Well, Larry finally told the world about Fusion Apps with some details. And he did it in Steve-Jobs-like “Oh, and one more thing” fashion at the end of the last big presentation at Oracle Open World 2009.
There are plenty of analysts posting plenty of analysis based on plenty of briefings and facts and NDA’s, and I don’t feel qualified or compelled to add my voice to that chorus. However, I’ve been doing some thinking about SAP Business ByDesign (ByD) and Oracle Fusion Apps (FA), and what might be the dynamics between these two offerings in the coming year(s).
ByD and FA have been in development for a very long time. Both have had huge amounts of R&D investment in them. Both build on even more years of investment in predecessors, and both are meant to use that experience and expertise with a much more modern technology approach.
As it turns out, based on information from the analysts, both offer suites of functionality with some significant gaps as compared to more complete “current generation” suites, particularly in areas like Human Resources and Manufacturing.
From a technology perspective, FA appears miles ahead of ByD. FA appears to have a very clean SOA architecture with separate orchestration and business process management, pretty good user interfaces, nice social features, RESTful API’s, and a more standards-based (e.g., Java) orientation. ByD, however, likely will have more functionality than FA.
ByD is targeting “the mid-market” customer, which SAP has described in the past as being from several hundred million dollars in annual revenues, up to somewhere around one to two billion dollars in annual revenues. ByD has been available for more than a year to a very limited set of customers, and SAP has been saying it will roll out ByD to a wider audience in 2010. According to Larry Ellison’s presentation at OOW, FA will hit the market, coincidentally or not, in 2010.
FA is targeting a variety of customer segments, but one notable segment is the installed based for the “Applications Unlimited” (or “legacy”) applications such as JD Edwards, eBusiness Suite, and so on – a very large fraction of these customers are in what SAP considers to be in the mid-market. These customers will be facing the end of life for their applications, along with a paucity of innovation associated with those applications and sky-high maintenance costs, so they will be natural candidates to consider a move to FA over time.
Some of the analysis written about FA has indicated that a move to FA from a legacy Oracle application will involve a complete reimplementation – some data will migrate, but the processes will likely have to be implemented “from scratch.” Given that these customers will be facing a reimplementation if they choose to “upgrade” to FA, it seems likely that they will also consider alternatives to a move to FA. For example, they may consider staying on their current products, but going off maintenance or switching to third part maintenance providers. However, there is another alternative that these customers are likely to consider: moving to a new product potentially from a different vendor.
You can be sure that SAP will be visiting these customers and pitching SAP solutions to them. Given the timing, and given that many Oracle customers are in what SAP considers to be the “mid-market,” ByD will be the solution SAP will pitch to many of these customers. And if Oracle pushes FA further “up-market,” you can bet SAP will bring ByD there as well.
If SAP goes head to head against FA using the current Business Suite product line, Oracle will clearly make a big deal over technology advantages in every competitive situation. While ByD is not as advanced technically as FA, ByD will be SAP’s best response to FA. For a while, large customers will be best served by SAP Business Suite or Oracle’s legacy apps, as large customers will have many requirements that will not be met by the relatively immature ByD and FA. Thus, initially, it appears inevitable that Oracle and SAP will be going head-to-head with these two products. So, what will happen when these products collide?
I think the most likely scenario is this: ByD in 2010 will be made to work well in a SaaS deployment model, and FA will have quality issues and functionality gaps and internationalization limits. If this scenario plays out, SAP may be able to convert a significant number of Oracle legacy applications customers over to ByD (and/or perhaps SAP Business Suite) in 2010 and 2011.
We shall see …