,
an analyst at AMRResearch. He characterizes Oracle Fusion middleware, portrayed
by the company as the mojo that can make Project Fusion work, as "Oracle drawing
a circle around products they already had," which is why they were able to claim
thousands of users only a month after they introduced it, he says.
In addition, he says, the components of Fusion middleware give Oracle the ability
to offer development tools, a BPEL-engine, integration tools and more. Those
offerings, Shepherd says, are not only useful for IT departments but "are also
probably getting to the point where ISVs could consider using them as a platform,"
he says, which he predicts will probably happen over the next year.
When it comes to Project Fusion, Shepherd says Oracle is "smart enough to understand
that you can't really integrate disparate code, especially when it has been
built by different companies with different design philosophies. What they intend
to build and what they talk about as Fusion (the application) "is a next-generation
product which will use the functional design from the existing products but
not the code," says Shepherd.
"SAP and others like to imply that Oracle is pouring millions of lines of code
into a Cuisinart and they will be spitting out some kind of Frankenstein monster,"
says Shepherd. "I don't mean to imply that it will be easy or even that anyone
has ever done this before-it is daunting- and just the fact that there is a
huge degree of overlapping functionality makes it tougher," he says. Likewise,
sorting out which functions to use from each application is going to be tough.
Putting in place a reasonable migration path for customers will not be easy
either. As a result, he says, Oracle will have to write a lot of code from scratch,
"but the good news is that they have the functional design and the not-too-ugly
news is that maybe they can sort out a data model that is reasonable," he says.
Unrealistic optimism, most likely
Shepherd says on the output end of the process, the trick will be constructing
the new application "in a sophisticated form so that it is not so big that no
one can possibly use it," says Shepherd. And the fact that Oracle says they
are targeting delivery in 2008, Shepherd thinks is "wildly optimistic."
"First, no one knows how to do it; second, it is an enormous task; and third,
you have to continue to maintain all your existing products to maintain your
flow of maintenance revenues," he says.
But it will happen and, in his estimation, means that the handwriting is on
the wall for other ISVs. "I think if you look at other industries, the implication
here is that the number of large global OEMs that can survive in a given market
is small," he says. Thus, he says, it is unlikely that that there will continue
to be hundreds of supply chain vendors or 50 to 75 CRM vendors. "That just doesn't
make sense," he says. Further, Shepherd says, "Customers have clearly indicated
they want to buy single-vendor integration."
The middleware is the underlying integration platform, and the base of the Fusion application project is the Oracle database.
Making history, maybe
Marc Hebert a former Oracle CIO, and now marketing executive VP at systems integrator
Sierra Atlantic, says his company has been involved in helping Oracle develop
a BPEL-workflow product as part of the Fusion Middleware.
In his view of what lurks inside Project Fusion, "the middleware is the underlying
integration platform," and the base of the Fusion application project is the
Oracle database. Layered on top, the middleware is part of the application server
layer. "The whole architecture is nice and tightly integrated, which is probably
Oracle's strength in this strategy," he says.
Still, he admits, "the Fusion project itself is perhaps the biggest, most challenging
software development project in the history of enterprise software, and it is
very hard to say how it will turn out."
To its credit, Hebert says Oracle has done a very clean execution of its acquisitions,
in particular by providing a clear roadmap and developing a strategy that gives
them plenty of leeway. And they have announced roadmaps for existing products,
which has calmed down their existing customers. So, he says, "If Project Fusion
turns out to be 5 years out instead of 3, they can still keep their existing
roadmaps going indefinitely so customers will have a normal, rational upgrade
Further, Hebert says, customers are buying it. "I have sat in on independent
user group sessions, and I have seen the show of hands-customers are saying
that everything is OK." Besides, he adds, there are few alternatives, which
is part of Oracle's strategy.
Sunny side up
Hebert's assessment of customer comfort levels is echoed by John Matelski, chief
security officer and deputy CIO for the City of Orlando, who also serves as
president of Quest International Users Group (comprised of traditional Oracle
customers as well as customers of the companies Oracle has acquired).
On a personal level, he says the City of Orlando has been a J.D. Edwards customer
since 1997 (currently running the JDE 8.10 EnterpriseOne Financials) and has
also been a longtime user of Oracle database products.
The PeopleSoft acquisition of JDE was not a pleasant experience. Based on the
uncertainty that exists with any merger/acquisition, and the fact that only
18 months had transpired since the first merger, Matelski was very concerned
about Oracle's potential acquisition of PeopleSoft.
"I was vigorously opposed to such an acquisition, not because of the merits-
but rather the anticipated impact that it could have again on the City of Orlando's
implementation." However, Matelski adds, to Oracle's credit, "They did an excellent
job of communicating with the city and the user group/ customer community, and
were able to quickly quell my concerns. Since then, he notes, "All of our interactions
with Oracle have been very positive, and the customer interactions have improved
He also credits Oracle with a much better understanding of user groups, and
an excellent Global customer support program, which encourages and sustains
independent user group activities. "They also understand that user group support
is not a marketing role, but rather a customer advocacy function," he says.
Thus, the user group support model has provided "avenues into our mission-critical
ERP vendor that never existed with PeopleSoft-not only do I have access to the
product development managers that I always had access to, I now have access
all the way up the corporate ladder," says Matelski. Further, he says the accessibility
of senior executives, such as Juergen Rottler, John Wookey and Charles Phillips,
is unprecedented. "All of these lines of communications have been created due
to Oracle's customer focus," Matelski says.
Whereas PeopleSoft seemingly had no product strategy vision under the leadership
of Ram Gupta, John Wookey seems to have the vision needed to move customers
into the future, Matelski believes. "Though that vision will not prove out completely
until we see a product developed, the fact that there is a vision for the future
is refreshing," Matelski says.
Matelski is also on the executive board of the International Oracle User Council.
The IOUC consists of leaders from the six currently recognized umbrella user
group organizations that Oracle works with, including Quest, Oracle Applications
User Group, Independent Oracle User Group, Oracle Development Tools User Group,
Asia Pacific Oracle User Council and Europe/Middle East/Africa Asia Oracle User
Matelski says a product development committee focused on the evolution of the
Fusion product was created as a function of the IOUC. "I do not believe that
our committee has been given access to any information that the general public
has not received, however, we have been tasked to work closely with Oracle senior
management to provide a two-way conduit between Oracle and the user group community
(and by extension, the entire global customer base), to gather information and
provide tactical and strategic feedback," he says.
Until the 50,000-foot vision manifests itself in a ground-level product suite with the features, functionalities and price points that make sense, we will stand pat...
Clarity requires a product
Looking ahead, Matelski says, with Fusion modules anticipated in 2007 and an
initial product suite expected in 2008, the City of Orlando has 2 or 3 years
to plan for potential upgrades. "My reality is, now that Oracle has indicated
that they will support all of the PeopleSoft and J.D. Edwards products until
at least 2013, the City is in no rush to move off our existing solution [and]
quite frankly, we will conduct our due diligence, weigh the benefits of enhanced
features and functionality against the cost of upgrading, and decide if/when
it makes sense to make a leap," Matelski says.
"Based on the current and evolving ERP landscape, I have a great deal of confidence
that moving to Fusion will make sense at some point of time," Matelski says,
"However, until the 50,000- foot vision manifests itself in a groundlevel product
suite with the features, functionalities and price points that make sense-we
will stand pat on our current release," he says.
"Overall, despite my initial trepidations, the Oracle acquisition of People-
Soft was the best thing that could have happened to JDE product users," he says.
Steve Hughes, president of the Oracle Application User Group, is also upbeat.
He says his group formed the Fusion Council to pull together input from the
user community. "The council is global in its nature and scope, and includes
80 companies that are representative of the various products and geographies,"
he says. The group recently held its second meeting, at Oracle OpenWorld, and
is now coordinating survey efforts with Oracle to ensure a broad input of ideas.
"What we hear from the community is that they have heard the Fusion story and
there is more excitement than anxiety," Hughes says. "They are eager to understand
the components and functionality of all the products so that they can get a
better understanding of where the project could end up," he adds.
"I don't know whether people are happy or not, but when there is a lot of confusion,
sometimes people decide not to decide. The thing that will eventually propel
the market is clarity, and there is no clarity until there is product," research
analyst Pombriant adds.
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