Global CIO: Oracle, SAP, And The End Of Enterprise Software CompaniesGlobal CIO: Oracle, SAP, And The End Of Enterprise Software Companies

"We sell these applications a piece at a time rather than a big rip-and-replace strategy, so when people aren't doing big ERP buys--by the way, ERP's a rather mature market--we think we're competing very well in ERP but it is a mature market."

Oracle's diversifying into hardware but is also rapidly cranking up the support/services side of that business with only once choice for customers: premium level. But aside from hardware, think of where Oracle and SAP have terrific opportunities to impart new value to customers:

1) Aggregating, organizing, and sharing deeper industry knowledge, more-insightful best practices, more expertise in cutting-edge business processes.

2) As I mentioned in Wednesday's column, Global CIO: Larry Ellison's Nightmare: 10 Ways SAP Can Beat Oracle, SAP has compiled an unprecedented database from 4,000 clients that would offer incredible value to SAP customers in the form of intelligence and insight and expertise rather than packaged software: ". . . an executive with the unprecedented title of Chief Value Officer made some sweeping promises about how SAP is prepared to arm customers with intense new insights into best practices, benchmarks, customer insights, process optimization, and 'creating value along the entire IT investment lifecycle'. . . . No, the real impact--the real import--of SAP's new vision is not what it might mean to Oracle but rather what it means for CIOs charged with raising performance while lowering costs, with rebuilding their enterprise architecture on the fly while also becoming revenue generators, and with squeezing latency out of every facet of the company's operations while also making everything more flexible." Indeed, Chief Value Officer Chakib Bhoudary said SAP can offer unprecedented insight from a database he and his team have compiled of 4,000 SAP customers' processes, best practices, and benchmarks."

3) Co-creating products with customers. SAP and one of its big energy-industry customers, Valero, collaborated on the development of applications that went well beyond the company's standard energy-industry suite, and provides a great example of how these huge "software" companies will be evolving more toward intellectual-capital companies. Some of that IP will be sold as packaged software, other parts will be rolled into services, and still other parts will, as in the case with Valero, be blended in with a customer's expertise and needs to create a truly unique asset. One of the concerns some companies have had about big enterprise apps is that if the same product is sold to multiple competitors in the same market, how can any of them expect to generate competitive differentiation out of such a widely available product?

4) The move to non-premises products: with each company delivering and creating new on-demand and other types of non-premises (as opposed to on-premises) software, they're beginning to sell even more services as opposed to more software. After all, SaaS means software as a service, not as software.

5) Oracle and SAP haven't said anything about this next idea, so it's just speculation on my point, but I think a very likely next step for Oracle and SAP after having built the software "plumbing" used by hundreds of thousands of companies will be to begin filling those pipes with information and information services. It is said that content is king, but distribution is the power behind the throne—in this case, Oracle and SAP's applications and other technologies give them ideal distribution, so it will be interesting to see if they choose to try to combine that with various types of content running through those distribution systems.

On that last point, I fully realize the knee-jerk reaction is to say that Oracle and SAP are in the business of managing and manipulating information and content, rather than owning and marketing and enhancing it. But that's a very short-sighted outlook because every major IT vendor is evolving rapidly to meet the new and emerging needs of its customers and prospects and any company that chooses to stay locked in the past is headed for disaster.

After all, the numbers don't lie, and the numbers say SAP and Oracle are already services companies.

RECOMMENDED READING: Global CIO: Oracle's Larry Ellison Mixes Fiction With Facts On SAP Global CIO: Larry Ellison's Nightmare: 10 Ways SAP Can Beat Oracle Global CIO: Oracle CEO Larry Ellison Declares War On IBM And SAP Global CIO: In Oracle Vs. SAP, IBM Could Tip Balance Global CIO: Oracle's Dazzling Profit Machine Threatened By Rimini Suit Global CIO: 10 Things SAP's Co-CEOs Should Focus On Global CIO: An Open Letter To SAP Chairman Hasso Plattner Global CIO: BP's Extraordinary Transformation Led By CIO Dana Deasy Global CIO: How 22% Annual Fees For You Equal 51% Margins For Oracle Global CIO: Oracle-Sun A Bad Deal? Only A Fool Would Say That Global CIO: Where Do Oracle's Profits Come From? Global CIO: Oracle CEO Larry Ellison's Goodbye Letter To European Customers Global CIO: Why SAP Won't Match Oracle's 22% Maintenance Fees Global CIO: An Open Letter To SAP CEO Leo Apotheker Global CIO: Have Oracle And SAP Hit Tipping Point With 22% Fees? Bob Evans is senior VP and director of information's Global CIO unit.

To find out more about Bob Evans, please visit his page.

For more Global CIO perspectives, check out Global CIO,
or write to Bob at [email protected].