Saturday, January 31, 2009

The Game Is Afoot!

Two interesting events have happened over the past few days that convince me that the game is afoot in the market for support of the Oracle E-Business Suite.

Oracle has sole possession of a very lucrative market when it comes to support for the E-Business Suite. Customers pay their 22 percent of list annually for support of EBS. And support is a low-cost, high-margin business. When you contemplate the math for a minute, you'll see that Oracle's business model for apps maintenance is essentially one of the biggest and highest-returning annuities in modern history. Unfortunately, due to today's challenging economy, this model has become more than a little burdensome for Oracle customers. For more info, see some of the articles written by Vinnie Mirchandani and Dennis Howlett on the subject...both explain things much better than I can. While Oracle has faced some competition for support of recently acquired apps suites (Rimini Street is an outstanding example), they're pretty much had the EBS support market to themselves. But now it seems there is some pressure for change starting to build up.

Information Week's Bob Evans recently wrote an open letter to Larry Ellison. You can read the letter for yourself, but the upshot is a call to lead the way in reducing annual applications support fees. Whatever else I may think of the letter aside, Mr. Evans does a great job of describing the current challenges facing EBS customers (as well as customers of other Oracle products) and how some players may enter the market by turning those challenges into opportunities.

On January 27, DAZ Systems announced the offering of a comprehensive help desk, both in the U.S. and India, for the Oracle E-Business Suite as well as Oracle CRM, Hyperion, Demantra and Agile. The DAZ help desk is offered as a supplement to the traditional Oracle maintenance contract rather than as an alternative. Still, it's not too difficult to see how the idea of using support to create a sales channel might evolve for implementers and integrators in the EBS market. In the current economic environment, I'll wager DAZ will be getting more than a few inquiries from Oracle apps customers hoping to somehow lower their current EBS maintenance costs.

The common thread between these two events? They both revolve around Oracle EBS maintenance. I get the sense that this may be the beginning of some poking and testing of the traditional maintenance model in the EBS domain...could be the beginning of something bigger. Change may be coming to the world of Oracle EBS support. Could it be that the game is afoot?

1 comment:

John Stouffer said...

Oracle has never waivered from their annual support fee. I really can't see Ellison supporting that especially with the Fusion costs.