IT News have an excellent article about the latest Gartner Symposium, where one of Gartner analyst Dennis Gaughan gave a broad overview of the strategic direction of the world’s largest application vendors IBM, Microsoft, Oracle and SAP.
Below are some keynotes and related “quotes” from Mr. Dennis Gaughan.
- IBM wants to manage you. Quoting Mr. Gaughan “The number one question is: how do you avoid being managed by IBM? Their account managers are very good at influencing strategy,”
- IBM is risking by moving into applications as the acquisition of Sterling Commerce implies. “IBM was always selling software tools and hardware, but would shy away from being in the software applications business,” . “We are starting to see IBM compete directly with SAP and Oracle around business applications – especially with Sterling Commerce or business analytics and optimisation.”
- IBM generates enormous revenue from using and selling SAP and Oracle products and now as it moves into application, it must find a way not to cut off this revenue stream “The challenge IBM has is that they generate enormous revenue from partnering with Oracle and SAP,” he noted. “IBM makes US$15 to US$20 billion a year alone in implementing, hosting, and managing SAP landscapes for its customers. They have to sort out how to compete and cooperate to not impact that significant revenue stream.”
- Microsoft crown jewels are their monopolies: Windows and Office. “This is a platform story,…”. “They are a platform company first and foremost. They continually ask themselves, how do we drive platform and how do we protect our cash cows, Office and Windows?When approaching Microsoft, consider that Windows is the core – and Microsoft will do everything to protect that core.”
- Their core is attacked by Apple on OS and Google on Office, Mail and Collaboration and probably Microsoft will loose market share in the next years. “Google is going after Office, mail and collaboration,” he said. “These are Microsoft’s crown jewels.” (Strangely enough neither did he mention any Linux vendor although some Linux distributions become very user friendly nor Open Office which has become very good)
- Oracle products do not integrate well.“Just because I am buying multiple products from Oracle, it doesn’t mean it will come pre-integrated,”. “Oracle’s marketing phrase is ‘engineered systems to work together’. But it should be ‘engineered systems to buy together’. It’s a bundling on paper, not in the architecture.“Total integration across the portfolio… won’t provide software license growth for investors. Profitability influences and colours every aspect of Oracle’s product strategy. Oracle offers a collection of products that might be best of breed, but in most cases the integration burden will always remain with you.” That leads as to the next bullet note
- One of Oracles main revenues is Maintenance. “Maintenance is king for Oracle – they generate a tonne of money on maintenance revenue,” “Maintenance accounts for 92 percent of Oracle’s profitability – and they wont do anything to disrupt that maintenance stream. So if you are considering Fusion Apps, you need to continually look to their roadmaps to consider longer-term strategy for the products you have already invested in. Unfortunately, Oracle isn’t always the best at disclosing long-term roadmaps, and maintenance isn’t a guarantee of future investment.” Which also leads us to the next bullet
- It does not not reveal long term product roadmaps, because of the fear that future products will canibalize with their current ones.
- Nevertheless, Oracle’s strategy works for highly profitable, volume businesses, customers
- “SAP is one of Oracle’s largest database resellers – and is naturally interested in lessening its reliance on Oracle.”
- In-memory technology although very per formant is very expensive too. Moreover “SAP haven’t sorted out the pricing,” which “It has given customers pause.”
- Strict licensing policies “SAP has interesting licensing terms for getting data in and out of the system for use in other applications,”
- There is no other opportunities for upgrading its customer from R/3 to Business Suite, which will have a major impact to its revenue.. “New revenue from that strategy is largely over, and that will impact total license revenue,” So probably SAP maintenance license in the future will be even more strict and heavy.
- The truth about IBM, Microsoft, Oracle and SAP
- What Microsoft, Oracle, IBM, And SAP Don’t Tell Customers
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