Oracles Fusion at the Fore

By Ed Frauenheim

Nov. 30, 2007

Oracle’s much-anticipated Fusion project, aimed at blending the best of various software product lines into a new set of applications, is approaching some key tests. 2008 is the year Oracle has pledged to start delivering its Fusion applications, which are slated to include human resources software.

Some customers and analysts have made critical comments about Fusion recently, saying Oracle has been vague about plans for the applications and questioning whether the project is on schedule. Expectations also are building up for the HR applications that will eventually emerge.

AMR Research analyst Christa Degnan Manning says Oracle is under pressure to produce software that smartly weaves in social networking and collaboration features, which are becoming priorities for organizations.

“Oracle really has to get the first version of Fusion right,” she says.

Oracle officials project confidence that Fusion will not fizzle. At the company’s recent 2007 user conference in San Francisco, Oracle provided an overview of Fusion characteristics and highlighted progress with related “middleware,” which is software that connects separate programs. During a keynote speech, Oracle chief executive Larry Ellison said the first three Fusion applications, in the area of sales productivity, will be available in the first half of next year.

Ellison also touted Fusion as reaching a new height in business software, beyond merely enabling efficient operations.

“It’s not going to automate a process,” he says. “It’s going to help you make better decisions.”

Fusion debuts
    Oracle first announced plans for Fusion in early 2005, soon after the company acquired rival software maker PeopleSoft and its line of business applications. In late 2005, Oracle told Workforce Management that heavily used human resource applications including payroll, benefits management and recruiting would be rolled out in 2008.

Asked about the current schedule for releasing Fusion HR applications, Oracle is less definite. “We are not disclosing additional information about Fusion Apps availability at this time except that Fusion Applications will begin rolling out in 2008,” Oracle spokeswoman Amy Grady said in an e-mail.

At Oracle’s OpenWorld conference, Ellison said the first Fusion applications are designed to tell salespeople who their customers are, which products they ought to sell, and which references they should use to sell successfully.

Sales is a critical area for organizations. But by prioritizing the sales arena, Oracle is running counter to a market trend showing HR applications to be the fastest-growing area of business software. Thanks in part to concerns about talent shortages, revenue from “human capital management” applications is slated to rise 11 percent annually between 2006 and 2011, to $10.6 billion, according to AMR Research.

As a result, the market is fiercely competitive. Oracle and archrival SAP each account for 24 percent of total HR software revenue, AMR Research says. But other players include a host of firms focused on “talent management,” meaning key HR functions such as recruiting, performance management and employee development. There also are vendors that sell a broader range of HR and business software, including Lawson and Workday.

Workday was founded by former PeopleSoft leader Dave Duffield soon after he failed to prevent Oracle’s takeover of PeopleSoft. Workday’s applications are designed to be easier to use, easier to change and easier to integrate compared with traditional software from vendors such as Oracle and SAP. Stan Swete, vice president of product strategy for Workday, says he doesn’t hear potential customers talking about Fusion so much as they are fed up with the difficulty of upgrading to later versions of Oracle’s existing PeopleSoft and Oracle E-Business Suite products. Such software switching can last months if not a year or more.

“Each of these upgrades is becoming more and more like an implementation,” Swete says, referring to the process of installing software in the first place. As a result, Swete says, customers are thinking: ” ‘So why wouldn’t we consider implementing something new.’”

Upgrade or implementation?
   Oracle has argued that moving from existing Oracle applications to Fusion will be an upgrade rather than an implementation, and that it will be simple to make upgrades once Fusion is in place.

But there have been questions recently about Oracle’s progress on Fusion. Pat Walravens, equity analyst at investment firm JMP Securities, wrote in a November research note that “something seems to have gone awry with the original Fusion applications plan, which was to deliver some major applications, such as ERP [enterprise resource planning], CRM [customer relationship management], and core HR, by the end of 2008.”

What’s more, some argue Oracle has been fuzzy about Fusion. “We’re coming up on almost three years now,” says Jason Averbook, chief executive of consulting firm Knowledge Infusion. “Customers are saying, ‘Just tell me the truth. What is Fusion, and what should I do?’ “

During the recent OpenWorld show, one attendee said she has been disappointed by the amount of information Oracle has provided about Fusion at its annual conferences.

“Each year, I don’t get as much information as I’d hoped,” she says.

The attendee, a systems administrator at a financial services firm that uses Oracle, spoke on condition of anonymity for fear of reprisal from her employer.

At a press conference during OpenWorld, Charles Rozwat, Oracle executive VP, argued customers have received an adequate product road map.

“Customers I talk to are very happy with the amount of information they have today,” Rozwat says.

At OpenWorld, Oracle officials outlined certain features of the coming Fusion applications. These include a “service architecture” designed to make it easy to integrate Fusion software with other business applications, “embedded business intelligence” to mine data for making better choices, and “software as a service” readiness—meaning the applications can be delivered over the Internet besides being installed on a customer’s internal computers.

Outside views
   Some observers are satisfied with Oracle’s disclosures about Fusion. Wayne Fuller, application systems engineer for financial services company Wells Fargo, says he is “absolutely” satisfied with the amount of information Oracle has given on Fusion applications.

Analyst Walravens wrote in his research note that Oracle’s Fusion road map “is probably good enough for now, as most customers seem focused on preserving the value of their existing investments.”

But that doesn’t mean the pressure is off when it comes to Fusion HR applications. Organizations have become more and more focused on closely connected talent management “suites” and emerging social networking tools. “Web 2.0” technologies such as blogs, wikis and corporate social networks are seen as potential spark plugs for increased collaboration, productivity and—ultimately—profits.

Oracle is keenly aware of these trends. Its OpenWorld conference went so far as to include an “Unconference,” where attendees could generate their own sessions. And at the annual HR Technology Conference & Exposition in Chicago this October, Oracle demonstrated how a test version of its WebCenter product could allow employees to set up informal networks devoted to a particular topic, as well as alert colleagues about job openings.

Degnan Manning says the HR tech conference demonstration heightened customer anticipation that Fusion will incorporate social networking tools. Building in such tools adds to the challenge of meshing the best features of Oracle’s existing product lines, she argues.

“Fusion has become increasingly strategic and complex,” Degnan Manning says.

Still another hurdle for Oracle is continuing to upgrade its existing applications even as it creates Fusion. But Oracle argues it is up to the task. Ellison, in fact, portrays Fusion as central to the company’s future. People ask when Fusion will be “done,” he told the audience during his keynote address.

“What do you mean by done?” Ellison says. “I think we’ll be working on Fusion applications for a long time.”

Right now, though, observers are starting to expect some concrete results from nearly three years of work on Fusion. And Ellison and crew have yet to convince everyone that Fusion will be a potent force, at least initially.

Fuller of Wells Fargo, for example, has no desire to move to Fusion’s first release.

“I don’t think Fusion will in two years be as good as PeopleSoft is from a functional standpoint,” he says. “Any new product has to develop.”

Ed Frauenheim is a former Associate Editorial Director at Human Capital Media and currently works as Senior Director of Content at Great Place to Work. He is a co-author of A Great Place to Work For All.

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