Conference ulysse::rdb_vms_competition

522.0. "Oracle in CIM - a Yankee Group Analysis" by CIMNET::BOURDEAU (Rich Bourdeau CIM Product Marketing) Wed Dec 20 1989 23:26

          ORACLE in CIM
    
          Yankee Group's Thoughts and CMPD's Interpretation
          Richard Bourdeau




          In the September 1989 issue of the Yankee Group's monthly news
          letter, "Yankee Conveyor", there is a very informative analysis
          of Oracle's new Core Manufacturing products. In this article,
          I have extracted some important quotations, and offer my in-
          terpretation of those quotes. If you have any questions, please
          contact me at: DTN 291-7512, (508)490-7512; CIMNET::BOURDEAU, or
          Richard Bourdeau @ MET.





          1  The Source Article

          o  Yankee Conveyor, September 1989 (ISSN 0898-2880).

          Title:  Reinventing Oracle: New Strategic Thrust into the Applica-
                  tions Business with "Core Manufacturing" Products
 
          Abstract:

          Oracle hopes to maintain an astronomical growth rate by selling
          it's own MRP package. Can it repeat its success in another
          field, one already crowded with formidable players ?

          The article is in the CMPD reasource center. Copies can be
          ordered through Yankee Group, 200 Portland Street, Boston, MA,
          02114 (617)367-1000

    
    
          2  CMPD's INTERPRETATION

          Oracle has realized that it cannot sustain their 1980's growth
          into the 1990's by offering a DBMS alone. Rdb's functional
          and performance enhancements have "leveled" the RDBMS playing
          field. Digital ability to tightly couple Rdb to VMS, as well as 
          IBM's tight coupling of OS/2 and DB2 confirms what many analysts 
          have been predicting: There is a fundamental market shift toward 
          database engine and operating system integration to facilitate 
          true application integration.
          
          Since Oracle is not in a position to offer the integration
          advantages possible through database and operating system
          coupling, they will be faced with declining growth for their
          database engine.  In an attempt to diversify Oracle has
          targeted manufacturing, an area which they have been success-
          ful selling their database products. Oracle's strategy is to
          propagate the myth of application portability, in the same way
          they have championed database portability. While portability is
          a significant issue, Interoperability or the ability to inte-
          grate applications is far more important to most manufacturing
          companies. The Yankee Group group points out that Oracle has
          alienated other manufacturing VARs who now view Oracle as a com-
          petitor. This could affect Oracle's ability to integrate with
          many popular manufacturing applications.

          Oracle also faces many other obstacles to their manufacturing
          strategy. For example, Oracle is using the same approach (one
          size fits all) for their manufacturing software as they do with
          their database. Oracle, touts their Core Manufacturing as "the
          richest CIM software solution ever" able to solve the needs
          of "discrete, repetitive, contract, Just-In-Time, or process
          manufacturing"[1] . Yankee Group views this approach as naive,
          and believes that Oracle's manufacturing functionality, will
          not be able to stand up to the leading commercially available
          packages, especially those designed for specific industries.


    
          2 DIGITAL PROPRIETARY 
    
    
          2.1  What does this mean for Digital?

          If you are considering recommending Oracle's CORE manufacturing
          software to your customer consider the following:

          o  Oracle's Application software (Manufacturing and Financials)
             were developed on and optimized for Sequent Hardware

          o  Estimated release of Oracle Manufacturing software for VMS
             will follow Sequent and other hardware platforms by six
             months or more.

          o  Since Sequent Manufacturing operations will be the first
             implementation of Oracle's manufacturing software, Sequent
             will be a primary showcase for Oracle.

          o  An Oracle solution on VAX is more expensive than Oracle on Sequent.
             If cost is the primary factor, Oracle will not hesitate to
             switch hardware.

          o  A Digital solution on VAX is very competitive with Oracle
             on Sequent, due to the significant cost savings of Rdb over
             Oracle. This is especially true if the application is imple-
             mented on a runtime Rdb license.

          While there are many third party manufacturing software vendors
          that run on multiple platforms, proposing an Oracle solution
          to your customer involves significantly more risk than does
          other third party manufacturing applications. Oracle can not
          only move the customer to another hardware platform, they are

          ___________________

        [1] "We Kick Ask" Oracle advertisement

                                                    DIGITAL PROPRIETARY  3

 






          also competitors with Digital in the Database, Forms, 4GL,
          Mail, CASE, and Systems Integration market. Teaming with Oracle
          jeopardizes the chance for follow on revenue in all of these
          areas.

          Digital's manufacturing database strategy centers around Rdb
          and CDD/Plus. We are actively working with many of our CMPs and
          ISVs to help them port to Rdb. Applications developed on third
          party databases decrease Digital's ability to provide integrated
          solutions for our manufacturing customers. Digital can be locked
          out of accounts, for the length of a systems life, which is
          frequently 10 or more years.

          3  QUOTES FROM THE YANKEE GROUP ARTICLE

          The remainder of this article include direct quotes from the
          Yankee Group article. If you use these quotes, please note their
          source.
    
          4  What is Oracle's Strategy?
                                                                        
          "Manufacturing is an important part of Oracle's business. The
          Yankee Group estimates that a full 30 percent of Oracle's rev-
          enues are accrued through manufacturing organizations"

          "The Yankee Group believes that Oracle's long term goal is to
          gain control of the ever-expanding and all-inclusive production
          planning and control DBMS within each manufacturing organiza-
          tion. A very tall order, indeed. If Oracle or any other company
          (principally, IBM looms as the heir apparent to that goal) were
          to gain control of that database, the Yankee Group believes, it
          would be in a position to exploit its competitive advantage into
          consistent long-term growth and profits."

          "Oracle's approach is simple and digestible. It is starting
          by providing base functionality to an MRP system for the first
          version of it's product."



          4  DIGITAL PROPRIETARY

 






          "...one of the first sites where Oracle is publicly announcing
          the installation of Core Manufacturing will be at Sequent's
          manufacturing operations."


          5  Factors Favoring Oracle

          "From the standpoint of interoperability - the ability of sys-
          tems to run similar software across multiple computer vendors'
          platforms - no software vendor is better positioned than Ora-
          cle."

          "The ability to share information from one module of the soft-
          ware to the next via a common DBMS"

          "Operations that straddle a distributed network, not just a
          single platform.

    
          6  Obstacles Facing Oracle

          "The vast differences between the information systems manager or
          architect, to whom Oracle sells and is reasonably well known,
          and end-users who have a significant say in the decision to buy
          MRP".

          "Facing off against a whole host of new competitors that have
          been partners in the past."

          "Much of the market that Oracle is targeting is destined for
          slow growth. This provides the interesting situation of a com-
          pany growing extraordinarily fast that all of a sudden will be
          in a slower, longer sales cycle - as much as 15 months for a MRP
          package."

          "Oracle is not targeting specific verticals; instead it is
          treating the applications in a broad manner. The Yankee group
          believes that this may be a naive approach."


                                                    DIGITAL PROPRIETARY  5

 






          "Oracle is likely to target super-large (Fortune 200) manufac-
          turers through its national account program. These users users
          will put any new MRP package through both performance and func-
          tional requirement wringers. Moreover, Oracle has leveled a
          somewhat cute advertising campaign at existing MRP vendors such
          as ASK Computer Systems.... ... Performance wise, the Oracle
          package will not be time-tested and bulletproof against these
          detailed analysis in the manner of a well-installed commercial
          package (MANMAN or even MAPICS)

          "Oracle's expansion into applications will antagonize its and
          other value-added relicensers (VARs)"

    
          7  Conclusions

          "Oracle's move was an important one. Is it required ? Clearly,
          Oracle was coming to the stage where it was going to have to do
          something to fend off potential competitors."

          "Oracle's growth rate as a DBMS supplier is likely to begin
          dropping off significantly."

          "Oracle is likely to encounter stiffer resistance from Digi-
          tal's third party software suppliers which are going to make a
          commitment to Rdb."

          "... The Yankee Group believes that part of Oracle's growth
          is due not only to its hardware-independent position, but also
          because of its application software independence. The Yankee
          Group believes that Oracle's position as truly systems-neutral
          will suffer"

          "The real message is that Oracle as a company will change, and
          it must reinvent itself for the 1990s."





          6  DIGITAL PROPRIETARY