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Oracle and SAP Unleash Strategic Initiatives

Analysis of News Events
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In recent weeks, Oracle Corporation and SAP have made strategic announcements about how they will enhance their core business applications over the next several years. The announcements increase the rivalry between the two enterprise application vendors and present their customers with new options to consider.

Oracle kicked off the latest round of announcements on April 25 when it revealed details of its roadmap for integrating its applications with those it acquired from PeopleSoft and J.D. Edwards. That roadmap, known as Project Fusion, has been little more than a statement of direction since Oracle unveiled it back in January. In its announcement, however, the vendor stated that Project Fusion will initially focus on creating a common middleware platform for Oracle E-Business Suite, PeopleSoft Enterprise, and J.D. Edwards EnterpriseOne. To emphasize the point, the vendor rebranded its existing middleware products as Oracle Fusion Middleware and positioned them as a standards-based approach for creating a Service-Oriented Architecture (SOA).

To transform its middleware into an SOA for integrating three application suites, Oracle will build support for Enterprise and EnterpriseOne into each of its middleware products. The company plans to start certifying Enterprise applications for its middleware during this quarter. Next quarter, it will start the same certification process for EnterpriseOne. As a result, both application suites should run on Oracle middleware by the end of the year.

It is not entirely clear which releases of Enterprise and EnterpriseOne will be certified for which middleware products. What is known is that the current releases will run on Oracle's Application Server, BPEL Process Manager, Identity Management, and Portal products. These four products should provide significant levels of integration at the business logic and presentation layers of the applications. For instance, Oracle Portal will provide users with a single interface to E-Business Suite, Enterprise, and EnterpriseOne applications.

While Oracle wants to shift customers to its Fusion Middleware over time, it will not force them off competing solutions. The company made it clear that it will continue to certify Enterprise and EnterpriseOne releases on middleware from IBM and BEA Systems. It will also support the J.D. Edwards World suite on IBM's iSeries server and DB2/400 database through 2013 at the least. Oracle has also announced a rough schedule for new releases of most products. The company plans to ship Enterprise 8.9 later this year and Enterprise 9 in 2006. Next year will also see the releases of EnterpriseOne 8.12 and Oracle's E-Business Suite 12. In addition, World will likely receive new service releases in both 2005 and 2006. World customers will gain access to Fusion middleware and applications by upgrading to EnterpriseOne.

Once Oracle has its Fusion Middleware platform in order, it will begin to ship applications that combine the capabilities of E-Business Suite, Enterprise, and EnterpriseOne. Oracle plans to ship the first applications in 2007 and 2008, with Financial and Human Resources modules likely to be among the first solutions to ship. It is not yet clear whether these applications will require Fusion Middleware to run or will also be certified for competitive middleware platforms.

SAP Puts on the Pressure

As Oracle was reassuring its customers that they have a future with Fusion, SAP was working to expand its customer base by making announcements with Microsoft and IBM. At its European user group conference, SAP announced a joint venture with Microsoft to give the company's Office applications access to mySAP ERP. The venture, known as Project Mendocino, will utilize Web Services to let users work with mySAP ERP applications through their existing desktop applications. For instance, users will be able to synchronize customer information between mySAP ERP and Microsoft Exchange, access operational data via Excel, and submit data to mySAP ERP modules via Microsoft InfoPath.

SAP and Microsoft plan to provide early releases of Mendocino to users during the fourth quarter of this year and then make the product generally available in 2006. As part of the agreement, SAP will resell Office with mySAP ERP while Microsoft will resell SAP's Business Process Platform. This is the same layer of process integration middleware that I discussed in an article last month.

Besides cozying up to Microsoft, SAP also joined with IBM to unveil DB2 Universal Database 8.2.2, a release that is optimized for SAP applications. According to IBM, customers who run their SAP applications on DB2 UDB 8.2.2 can achieve greater database performance and availability. While the new release does not run on OS/400 partitions of the iSeries, it will run on AIX and Linux partitions. IBM sources have also told me that the two vendors are working on software enhancements that will benefit customers running SAP on OS/400.

With its latest announcements, SAP is clearly trying to use its relationships with IBM and Microsoft to expand its market share at Oracle's expense. At the same time, it is making a more subtle attempt to keep IBM from developing closer ties to Oracle. By offering to help IBM boost sales of DB2--something that Oracle would never do--SAP can remind IBM of the close partnership between the two firms. That reminder is much needed, given the rising competition between the two firms in the middleware market.

While SAP may be putting competitive pressure on Oracle, it is unlikely that the latter firm will lose many customers to the German software giant if it delivers on its support commitments and Project Fusion plans. While it is too early to tell whether Oracle will meet these conditions, the company has made promising starts on both fronts. That is good news for PeopleSoft and J.D. Edwards customers, as most of them would prefer to stick with their existing applications than switch to new ones.

Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology. You can reach him at This email address is being protected from spambots. You need JavaScript enabled to view it..

Lee Kroon is a Senior Industry Analyst for Andrews Consulting Group, a firm that helps mid-sized companies manage business transformation through technology.


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