Defusing Oracle’s Fusion?

usion, business software giant Oracle’s project to blend the best of its various product lines into a new set of applications, once was the buzz of the industry.

    But now, nearly four years after Oracle unveiled its Fusion plan for HR and other applications, the effort is met more with murmurs than shouts.

    Oracle’s schedule for Fusion applications appears to have slipped, and it’s still not clear when a full set of human resources Fusion products will be released. But Oracle has dodged any large-scale revolt from its customers conceringthe Fusion confusion, in part by focusing on improvements to its existing Oracle E-Business Suite and PeopleSoft products.

    In addition, many organizations are still figuring out how to make their HR operations more strategic, which limits their ability to consume a lot of advanced capabilities in HR software, says Christa Degnan Manning, analyst at AMR Research. At the same time, she says, the late arrival of full-blown Fusion helps Oracle sell its existing products for a longer period as well as pitch the few Fusion applications that are coming online, such as a tool for managing job candidates.

    Deemphasizing Fusion, in other words, may be smart for Oracle.

    "It’s potentially in their best interest to have a slow, gradual rollout of Fusion," she says.

    But more recently, Oracle has been less definite about its plans for Fusion. Oracle declined to answer questions for this story, including a question about when the full set of HR Fusion applications will be released.

    One sign of Fusion’s subdued status is Oracle’s Fusion applications Web site . Rather than begin by focusing on attributes of Fusion applications or heralding their arrival, the site’s "overview" starts by discussing the company’s "applications unlimited" program. That’s Oracle’s promises to continue upgrading its current product lines, including the PeopleSoft, Siebel and Oracle E-Business Suite lines.

    Jim Holincheck, analyst with research firm Gartner, attended Oracle’s recent OpenWorld user conference in San Francisco and concluded that the complete set of Fusion applications isn’t coming immediately. "There will be no suite of Oracle Fusion Applications delivered in 2008," Holincheck wrote in a blog item about the conference .

    When it first announced the Fusion project, Oracle said the new applications would be built using "open standards." This refers to technologies designed to make it simpler for different applications to talk to one another. During the past few years, Oracle also has highlighted "Fusion Middleware," which is a layer of software for tying applications together.

    Last year, Oracle officials outlined certain features of the coming Fusion applications. These included "software as a service" readiness—meaning the applications can be delivered over the Internet besides being installed on a customer’s internal computers.

    Software as a service is one of the trends that have come on strong in the HR technology arena in recent years.

    Another is "Web 2.0," the idea that social networking and other collaborative, interactive tools first seen in the consumer Internet world ought to be tapped by corporations. Oracle sought to capitalize on that trend with its recent announcement of software dubbed Beehive. Introduced at Oracle’s September OpenWorld event, Beehive aims to let employees team up through electronic workspaces as well as calendar, instant messaging and e-mail tools.

    Web 2.0 influence also could be seen at a conference session on Fusion, according to Degnan Manning. She says an Oracle feature called "person gallery" provides an organization-chart view of a company, with visual representations of employees.

    The software allows for a description of an employee’s status, such as working at home. Along these lines, consumer instant messaging programs like Yahoo Messenger let users set their status.

    In developing its Fusion applications, Degnan Manning says, Oracle seems to be focusing in on managers and employees—who ultimately do the work of an organization. Fusion applications initially may not cover the traditional HR processes.

    But, she says, "is what they have compelling? Yes."

    Workday, led by former PeopleSoft founder Dave Duffield, has produced a set of software-as-a-service business applications designed to give organizations fewer technology hassles and greater business agility.

    In addition, the uncertainty around the arrival of Fusion applications makes it harder for Oracle customers to plan for their HR technology, Holincheck says. But customers seem to be more interested in learning about coming versions of PeopleSoft and Oracle E-Business software, he says.

    The absence of Fusion applications, he argues, may be more a molehill than a mountain.

    "For existing customers, I don’t think it’s terribly frustrating," Holincheck says.

    Jason Corsello, a vice president at consulting firm Knowledge Infusion whose blog is featured on Workforce.com, takes a more critical view.

    "Many enterprise clients I have spoken to over the past 3+ years have had a postponement (or ‘do nothing’) strategy in place, anticipating Fusion," Corsello wrote in a recent blog item. "Thankful for me, I don’t have to make any of these decisions because I don’t own an Oracle application. For many, though, I would argue their Oracle application assets are quickly turning into liabilities because of the undelivered Fusion promise!"

    Still, Corsello concedes Oracle’s strategy has been good for the firm.

    One comment to his blog argued that Oracle is wise to take it slow with Fusion, in part because of Oracle’s "huge cash cows" of annual software maintenance fees and "a relatively happy, contented" PeopleSoft client base. Corsello responded in part by saying that Oracle is "smart enough to know they have a committed customer base (note I did not mention satisfied)!"