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Can Fusion Bring It All Together for Oracle

October 30, 2006
Related Topics: Human Resources Management Systems (HRMS/HRIS), Featured Article
Oracle says its effort to merge the best of several HR software products is on track, but others suggest that the initiative, Project Fusion, is closer to a state of confusion.

    Gretchen Alarcon, vice president of human capital management product strategy at Oracle, says the company is on schedule to deliver an initial set of Fusion HR applications next year, and an entire set of products in 2008.

    "It’s going very well," she says, adding that the company is figuring out what features and functions will be included in that 2008 release.

    The Redwood Shores, California-based firm also says it has erased customer fears that Fusion would force them into costly upgrades. A few months ago, the company announced its "Applications Unlimited" program, in which it promised to continue developing its individual Oracle, PeopleSoft, J.D. Edwards and Siebel product lines indefinitely.

    But some view that commitment as a possible problem, with Oracle potentially spreading itself too thin. And Oracle hasn’t met customer expectations for clear guidelines about what features will be included in Fusion, says Jim Holincheck, an analyst at market research firm Gartner.

    "It’s definitely been frustrating for customers that there isn’t clarity as to what the road map is," he says.

    Oracle, though, says it has "clearly explained the Fusion road map" at all its customer user conferences, starting with a meeting in October 2005.

    One way or another, Oracle’s quest to blend its own applications with others it has acquired, including PeopleSoft Enterprise software, will likely have a major effect on many organizations and on Oracle’s stature in the HR software market.

    Two recent studies differ on whether Oracle was first or second last year in HR application revenue worldwide. But both reports indicate Oracle is losing ground to rival SAP.

    Oracle disputes it is losing momentum, and in its most recent quarter posted 80 percent revenue growth for new software licenses in applications—which include HR products and software in other categories such as financial management.

    The company also touts Fusion as the next generation in business software. It says Fusion applications, which are slated to include products for areas beyond human resources, not only will include the best features of individual Oracle product lines, but also incorporate new functionality, work well with non-Oracle software and be easy to modify as business requirements change.

    Oracle said it couldn’t make predictions about Fusion’s revenue potential. It also declined to give details on the company size it is targeting with the applications. Holincheck said Fusion, at least initially, likely will be most attractive to customers with more than 2,500 employees.

    SAP, not surprisingly, predicts problems with Fusion. Mark Lange, head of human capital management solutions for SAP in North America, says Fusion is challenging technically and that customers are anxious about whether Oracle is investing enough in HR applications, partly because the company has pledged to bolster several products. "They’re quite reasonably concerned when a vendor promises to be all things to all users," he says.

    Lange isn’t alone in arguing Oracle will have a hard time delivering all the software projects it has promised.

    "It will be a tremendous challenge for them to develop, market and sell upwards of four major product lines," says Christa Degnan Manning, an analyst at research firm AMR Research.

    But Oracle, which has more than 65,000 employees, says it can keep delivering product upgrades even as it brings Fusion to market.

    "The sheer size of the company—and its $2 billion annual research and development budget—allow the company to commit the resources necessary to building out its product lines," Oracle said in a statement.

Workforce Management, October 9, 2006, p. 34 --Subscribe Now!

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