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Database giant talks middleware

Oracle has emerged as one of the top players in middleware. Akhtar Pasha reports on how the software giant succeeded in a segment where it had no presence just four years ago.

Though Oracle did not have a significant share in the middleware market four years ago, the vendor has managed to emerge as one of the leaders in this segment by mid-2005.

Comments Roland Slee, Vice-president, Fusion Middleware Sales, Oracle APAC, “The middleware business is exciting. We entered this market just four years ago and already more than 26,000 customers have deployed our products.” The company’s middleware sales grew 33 percent in 2004. Compared to this, the overall middleware market is sluggish and is expected to grow just 4.7 percent on an average through 2009, according to IDC.

“For us, the middleware business is the fastest-growing line [it is the second largest business after the flagship database],” says Slee. Oracle reported $850 million in licence revenues and support fees globally from middleware in financial year 2005. Slee continues, “We expect that to increase to more than $1 billion in 2006, a significant contribution to our business.”

The scene on the domestic market front is no different. Oracle India’s middleware growth has been in sync with its global growth rate. The company states that it ships more units of middleware than IBM or BEA, but because its prices are lower the revenue figures are relatively smaller even if uptake is greater than that of the competition.

S P S Grover, Senior Director, Oracle India says, “A combination of vertical focus (BFSI, telecom, government and manufacturing/retail), a growing field force and partner alliances (TCS, Wipro, CMC, HP and Infosys) has been the key driver for Oracle’s middleware business in India. Having gained marketshare in the middleware space, Oracle aims at focussing on execution for the next four quarters in India.”

Upbeat over Fusion

Fusion is Oracle’s attempt to create an integrated suite of the best components of all the ERP applications that the company has acquired over the past year—PeopleSoft, J D Edwards and Siebel. The software-maker is now calling its middleware offering— formerly known as Oracle Application Server—Oracle Fusion Middleware.

For Cummins India, a global manufacturer of diesel generators, its ERP system (it is using Oracle’s e-Business Suite 11.0.3) helps it offer superior customer service, reduce lead time to develop gensets, and lend decision support. Says its General Manager, Information Systems and Technology, Tushar Padalkar, “Oracle’s Fusion Middleware solution is a comprehensive integrated solution. Its data hub functionality lets an IT head centralise, update and clean his company’s customer data to the highest quality, and synchronise the same with applications for a complete view. Additionally, the middleware has the Oracle Collaboration Suite with business intelligence tools which are required in an enterprise but were previously missing from the Oracle database. This along with features such as delivery solution and distribution, and the inclusion of PeopleSoft light software makes it better. More importantly, it [Fusion] is open and adopts a standard approach for deploying Service Oriented Architecture (SOA).”

Padalkar continues, “We are yet to deploy Fusion which will be possible only after migrating from Oracle 11.0.3 to 11.5.10, which is Internet-enabled.” Moreover, the effort involved in Cummins’ data conversion is expected to be massive and time-consuming.

Advises Padalkar, “In an enterprise set-up, it is better to have one integration tool rather than struggle with two middleware products.” Cummins Inc. is a global partner of the Oracle customer group, tests all its versions and gives feedback.

Another of Oracle’s customers, J K Tyre, used Oracle Application Server, Oracle Warehouse Builder and Oracle Business Intelligence Solution. With the use of middleware, data compilation time at the automotive tyre manufacturing major was reduced by 75 percent and sales data analysis time came down drastically from one month to three days.

However, the re-branding of middleware is seen as a cosmetic name-change for Oracle Application Server (APS) 10g by most analysts. The company is making APS central to its strategy for packaged applications. Until now, APS 10g has been seen primarily as a platform for customer development. Now Oracle has given it proper branding and a role that’s comparable to that of NetWeaver in SAP’s line-up.

Project Fusion is the term for the next generation of Oracle’s packaged applications which will combine its e-Business Suite with products acquired from PeopleSoft, J D Edwards and Retek. Additionally, users of these acquired companies’ products now have a reason to look at APS, according to a market analyst. Strategically, Oracle needs to make it capable of supporting its new role while competing with specialist APS solutions from BEA, IBM and Microsoft.

This move, analysts say, is favourable for Oracle’s existing customers as they will stick to Fusion rather than move to another product. Tactically, the company will have to offer a compelling case for users of PeopleSoft and J D Edwards products to opt for its middleware. It needs to have the customers adopt middleware as fast as possible to reduce maintenance costs, promote cross-selling and prepare the ground for their eventual migration to Project Fusion.

Slee believes that the company is offering a compelling case for PeopleSoft and J D Edwards-users. The middleware is hot-pluggable, which gives customers greater choice. Customers running PeopleSoft and J D Edwards are in the reverse situation as their applications are certified to work with WebSphere but not Fusion. “We have been doing the certification and we expect to announce the availability before the end of 2005. We are not forcing anyone to adopt Fusion. Customers running other products on WebSphere can continue to do so,” informs Slee.

At the heart of middleware is a Java runtime environment based on J2EE 1.4. On top of the Java standard are other standards—business process definition & integration, SOA, and Web services, UDDI and SOAP.

Acquisitions give depth

Oracle has injected fresh life into Fusion by including key functionality such as business intelligence tools, and security and identity management after acquiring Oblix Inc. (The latter was a leading developer of identity management software that allows Web access control including single sign on, identity administration and user provisioning.) It also provides security and regulatory compliance solutions.

Oracle also acquired Collaxa Inc., which has resulted in Oracle BPEL (Business Process Execution Language) Process Manager that will help companies to automate their business processes. Gartner believes that BPEL will emerge as the leading industry standard for Web service orchestration and co-ordination of business processes.

"No vendor in the past produced a complete integrated suite of stack in middleware which was standard-based" - Roland Slee Vice-president Fusion Middleware Sales Oracle APAC	"Having gained marketshare in the middleware space, Oracle aims at focussing on execution for the next four quarters" - S P S Grover Senior Director Oracle India

Total cost of ownership

Slee says there is more to middleware than meets the eye. According to him, there are a number of different generations of IT architecture that have emerged—from the mainframe to the mid-range solution to the client-server. As organisations look for a lower total cost of ownership and cost-effective IT investment, we see a move towards adopting Internet and grid-computing architecture. It is important to have middleware because applications no longer run on a PC—they run in the middleware. The demand for middleware has created a market that is dynamic and fast-changing but immature. Nevertheless, it has witnessed consolidation. While BEA has seen two years of challenging financial results, IBM continues to have a strong position. Comments Slee: “No vendorin the past produced a complete integrated suite of middleware stack which was standard-based.”

If Oracle can pull it off, it will succeed in selling Fusion not only to existing customers but also to new ones.

akhtar@expresscomputeronline.com