The heavyweights of the enterprise applications market are facing a “doomsday scenario” that could become reality by 2010, says Bruce Richardson, chief research officer for analyst group AMR Research: customers stop buying applications from the likes of SAP and Oracle, and instead “contract with low-cost Indian or Eastern European integrators to build custom composite apps that sit on top of their ERP backbone.”
The enterprise resource planning (ERP) market, that SAP and Oracle dominate, is undergoing a revolutionary change, prompted by the adoption of service-oriented architecture (SOA), which IT advisory group Gartner predicts will be worth $18.4 billion by 2012, up from $450 million in 2004.
Currently, it is both expensive and painful to move ERP platforms; customers are effectively locked in to their existing supplier. But SOA promises to change that, and executives at both Oracle and SAP have recognised how SOA will transform the way their customers buy and deploy applications; both have undertaken long-term projects designed to ensure they retain a critical presence within the enterprise infrastructure, as users move from monolithic applications to composite groups of loosely-coupled services.
To this end, SAP has the NetWeaver SOA platform and Oracle has Project Fusion. Make no mistake: while both of these platforms will make it easier for users to automate business processes by utilising all manner of application functionality, from the vendor side, the intent is to become the focal point of SOA activity.
Unsurprisingly, given its heritage, SAP’s NetWeaver takes an application-centric view of SOA. NetWeaver is designed to leverage SAP’s ERP functionality; the German software maker has been busy building its own set of composite applications, theoretically saving users the effort.
Oracle’s Project Fusion, on the other hand, reflects the fact that the company does not come from an application background. Through its Fusion Middleware line, a conglomeration of infrastructure software it has either built or acquired, Oracle presents an “open platform” for the service-oriented architecture.
And Oracle is building a significant presence in middleware: in August 2006 its middleware division had sales of over $1 billion. UK middleware director, David Keene, believes that this puts the division ahead of infrastructure software rival BEA Systems in license revenue. “We know we’ve already broken past them in number of customers,” he says.
The application side of Project Fusion will begin to take shape later in 2006, with the release of Oracle E-business Suite 12, an integrated application suite that combines components from many of Oracle’s acquisitions. But because most businesses are tied to the applications they already use, the release of E-business Suite 12 is unlikely to be met with a mass migration. “Customers don’t want to be forced into upgrading their software,” says Keene. Oracle will continue to support existing applications for many years to come, he adds.
It is therefore middleware, argues Keene, that will draw customers to Oracle’s version of SOA. “The service-oriented architecture enables slow, iterative movement forward based on business need. With Fusion Middleware, we are helping our customers to evolve applications into true services.”
Achieving that gradual progression towards a fully service-oriented architecture requires integration with legacy systems. That makes open standards at all levels of integration essential. “SAP does not have open standards-based services in NetWeaver, at least not the business process level,” says Keene.
But how committed to openness is Oracle? Forrester analyst Ray Wang notes that although Oracle has agreed to support IBM’s WebSphere for its Fusion application range, there will be some requirement to adopt Oracle’s proprietary standards to operate the applications in that environment. “Thus,” writes Wang, “although Oracle is open at the middleware layer of its new architecture, there will be limitations to that openness.”
Customers expecting the SOA-era to release them from the shackles of legacy ERP systems should take heed: SOA may provide greater freedom, but as ever, the devil will be in the detail.