Customer care key to boost Oracle growth

Conference Report from the Open World User Group forum.

Oracle will focus on improving customer loyalty and partner relationships over the next couple of years to boost its bottom line, it revealed at a user group conference last week.

The database supplier, like other software companies, has experienced a slowdown in growth as a result of the year 2000 issue - which is causing organisations to freeze budgets - and the economic crisis in Asia-Pacific.

As a result, Oracle has seen only a small percentage of its installed base move from release 7.3 of its database to the much touted version 8. Many customers plan to migrate only after the millennium.

Ray Lane, president and chief operating officer of Oracle, said in his keynote speech he had been looking at how to equip the vendor to deal with change taking place within and outside the organisation driven by the internet. He dubbed the scheme 'Oracle 2000'.

'We want to drive customer reference ability to 100 per cent by the end of 1999, so we need to understand the needs of disloyal customers,' he said. 'We have to focus on customers and their concerns and put together a number of programmes to raise their affection. This is not altruistic - it's driven by profits. For every five per cent shift on the loyalty curve, you make a 35 per cent increase in profits.'

The aim, Lane said, was to make it easier for customers to do business with Oracle. The supplier intends to hire more account management personnel, who will come from a service rather than a sales background, to give customers more customised support.

In future, instead of simply pushing out product releases, Oracle will optimise and package them for niche sectors, including non-conventional ones, and will try to anticipate how markets are changing. This repackaging will include the vendor's applications as well as database and tools.

On the partner side, Oracle will increase its budget by $40 million to boost training, education and channel programmes. This includes a two per cent increase in marketing funds for members of its third party channel using the 'On Oracle' brand.

The company is also consolidating its diverse partner schemes into one global, hierarchical programme. It will be based on the Oracle Technical Network programme and will include 100,000 developers, 10,000 programmers, 2,000 certified solution partners, 200 certified advantage partners and 200 global partners.

Oracle is also setting up a venture capital fund to back companies wanting to develop industry-specific applications for the Oracle 8i database.

Meanwhile, the vendor is attempting to use the database as a vehicle to position itself as the supplier of choice in the internet space and its product as the industry standard.

Oracle's aim is to try to usurp Microsoft's dominance of the desktop OS market by denigrating such technology as old hat and positioning itself, by association, as primary vendor for the so-called 'new wave' of computing.

Lane gave the database supplier's rationale for the strategy: 'We see Oracle 8i as being to the internet what Windows was to the PC. It industrialises it and brings a level of standardisation that was not there before. We're calling it a platform because we look at it in the same light as an operating system - a means to develop and deploy applications according to the internet model of computing. That the internet is the platform is the key message,' he said.

But, he claimed, Oracle 8i was more than an OS because users could not develop applications using an operating system.

'We can make an OS less relevant. Our aim is to hide OS differences and, unlike our database rivals, we're including OS services in the database. We want to present a platform so Java programmers can look at Oracle just as C++ and Visual Basic programmers look at Microsoft today,' Lane said. 'We're building our business on Oracle 8i, like our applications, consulting and Business Online (Oracle's applications outsourcing venture).'

But Larry Ellison, chairman and chief executive of Oracle, claimed the database vendor already dominated the internet and e-commerce space.

'This is great for Oracle. We're the choice of nearly every Website and e-commerce site in the world. Oracle has 90 per cent of the market, IBM has 10 per cent and even Microsoft's WebTV site runs on Oracle. Oracle dominates this space,' he asserted.

In another development, Oracle has made a $43 million bid for Concentra, in an effort to fill a gap in its e-commerce product lines.

Concentra, based in Boston, sells Configurator, an engine traditionally used with manufacturing applications to enable sales staff to configure products for customers.

Oracle, however, plans to broaden out the browser-based product and integrate it with its own Web storefront, manufacturing applications and front office packages. It will then offer it to users so they can make their own product choices.

Ron Wohl, senior vice president of applications development at Oracle, said: 'We're trying to fill a key technology gap. We want to build and deliver at the lowest cost. There are three elements to this - introducing flow manufacturing to help users build mass customisation products; integrating the front office, including sales, services and the Web storefront; and the third is Configurator'.

Concentra was a member of Oracle's Alliance programme and the database supplier has begun integrating the product with its own package. Configurator will also be sold as a standalone option.

Concentra is a publicly-held company currently generating about $10 million sales. The majority of its 100 staff will transfer to Oracle, although some administrative staff will be made redundant. The deal is expected to close before the end of the year, subject to board approval.