The findings from Forrester’s latest research on Oracle point to a worrying trend in the enterprise software landscape. Businesses are not generally doing large, transformational IT projects built around traditional enterprise resource planning (ERP).
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The key suppliers are adapting their enterprise software portfolios in a bid to drive more sales. But the CIOs Forrester spoke to are not convinced it is a strategy that is working for Oracle.
In Forrester’s Oracle’s Dilemma: Applications Unlimited report, many people are happy with the software they are running and have no real plans to migrate onto Oracle’s future enterprise platform.Since Oracle is a strategic supplier to many, there is little interest among CIOs for migrating away. There are concerns that Oracle may turn some of the products they have deployed into cash cows, potentially with high, annual maintenance fees and licensing costs.
Members of the IT director’s group, the Corporate IT Forum, are angered by the changes to Oracle licensing. Head of research Ollie Ross told Computer Weekly that members were being pushed into taking certain technical directions like OVM (Oracle VM), rather than VMware. The forum’s executive director, David Roberts, believes many CIOs are reacting negatively to Oracle’s exceptionally high-pressured sales techniques. This is reflected in the supplier’s poor software licence revenue when compared with its nearest rival, SAP. If businesses are not upgrading at a rate that looks good on the company’s balance sheet, Oracle will need to take a different approach.
Newham Borough CIO Geoff Connell is concerned that Oracle (and other top tier vendors) will increase licensing, because their customers are “locked into” their products due to historical investments.He argues that many software suppliers appear to be ignoring the financial climate and are attempting to make up for reduced sales volumes with higher unit costs.
Coercing customers to buy more software is not the right way to go. But Oracle executives have not shown much willing to go wholeheartedly down the software as a service (SaaS) route, or even offer a roadmap for integrating SaaS and on-premise enterprise IT. Nor has Oracle been willing to adapt software licensing to make it more virtual machine friendly. The research shows customers are unhappy and the time for Oracle to make some tough decisions is long overdue.
Connell believes if Oracle and other leading suppliers continue to hike prices, users will abandon commercial enterprise software for open source alternatives.