Oracle and SAP outline different market strategies
I’ve written extensively in the past about the differences between Oracle and SAP’s technical paradigms. (In a nutshell, Oracle is first and foremost about data, while SAP is about business process.) Last week, the respective companies’ CEOs outlined very different business strategies as well. Specifically, SAP’s Henning Kagermann called SAP’s new ByDemand SaaS offering “most important announcement I’ve made in my career,” while Oracle’s Larry Ellison outlined a continued high-end strategy as follows (excerpted from Oracle’s September 20 conference call transcript):
Our strategy for growth is to find a way to add more value to the same customers we already serve, which are the large end of the mid-market and large companies. What we’re doing here is moving beyond ERP to industry specific software. So in the telecommunications industry that would be billing systems and network provisioning systems and network inventory systems; core applications to run their business, to run telco. Core applications to run a bank. Core applications to run a retail chain of stores. Core applications to run a utility. That’s our focus, and that allows us to leverage the existing relationships that we have because we already sell databases to these companies, we sell middleware to these companies. We sell ERP and CRM to these companies, and now we want to sell this industry-specific software.
Now, when a CEO says that something is a company’s “most important announcement ever,” it’s time to check your hyperbole meter. (E.g., I recall Larry saying that about, of all things, a release of Oracle’s application development tools.) Still, there are at least three strong reasons to take last week’s statements more or less seriously:
- SAP has famously rewritten its apps for new environments a couple of times, most notably in the R3 release that first took technology to RDBMS-based client/server platforms. And Larry’s gibes notwithstanding, it’s very reasonable to expect that SAP will figure out how to make the SaaS (Software as a Service) business work.
- ByDemand development was run by Peter Zencke, who is a big believer in SAP’s declared technical strategy of packaging things up neatly into a variety of services. If anybody was to fundamentally rearchitect SAP’s apps, he was the guy.
- Oracle’s relentless accumulation of add-on technologies to its core DBMS engine suggest it’s serious about maximizing its high-end differentiation and revenue streams.
A further quote from the Oracle transcript outlines some of its thinking in that regard.
A few product area highlights. On the database business, the enterprise options continue to do very well. What was encouraging is our newer options are coming on so if you take Oracle Database Audit Vault, for instance, which we released last April, that was up 48% quarter to quarter. If you look at Content Database and Records Database, both of those were up nearly 300%, so these new areas are coming on.
Also in the quarter, keep in mind we released a major new release of the Oracle database, 11g. In the first month, we had 35,000 downloads. Also with that product, we picked up four new options which is, of course, important. They include advanced compression, total recall, real application testing and active data guard.
As I noted in the Oracle post already linked above, any similarity to the kind of thinking that Clayton Christensen highlighted in The Innovator’s Dilemma is probably not coincidental.
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2 Responses to “Oracle and SAP outline different market strategies”
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SAP has been known to take on unchartered waters – and make a huge success out of it. The criticism from mayor role players could all be relevant or not. From my experience SAP has only launched well thought through products, and Business By Design would be one of these again. It’s all about the customers – if they believe and take up the product, that will be the ultimate success.
Cornel Schoeman
Britton Solutions
http://www.businessone.co.za
[…] I explained in another post, it’s credible that SAP is very serious about its new ByDemand SaaS (Software as a Service) offering. While I haven’t been briefed on the product (er, service), I’m guessing ByDemand is […]