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Oracle urges users to hand over application management

Oracle is trying to beef up its outsourcing operations with an international campaign to persuade customers to hand over maintenance of their software.

"We have decided to go in and actively go after our installed base and tell them that this is a better way to do it [run Oracle applications]," said Jeff Henley, Oracle's chief financial officer.

The company is claiming that businesses can save on IT costs and improve product service-response time by up to 50% by letting Oracle manage and maintain its the software.

Oracle offers two models of outsourcing - the software can either be hosted on Oracle systems in an Oracle data centre, or Oracle can manage software installed on the customer's systems at the customer's location.

Customers who opt to have Oracle host and manage the applications pay 5% per month of the list licence price in addition to base licence, product support, update and other standard costs.

Those who choose to have applications managed by Oracle, but run at their own site on their own systems, pay 3% per month of the list licence price in addition to the other costs.

As a promotion for users signing up for the on-premises service, Oracle is offering unlimited software upgrades for the next five years. The company will invest some £35m in new data centres to push its outsourcing services around the world, Henley said.

"The bulk of our customers are going to operate this way in the not-too-distant future," Henley said. "We offer much faster implementation, much lower cost and much better service."

Oracle intends to approach all its customers, but will especially target those that are in the process of upgrading to version 11i of Oracle applications, also known as the E-Business Suite.

"We have this epiphany opportunity here to talk to our customers," said John Nugent, senior vice-president at Oracle. "If over the next 12 months we can move 25% of our customers over, that is a tremendous business opportunity for us."

Outsourcing today is a "relatively moderate" business for Oracle, according to Henley, "but we think it can be a multibillion dollar business over the next few years."

Oracle has about 200 customers on its ASP out of a total of 12,500 applications customers.

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