I’ve been sitting on the sidelines waiting to hear what Oracle would say about a swingeing Forrester report that panned the company’s Fusion progress.
While financial analysts tend to like the company, industry analysts are often critical. One epithet I hear a lot: ‘Oracle hates everybody and especially its customers.’ In the public domain, the company has a reputation for throwing out headline grabbing content and then clamming up when media tries to get behind the story. Its continued problems with advertising standards bodies don’t make things any easier for the company. The fact it has issued what appears to be a widely circulated rebuttal suggests Forrester has really hurt them. That is something of a surprise because Oracle tends to view the analyst community with disdain. There is some justification for that position but Oracle does itself few favors by attempting to exercise a LOT of control over the Forresters, Gartners. IDCs of the world. What’s the reality?
When the Forrester report content became public knowledge, I approached Oracle on the topic. Something didn’t quite gel for me. Why? I have had ongoing conversations with Oracle partners who are intimately involved in Fusion implementations. Oracle told me that they have had ‘multiple problems with this report.’ Here is what I can discern:
- Fusion is incredibly difficult to implement as an on-premise application and upgrade from Oracle E-Business Suite. However, it can work well as a cloud offering. As a result, Oracle is (mostly) selling Fusion as a cloud play. Ironically, they benefit from a cloud ‘halo’ effect precisely because Fusion is such a tough ask in the on-premise world.
- Fusion HR has proven popular – relatively speaking – with Fusion CRM coming down the track. I hear almost nothing about other Fusion modules despite there being ‘more than 100’ on the Oracle price list. .
- Oracle reports north of 400 deals on Fusion. However it is much shier about talking implementations and go live. My sources say that while the pace of implementation last Fall was slow, things have picked up considerably in the last few months. Oracle will not talk numbers right now because it is in a reporting quiet period. However I am told they will say much more, once they’re in a position to do so. Some will argue that they could still provide indicators but that would be perilously close to breaking SEC rules. That’s one thing Oracle avoids like the plague.
- From a wider market perspective, everything I hear suggests to me that Fusion is an up/cross sell and not an SAP (or anything else) killer. The ERP market is stagnant and any reported wins between those companies is little more than churn. As regards the wider portfolio, Oracle has started to make enhancements beyond the usual ‘legs and regs’ stuff required to keep applications in compliance. We should not therefore expect Oracle to report thousands of customers transitioning to Fusion any time soon.
- Oracle’s Applications Unlimited, which offers the basis for a co-existence strategy with Fusion applications has had the effect of stalling the market for Fusion applications. That is not a problem for Oracle customers provided Oracle continues to deliver the innovations they want.
Was Forrester right?
The big statistic Forrester pulled says: “65 percent of Oracle customers in a survey with 79 respondents indicated they had no plans to upgrade to Fusion.” Oracle rebutts saying that:
- 45% of the respondents are using Oracle Hyperion. Hyperion doesn’t really have anything to do with the context.
- The survey was limited to the US (60% of respondents) and to Europe (40% of respondents). There is no representation from Asia Pacific, Japan, Latin America, Eastern Europe, Africa or Middle East.
- The survey was heavily targeted to manufacturing companies (27%); and government, education, and healthcare (17%), so not representative of the entire industry spectrum.
On its face, Oracle’s answers sound reasonable. Personally, I am always skeptical about surveys that use small numbers. While I accept there are circumstances where an otherwise statistically invalid sample can be representative, the combination of objections Oracle raises should at least pose questions about methodology.
As observed above, Forrester’s assertion that support for Applications Unlimited has stalled the market for Fusion is credible. As Larry Dignan observes:
Oracle’s decision to offer Applications Unlimited, a program that allows customers to upgrade software running on their timelines, was a good decision in 2006 because it reassured customers. Today, that program means that few customers are on the Fusion upgrade bandwagon.
- The market for Fusion is in early stage.
- Partners are investing implementation skills. That would not be the case unless they thought there is a bright future for the solution.
- Oracle’s lack of a rich store of publicly accessible success stories reflects the early stage element. However, Oracle needs to surface stories in the coming months if it is not to continue getting hammered on this point.
- Customers need to understand the impact of Fusion projects. Starting small with something like talent management – a hot topic of its own – will help build confidence.
- Oracle needs to burnish its image. If it can get persuasive spokespeople like Steve Miranda to provide honest assessments of Fusion’s readiness into the public domain then the perception that Fusion is largely pricelist-ware starts to diminish.
- Any time there is an upgrade in the wind is an opportunity for competitors to swoop. Competition from Workday in particular is something that Oracle needs to watch carefully. The more customers Workday wins, the more difficult it becomes for Oracle to justify an already difficult upgrade.
Update: Floyd Teter weighs in. Don’t know who Floyd is? He’s been working on Fusion Apps as an implementer for some time. He knows the good, the bad and the ugly. He also knows about adoption cycles. Check out his ‘shoe dropping’ post. It’s an easy and entertaining read.