April 9, 2002 5:55 PM PDT

Ellison's call: Upgrade, upgrade, upgrade

SAN DIEGO--Oracle Chief Executive Larry Ellison has a simple message for the thousands of users of the company's business software: Upgrade.

Oracle has touted the benefits of its latest set of Internet-ready business programs, called 11i, for some time. But many customers remain on the sidelines, with only 10 percent of the company's 12,000 business-application customers upgrading.

The software was initially released with glitches last spring. But Oracle executives have taken pains at this week's annual AppsWorld business-software conference here to stress that the company has learned from its mistakes, and 11i is now a stable set of software.

Ellison re-enforced this theme, calling 11i "the largest collection of applications software produced by a single vendor" and hailing the company's 5,000 business software programmers for a "tremendous effort."

The CEO then detailed the options available to customers, including the ability to install the sprawling software themselves or to have Oracle handle the upgrade and maintenance of the software, a new thrust at the database giant. Oracle is in a fierce fight for market share in business software against rivals such as SAP and PeopleSoft.

"The (higher) level of service we provide to our customers is probably the biggest change in the past year," Ellison said during an informal speech that was surprisingly free of the CEO's typical grandiose pronouncements.

He characterized the state of data in large organizations as "fragmented" and promoted the notion that putting all data in a single database--like Oracle's--is the answer for those with data stored in various places across their computer systems.

"We think we've come a long way in terms of realizing this vision," Ellison told attendees.

This assumes, however, that customers have chosen all of Oracle's business software and its database--an unlikely scenario in a multifaceted technology world, according to analysts. With companies reluctant to spend on technology in the current economic climate, sales and upgrades may be an uphill battle for Oracle, according to some, even as the company relies more heavily on business applications for profits.

Recent research from industry consultancy Forrester Research suggests that it could be a tough year for corporate-applications companies such as Oracle. In a recent survey, Forrester found that only 26 percent of companies of the "Global 3500" planned to purchase enterprise applications this year, down from 58 percent in 2001. The Global 3500 refers to the 3,500 largest companies in the world with at least $1 billion in annual revenue.

"They're all Oracle all the time," and they don't recognize that their customers have other applications, Forrester analyst Jennifer Chew said. "We think that's fairly short-sighted."

Nevertheless, Ellison said the company has come a long way in servicing its customers. He highlighted a recently launched series of support programs as evidence that the company is making progress as 11i is being adopted more widely.

"Having an active 'We love our customers' program can only help," said Joshua Greenbaum, principal analyst with consulting firm Enterprise Applications Consulting.

During a question-and-answer session after Ellison's remarks, the CEO broached a variety of topics. When a questioner brought up Web services, the latest technology trend, Ellison said he fears that the premise of the technology has been "oversold."

Ellison also said he has stopped making predictions on when the technology downturn will end and when companies will start making systems investments again, but he said the company is "assuming" that the sales environment will not improve in the next three months.

Oracle executives warned of a continued poor technology climate during the company's earnings call in March.

 

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