The blogosphere and other media outlets might still be raving about major announcements at Oracle OpenWorld 2009, such as the one about Oracle’s professed strategy of “gently” and thoughtfully assimilating Sun Microsystems. The impending merger (subject to somewhat more difficulty than previously expected, due to regulatory hurdles in Europe) should make Oracle not only the world’s largest business software company, but also a major hardware player. References to Apple Computer and its ability to successfully design and offer both hardware and software were cited several times during the event.
Basically all other major highlights from the “ginormous” user event revolved around Oracle’s “complete, open, and integrated” product strategy across the board. Some of these highlights would be the Specialized Oracle Partner Network (OPN) Program for 25,000 OPN partners, or the quite anticipated Larry Ellison’s explanation of the upcoming first generation of Oracle Fusion Applications.
Still, my special interest at this overwhelming multi-day event (with over 40,000 attendees, it likely made San Francisco residents feel sort of besieged) was about Oracle’s continued efforts to become more attractive and appetizing to small and medium enterprises (SMEs). My recent blog post featured Oracle’s VAD Remarketer program targeted at the low-end of the market. The current figures are over 1,200 recruited Remarketers and over 2,000 placed orders for the (primarily technology infrastructure) products that fall under the ORACLE 1-CLICK ORDERING program since its launch over three years ago.
Oracle Apps for SMEs
Another program that was devised at about same time (coincidentally or not) in late 2006 was Oracle Accelerate. Oracle Accelerate is not only a partner program but also Oracle’s go-to-market approach to provide business software solutions to midsize organizations.
For a long time prior to 2006, Oracle E-Business Suite (EBS), formerly the only Oracle applications suite, was admittedly “too big, too complex, and too expensive” for SMEs to deploy. Oracle Accelerate is Oracle’s approach to helping Certified Partners and Certified Advantage Partners in the OPN bring complete, easy-to-own, and industry-focused solutions to small and medium businesses and government agencies.
The Accelerate program is presented by Oracle as a three-legged stool. The first leg is the broad offering of enterprise-class applications that are not “dumbed-down” or made “lite” for smaller customers. Neither are these entry-level applications with different source code than their bigger brethren, which presents a migration challenge when the SME company outgrows the entry-level product.
That is to say that the same software that supports a midsize company’s business supports Oracle’s largest customer’s business as well. The Accelerate product instances are rather configured via so-called “leading industry practices” (instead of other vendors somewhat condescendingly calling them “best industry practices”) and business flows for a controlled (and known upfront) implementation scope, time frame, and price.
What Do SMEs Need and Want?
Competitive pressures and the demand for modern IT tools have changed the software expectations and requirements of mid-market firms. Today’s preference is for a single source (a “one-stop-shop”) for most business systems and supporting services. This is not surprising in light of constrained IT budgets and resources, especially within cash-strapped smaller businesses and in this down economy.
But while price remains a factor in any software purchase, there are still a number of myths that are yet to be debunked about SME buyer needs and behavior. The first myth is that midsize companies are pretty much alike: the reality is that they are more different and diverse than they are alike. Next comes the myth that midsize companies are simpler versions of their larger peers, whereas in reality, in many ways, midsize companies could be more demanding than large enterprises, not least for having to do more with less.
Last but not least, there is the myth that midsize companies are cheapskates and risk-averse IT laggards. In reality, though, while cutting costs is a must, midsize companies have much less tolerance for error and need to get it right the first time. Ray Wang’s recent blog post talks more about SME enterprise software needs.
With Oracle Accelerate, SME customers can take advantage of Oracle’s multiple enterprise applications to accommodate integrated business flows across front-office, back-office, and industry-specific processes. The business flows are prepackaged business practices intended to provide a guide through the customers’ setup with no programming-based customization but rather via simple tick-box configuration.
As the second leg of the program, Oracle’s accelerated enterprise class software is delivered with business accelerators for implementation simplicity. In fact, the key to Oracle Accelerate solutions is the availability of pre-packaged applications, bundled by vertical industry or country, that can be quickly implemented by partners, and that provide a wide range of industry-specific functionality.
Such a prepackaged enterprise resource planning (ERP) application offers modern functionality for targeted businesses. Templates streamline implementations, allow technology adoption in a compressed timeframe, promote ease of use, and, in the long run, can help lower the total cost of ownership (TCO).
What Is an OBA?
Therefore, as the second part of Oracle Accelerate, Oracle equips partners with Oracle Business Accelerators (OBAs), which are tools for rapid and precise implementations. Namely, OBAs are automated configuration tools that encompass templates and process flows defining a particular vertical industry and geographic region’s “leading practices” to enable customers to realize more immediate benefits from select Oracle applications. The two main goals of using OBAs are the following:
This highly structured and prescribed method provides the ability to swiftly move from conference room to production. The method also minimizes an impact due to varying implementation skills of the team members. This mass customization capability (of a sort) for partners leads to increased speed to value (payback) for customers, while the Oracle partner has a repeatable process and know-how for more sales (volume). In this context, mass customization refers to the partners’ ability to deliver a custom configured solution to fit the customers’ needs without actually customizing the base code per se.
Moreover, prepackaged deployment approaches lend well to the partner ecosystem’s consistency and possible partner-to-partner deployments. For example, the consistency of these approaches also works well for large deployments where the geographic presence limitations of some partners can be mitigated by having another partner fill in as necessary.
The critical point for Oracle Accelerate was the decision by Oracle in 2006 to extend OBAs to qualified partners. Namely, for a long time only Oracle Consulting was privileged to leverage these collections of prepackaged and preconfigured business flows to streamline the Oracle EBS implementations, while partners were left to their own devices.
Thus, OBAs for Oracle EBS are logically the most advanced accelerators within Oracle, having had a decade or so of use and having gone through six generations of optimization for their ease of use. The OBA development department within Oracle is staffed with well over 100 individuals continually supporting and developing tools. Most recently, the Oracle Accelerate and Oracle Business Accelerators teams merged and reorganized into a regional reporting hierarchy to better serve the Oracle Accelerate ecosystem and more closely align to the regional sales teams.
Why Bother With OBAs?
According to Oracle’s internal statistics, based on 8 partners and their 44 ERP systems going live (whereby 28 clients have used OBAs and 16 have not, with implementations equitably split between Oracle EBS and Oracle JD Edwards EnterpriseOne), 162 days is the average duration for implementations using OBAs versus 314 days average without OBAs. In other words, implementations are on average 48 percent faster using OBAs than in a less prescribed way. The average in the best-in-class category of projects is 142 days, which would make the time savings even 60 percent.
It was an interesting fact for me to learn that only about one third of all implementations of Oracle’s ERP products still go with an OBA. Some explanation for that curious situation would be that certain combinations of regions and industries do not yet have a developed OBA by Oracle (or by a partner either, in which case they are called only “Business Accelerators”). In addition, some companies that might find, e.g., that 40 to 60 percent of suggested leading practices by an OBA are not relevant or beneficial to their business might then be better off not using the tool anyway.
In addition to these, there are several other reasons why partners do not use OBAs. First is that Oracle really just started pushing and promoting OBAs three years ago so there is an adoption and learning curve. There is dramatic year-over-year growth in the usage of OBAs over the last three years.
Second, using OBAs shortens the deployment cycle and therefore billable hours for a consultant. Although the margins associated with an Accelerate implementation are the same or better than standard implementations for a consultant, the overall revenue is lower. Therefore, a partner wanting to make the same revenue would need to sell more deals.
This is a pretty dramatic change for a firm to go from four deals per year to seven for the same revenue, as it means hiring more sales people, etc. More and more partners continue to adopt this model, however, as it is more in line with what the market is demanding.
JD Edwards’ Demise: as Ludicrously Exaggerated as Obama’s “Death Panels”
Another interesting fact for me was to notice that Oracle JD Edwards EnterpriseOne implementations averaged 183 days (the lowest figure was 122 days) versus the EBS average of 157 days. Now, as a traditional mid-market and upper mid-market product, I expected JD Edwards to be a tad quicker to implement by default. For a comparison of the two renowned Oracle ERP products, see TEC’s recent blog post here.
The trick, however, is in EBS’ aforementioned head start in using OBAs that were initially developed for that product, with over 10 years in development and refinement. To date, over 7,000 Oracle and partner assets have been used to train, sell, and implement Oracle applications in an accelerated mode.
Another interesting aspect and revelation of the Accelerate initiative for me is that there is as much activity for Oracle JD Edwards EnterpriseOne as there is for the “mother” Oracle EBS product. Namely, for a long time during analyst briefings I’ve been hearing many “convincing arguments” by Oracle competitors how they hardly ever see JD Edwards in competitive bids since that product was acquired in 2005.
Well, something doesn’t add up here, as JD Edwards has been a silent and yet strong performer for Oracle, demonstrating much better than market average year-over-year growth. For its part, Oracle has heftily invested in building out industry-specific functionality in the product’s core. While a separate series of articles will talk about the recent developments of JD Edwards, it suffices for me to say here that the product has been targeted for a select few industries that are project-based and asset-intensive (e.g., construction, chemicals, etc.).
JD Edwards has since benefited from leveraging Oracle’s technology (e.g., Oracle Fusion Middleware [OFM]) and from integration to best-of-breed siblings such as Demantra, Hyperion, or Primavera. A few partners that deal with both of Oracle’s ERP product suites have hinted to me that the Oracle JD Edwards EnterpriseOne-based Accelerate products might even be more completely configured than those that are based on Oracle EBS, and thus easier to tailor to their intended industrial segments.
To be more precise, with JD Edwards EnterpriseOne OBAs, the up-front work may be more intensive to get the instance right than with EBS OBAs. The final installed software with JD Edwards EnterpriseOne may require less post-OBA configuration than with EBS, but the work is still there upfront.
At the end of the day, it is nearly a wash: OBAs with both products dramatically reduce the overall implementation time and improve the accuracy of the scope and bid up-front. In fact, based on the data mentioned earlier, the average time to go-live with either product is about the same, with EBS having a slight advantage.
JD Edwards’ vertical fit increases the product’s attractiveness for midsize organizations. Another reason for the JD Edwards’ strength in the Accelerate program is because the formerly independent mid-market vendor traditionally had a more genuine commitment to the channel than Oracle did for EBS. Therefore, about 40 percent of Oracle’s value-added reseller (VAR)-based revenue comes from JD Edwards’ sales. See here for more on Oracle Accelerate customer success stories.
It All Starts and Ends With Partners
This brings me to the third leg of the Oracle Accelerate stool, which is the expert delivery ecosystem or about 180 partners that are currently wearing the “Accelerate badge of honor,” if you will. The value proposition for partners is that they are this way enabled and encouraged to sell more of appetizing fixed-price and fixed-time projects. If done properly, these engagements should still provide healthy profit margins for partners, who also stand a good chance of follow-up cross-sales given the ongoing expansion of Oracle Accelerate’s functional scope (to be discussed in upcoming parts of this series).
The Oracle Accelerate program not only helps promote the Oracle brand in the highly contested mid-market arena, but it also provides partners with advantages such as discounting, access to Oracle’s vast intellectual property, referral programs (and rewards), and marketing resources. More importantly, Oracle’s promotion of fixed-price and fixed-scope application approaches that use leading industry practices is also designed to reduce upfront costs and risks for buyers, which is in high demand these days of hard-to-secure working capital.
For their part, due to intact source code, customers can also benefit from more straightforward product upgrades, which can significantly reduce the complexity and risk associated with migrating to new product releases. Finally, the consistent and predictable nature of these approaches helps eliminate concerns of reseller viability. In other words, if followed correctly, the templates and documentation that support the core Accelerate products mean that one partner can fairly easily assume the work of another (if push comes to shove).
Part 2 of this blog series will continue with analyzing the program’s current state of affairs. In the meantime, what are your views, comments, opinions, etc. about Oracle’s improved partnering approach, and about the Oracle Accelerate program per se? If you are the program reseller and/or recipient, I would appreciate you sharing your experiences with the offering and the provider.