Oracle Fusion Applications are Coming! Shhhh!

Posted by spencer on May 3, 2010 under ERP Software, Government Software, Non-Profit Software | 2 Comments to Read

We are currently working with a client that is considering PeopleSoft – one of the ERP applications that Oracle acquired a few years ago. The PeopleSoft product looks like a possible fit, but it was interesting to note that the salespeople did not talk much about the new Oracle Fusion product and the fact that this new ERP software is less than 1-2 years away from release.

I thought this was very interesting. One would think that a brand new ERP software product from one of the largest ERP software vendors in the world would be promoted heavily. But Oracle is almost completely silent about the development of this product even though they have to be spending many millions of dollars in R&D for this product right now.

Why isn’t Larry Ellison shouting from the tops of the trees that Oracle Fusion applications are coming? Because they are trying to protect the current sales of the e-Business Suite, PeopleSoft, and JD Edwards ERP solutions.

Right after the acquisition of PeopleSoft/JD Edwards, Oracle began talking up the idea of their new Super ERP product “Fusion” that would Fuse all of the best functionality from the 3 ERP products Oracle owns. They were also going to put functionality from other acquisitions such as Siebel and Hyperion into the new solution. It would be web based and facilitate Software as a Service (SaaS) as well as on-premise deployments.

Competitors began seeing this as an opportunity to create uncertainty about Oracle’s current ERP solutions. They asked “Why would you buy e-Business suite when it will be replaced within the next couple of years?” This hurt current sales and revenues, while the Fusion application was still years away from being released. So, they dropped the marketing for the new Fusion ERP Applications product.

In fact, if you go to Oracle’s website there is just a 1-page overview that Oracle’s Fusion applications are under development. Interestingly, the first thing you see is how Oracle will support all of the current products with Lifetime Application Support. Again you can see their concern that the announcement of future Fusion applications will hurt sales of their current products.

Now I do not doubt that when Fusion comes out, Oracle will continue to support companies on e-Business Suite, PeopleSoft, and JD Edwards for a long time. All of them have significant numbers of installations and they receive billions in annual maintenance revenues from these companies. However, when Fusion is released, the focus for new sales will be the Fusion product. This means that the sales goal within Oracle will be to upgrade all of these companies to the new product eventually. Which will be a huge revenue stream for Oracle.

That is why you will hear almost nothing about Fusion until it is released. Just know that if you currently own an Oracle product, or are looking to purchase one, that you will eventually be encouraged to upgrade to Fusion Applications. Make sure that if you are considering an Oracle product, that an upgrade to Fusion is included in your contract.

Gavin said,

Whilst I agree that Oracle is definitely looking to promote sales of the Applications Unlimited products (eBusiness Suite, Peoplesoft etc) there is another complication which prevents them from speaking about new releases before they’re anounced which relates to accounting rules around revenue recognition. For this reason they make use of leading figures within the Oracle community to spread the message. It’s worth having a look at http://debrasoracle.blogspot.com/ and http://orclville.blogspot.com/ for more information.

Secondly, regarding the upgrade to Fusion, all customers should be evaluating an upgrade to the latest version of their applications. Oracle are bringing a lot of the Fusion Applications concepts to the latest releases so there is often a lot of value to be gained there. Oracle has stated that there will be certain Fusion Applications that are replacement and certain that are new functionality. Where the app is a replacement, the customer will be able to upgrade as per the usual process. Where the app is new, this would require new licences.

General public concensus is that Larry will anounce and possibly release Fusion apps at this years OpenWorld conference in September. Having said this, Oracle is not expecting too many customers to upgrade initially and are chosing early adopters very carefully.
spencer said,

Thank you for your comments. You bring up some good points.

With regard to your first point, I can understand the revenue recognition rules when they are reporting sales numbers, who is actually using the beta versions of the system, and install base of the new product. The post was more along the lines of Oracle’s promotion and discussion of what will be included and when the new Fusion apps will be available which is more of a “marketing” function than a revenue recognition “accounting” function. Because the Oracle salespeople did not want to have deep discussion about what was coming with the new Fusion apps to this prospect, it leads me to believe they are concerned about the danger of losing sales of current solutions because of marketing a future product.

To your second point, it sounds like Oracle will be rolling out pieces of Fusion to the current ERP products as well as offering a complete “Fusion” ERP solution. Our understanding is that they built Fusion from the ground up as a new product, and that they did not use PS, EBS, or JDE’s base code. This means that if a company were to completely install the new product, it would basically be an implementation of a new product. Oracle will mitigate this work by basing the software on a Service Oriented Architecture, provide a migration path, and use Fusion Middleware, but it is something to keep in mind.

Finally, thank you for the update that Larry Ellison may be announcing this new product in the fall. I had not seen an estimated date of release, so I wanted to be safe with a 1-2 year release time window. In general, software companies are notorious for pushing back release dates!