SAP is progressing with its plan to services-enable its entire business suite by 2007 and has made partnerships around its strategy, outpacing rival Oracle Corp. in an increasingly competitive applications software market, according to a report by Cambridge, Mass.-based Forrester Research Inc.
But there is still plenty of time for Oracle to catch up with SAP and is doing so aggressively, with acquisitions to strengthen its vertical focus and its already strong middleware products, according to Forrester.
Meanwhile, Oracle already has the infrastructure in place to help its customers build a services-oriented architecture (SOA), but the vendor needs to make significant progress in building a partnership network if it plans to compete strongly with SAP, according to the Forrester report, "Demystifying The Confusion On Project Fusion."
Project Fusion will merge the J.D. Edwards and PeopleSoft technology Oracle acquired with the vendor's E-Business Suite software. The project was announced in January, and Oracle executives said the company would transition Oracle customers to an SOA by 2008.
"Oracle's competitors have done a good job of creating some confusion in the market, and they've been successful at it because Oracle has not been successful in getting out its message," said Forrester senior analyst Ray Wang, in an interview with SearchSAP.com. "Oracle should not have to defend its middleware technology since SAP is the software vendor moving into an infrastructure play."
Oracle's middleware technology is similar to SAP's NetWeaver application and integration platform. It includes Oracle's application server, integration tools, business intelligence, portal, development tools, data hubs and collaboration software, according to Forrester. But unlike SAP, which supports third-party products, Oracle lags behind and must develop a partner program to certify integration with its stack, Forrester said.
"How can you have partnerships when you haven't locked down what Fusion is?" Wang said. "Oracle is addressing this now."
Don't expect Oracle to launch Fusion in its entirety in 2008, according to Forrester. The most likely scenario is that Oracle will roll out portions of its Fusion project and then monitor early adopters, Forrester said.
Where does Oracle outshine SAP? According to Wang, the Oracle Business Process Execution Language (BPEL) Process Manager, a technology it acquired from Collaxa, enables Oracle customers to have more reliability, ease of administration and flexibility in managing business processes. BPEL is an XML language, designed to use Web services to enable task sharing for grid computing environments.
Companies can make a workflow change with the BPEL Process Manager, without having to write any code. SAP has an equivalent tool, but Collaxa was the leading tool on the market, Wang said.
SAP customers have also been slow in upgrading to mySAP ERP, the latest version of SAP's software suite. Although the exact number is disputed, more than half of SAP's customer base is on SAP R/3 software, an earlier version of SAP. Still, SAP executives said the number of customers signing upgrade contracts has been steadily increasing.
"Oracle is not out of the race," Wang said. "But the race is about who makes the least mistakes, so the market is playing itself out now."
Look for new pricing models
As SAP and Oracle launch services-enabled software suites, customers can expect to see new pricing models rolled out as well, Forrester said. Both vendors will look to simplify pricing and licensing, while the competition continues to give deep price discounts for initial licenses.
Oracle could decide to launch usage-based and user-based licensing models with Project Fusion. Customers should also be prepared to bargain for the types of credits given for existing functionality, Wang said. Also be aware of support changes and maintenance fees.