Alright...this will be a Soap-Opera-Class Entertaining and Interesting Story to track all my life, as most of us do, As the dust never seems to settles in the battle of ERP dominance between Oracle and SAP. This would be long story made short with Quotes to hear from heads of both companies...and don't make any judgments from them since the twist in the story is still to unfold and will be long time before we can conclude...Check and Mate.
Larry Ellison, 62, CEO of Oracle, those who know him, say, He is a Master of Applying and Executing My all time most favourite Book -The Art of War-Sun Tzu’s precepts to the modern-day warfare of business competition.
One of basic tenet from the book notes,"A smaller force can beat a larger one by causing its rival to respond before thinking." exactly so..
Larry Ellison, 62, CEO of Oracle, those who know him, say, He is a Master of Applying and Executing My all time most favourite Book -The Art of War-Sun Tzu’s precepts to the modern-day warfare of business competition.
One of basic tenet from the book notes,"A smaller force can beat a larger one by causing its rival to respond before thinking." exactly so..
Ellison Recent Key Remarks of SAP and its CEO:
"SAP appears to be rethinking their strategy as they lose application market share to Oracle and confront the difficulties of moving their application software to a modern Service Oriented Architecture [SOA],” said Ellison in the release. “They’ve just announced that they are delaying the next version of SAP applications until 2010. That’s a full two years behind Oracle’s scheduled delivery of our SOA Fusion applications.
And now [SAP CEO Henning] Kagermann is talking about an acquisition strategy to augment SAP’s slowing organic growth.These are major changes in direction for SAP."
Ellison's comments were "a complete misrepresentation'' of SAP's products and strategy, Walldorf, Germany-based SAP said the same day. Only once before, in 2000 when Oracle said it was first in sales of business-management software, had SAP issued a statement responding to Oracle claims. "Both times the distortion of facts about SAP were so significant we had to clear the record,'' SAP spokesman William Wohl said in an interview.
Now.. Why did Ellison do this ?
Ellison's tactics are meant to validate Oracle's place next to SAP.Ellison's efforts were aided by SAP in July, when SAP CEO Henning Kagermann said his company lost market share in the $25 billion industry for business-management software to Oracle and Microsoft Corp.
SAP never should have reacted to Oracle's statements because it makes customers and investors view Oracle as a peer to SAP, when they aren't.
"They are trying to set the boundaries of the discussion,'' Daniel Sholler, lead SAP analyst at Gartner Inc., a Stamford, Connecticut-based research firm, said in an interview.
"It has no effect on customers except to make it clear that Oracle should be compared to SAP.''
SAP and Oracle are in the middle of overhauling their software toward a so-called Service-Oriented Architecture, or SOA, which allows customers to upgrade and change management software more easily. SAP said all of its products will be able to run on the new platform by next year, and will only offer enhancements to that platform until 2010.
Actual Market Share:
According to Boston-based AMR Research, SAP had 20.6 percent of the applications software market in 2005, up from 19.5 percent in 2004. Thanks to $20 billion of acquisitions in two years, Oracle's market share almost doubled in 2005 to 10.1 percent from 5.2 percent.
The $10.6 billion PeopleSoft acquisition in January 2005 and the $5.85 billion purchase of Siebel a year later made Oracle the second-biggest maker of business-management software, behind SAP. In September, Ellison said the purchases allowed Oracle to "leapfrog'' over SAP in several industries, including retail, banking and telecommunications.
Ellison has also employed Sun Tzu's statement,"All warfare is based on deception'' in asserting that Zale, which SAP announced as a new customer about a year ago, will switch to Oracle because, the CEO said, the German rival "made some promises we knew they couldn't deliver.''
Oracle reported application license sales grew 80 percent in the first quarter. Stripping out sales from Siebel and other recent acquisitions, application license sales gained 47 percent.
Software license revenue, is a key barometer of future prospects as the company gains further revenue in the future off of maintenance and consulting.
“We’re rapidly taking applications market share from SAP,” Oracle President Charles Phillips said in the release. “Q1 was the second consecutive quarter that Oracle’s applications new license sales growth was 80% or more. That’s ten times SAP’s 8% new license sales growth rate in their most recently completed quarter.” taking absolute joy in poking its finger in the eye of rival SAP.
Charles Di Bona, an analyst with Sanford C. Bernstein, disagrees with Oracle's math. Factoring in Siebel Systems' third quarter sales, before its acquisition, Di Bona estimates Oracle's organic growth for the quarter at 2.2 percent.
Q Results For Oracle :
For the fiscal first quarter ended August 31 which blew away expectations across the board. Revenue totalled $3.6 bilion, nicely ahead of the Street consensus of $3.47 billion. The company reported 13 cents a share in GAAP profits, or 18 cents on a non-GAAP basis; both were several pennies ahead of Street projections. Database and license revenue grew 15%; application revenue grew 80%; services revenue was up 33%.
In its press release announcing the numbers, Oracle President and CFO Safra Catz said that the company “exceeded our guidance on every metric…we are now in year three of our five-year plan targeting EPS growth at 20% per year.”
Important Statments from Oracle :
"We think Oracle’s current strategy is helping us overtake SAP and win market share. Let me start with the first key success factors for SOA applications, and that is middleware... SAP is sticking with a proprietary approach to middleware while Oracle has adopted a completely standards-based approach from middleware and our next generation of fusion applications.
As the market more deeply embraces service oriented architecture, SAP’s non-standard ABAP approach to middleware is hurting their sales and helping us win share...
SAP has good industry knowledge and products in some industries, like oil and gas, but they lack industry-specific knowledge and products in most other industries.... Oracle’s acquisition strategy has moved us ahead of SAP in several industries -- banking, telecommunications, retail, and so on. Oracle will continue to acquire industry knowledge and products. We believe that SAP must do the same, or SAP will become progressively less competitive in several industries and continue to experience slowing organic growth." explians Larry Ellison.
"Well, I think it’s hard for our share gains to accelerate. I mean, SAP’s growth in their most recent quarter was 8% and our growth in our last two quarters was over 80%, so I cannot imagine that our rate of gain will accelerate, but I think our rate of gain against SAP will stay very, very high. I think it includes gains in ERP, gains in CRN, and gains in industry-specific applications" Ellison remarks.
The Other Side of Story: 85% win Rate for SAP
Oracle claimed 88 head-to-head wins against SAP.
Leo Apotheker an independent analyst team gave the detail of the analysis of head-to-head between SAP and Oracle.
"We chose not to compete on one of these deals. Six were not competitive situations, and all occurred before Q107 of August quarter, first quarter. Twelve of them we have no record on, so I cannot comment because we did not compete. We were not in the game. Seven were not a win against us. They must have counted some other wins. Four were indeed losses for us, so they did win four against us.
Just to put things into perspective, in this quarter, we had 247 competitive head-to-head against Oracle, of which we won 209. That is an 85% win rate."
"What we do is we take our sales figures. We compare it to the Oracle Siebel entity last year, compared to the combined entities this year, then you know that SAP has really gained market share again." explained Henning Kagermann, CEO, SAP.
Q Results for SAP:
SAP said net income rose to 388 million euros ($486 million), or 1.27 euros a share, with revenue up 11% to 2.2 billion euros.Software license revenue, a key barometer of future prospects as the company gains further revenue in the future off of maintenance and consulting, grew 17% to 691 million euros in the third quarter. Analysts had expected SAP to generate 14% growth.
License revenue had grown just 8% in the second quarter. “We reported a strong third quarter with an impressive win rate and double-digit software revenue growth in all regions,” said Henning Kagermann, chief executive, in a statement.
Oracle, SAP’s leading rival, reported a 19% profit rise in the quarter ended Aug. 31. SAP fared well in Oracle’s home market, with U.S. license revenue up 1 5%.
“This long track record of outstanding performance can be largely attributed to our successful strategy of growing SAP organically. This disproves our major competitor’s claim,” Kagermann said in a clear reference to Oracle.
Conclusion :
Oracle's enthusiasm for bad-mouthing the competition doesn't help the industry.
Oracle's made full-page advertisement that mimicked SAP's ad campaign.
The Oracle ad said: "Computer Associates (CA) Runs SAP.''
The implication was that CA's well-publicized troubles, including a $2.2 billion accounting fraud, were connected to the SAP software it uses. CA has applications from both rivals. These kinds of guerrilla marketing tactics, combined with puffed up rhetoric and carpet bombings are tedious distractions.
But ultimately, knowing how the enterprise software sales cycle works, experts guess, the playing field is far more balance than what either side contends.
For a while, SAP is just dominating Oracle (particularly in the U.S.).
Ellison has also employed Sun Tzu's statement,"All warfare is based on deception'' in asserting that Zale, which SAP announced as a new customer about a year ago, will switch to Oracle because, the CEO said, the German rival "made some promises we knew they couldn't deliver.''
Oracle reported application license sales grew 80 percent in the first quarter. Stripping out sales from Siebel and other recent acquisitions, application license sales gained 47 percent.
Software license revenue, is a key barometer of future prospects as the company gains further revenue in the future off of maintenance and consulting.
“We’re rapidly taking applications market share from SAP,” Oracle President Charles Phillips said in the release. “Q1 was the second consecutive quarter that Oracle’s applications new license sales growth was 80% or more. That’s ten times SAP’s 8% new license sales growth rate in their most recently completed quarter.” taking absolute joy in poking its finger in the eye of rival SAP.
Charles Di Bona, an analyst with Sanford C. Bernstein, disagrees with Oracle's math. Factoring in Siebel Systems' third quarter sales, before its acquisition, Di Bona estimates Oracle's organic growth for the quarter at 2.2 percent.
Q Results For Oracle :
For the fiscal first quarter ended August 31 which blew away expectations across the board. Revenue totalled $3.6 bilion, nicely ahead of the Street consensus of $3.47 billion. The company reported 13 cents a share in GAAP profits, or 18 cents on a non-GAAP basis; both were several pennies ahead of Street projections. Database and license revenue grew 15%; application revenue grew 80%; services revenue was up 33%.
In its press release announcing the numbers, Oracle President and CFO Safra Catz said that the company “exceeded our guidance on every metric…we are now in year three of our five-year plan targeting EPS growth at 20% per year.”
Important Statments from Oracle :
"We think Oracle’s current strategy is helping us overtake SAP and win market share. Let me start with the first key success factors for SOA applications, and that is middleware... SAP is sticking with a proprietary approach to middleware while Oracle has adopted a completely standards-based approach from middleware and our next generation of fusion applications.
As the market more deeply embraces service oriented architecture, SAP’s non-standard ABAP approach to middleware is hurting their sales and helping us win share...
SAP has good industry knowledge and products in some industries, like oil and gas, but they lack industry-specific knowledge and products in most other industries.... Oracle’s acquisition strategy has moved us ahead of SAP in several industries -- banking, telecommunications, retail, and so on. Oracle will continue to acquire industry knowledge and products. We believe that SAP must do the same, or SAP will become progressively less competitive in several industries and continue to experience slowing organic growth." explians Larry Ellison.
"Well, I think it’s hard for our share gains to accelerate. I mean, SAP’s growth in their most recent quarter was 8% and our growth in our last two quarters was over 80%, so I cannot imagine that our rate of gain will accelerate, but I think our rate of gain against SAP will stay very, very high. I think it includes gains in ERP, gains in CRN, and gains in industry-specific applications" Ellison remarks.
The Other Side of Story: 85% win Rate for SAP
Oracle claimed 88 head-to-head wins against SAP.
Leo Apotheker an independent analyst team gave the detail of the analysis of head-to-head between SAP and Oracle.
"We chose not to compete on one of these deals. Six were not competitive situations, and all occurred before Q107 of August quarter, first quarter. Twelve of them we have no record on, so I cannot comment because we did not compete. We were not in the game. Seven were not a win against us. They must have counted some other wins. Four were indeed losses for us, so they did win four against us.
Just to put things into perspective, in this quarter, we had 247 competitive head-to-head against Oracle, of which we won 209. That is an 85% win rate."
"What we do is we take our sales figures. We compare it to the Oracle Siebel entity last year, compared to the combined entities this year, then you know that SAP has really gained market share again." explained Henning Kagermann, CEO, SAP.
Q Results for SAP:
SAP said net income rose to 388 million euros ($486 million), or 1.27 euros a share, with revenue up 11% to 2.2 billion euros.Software license revenue, a key barometer of future prospects as the company gains further revenue in the future off of maintenance and consulting, grew 17% to 691 million euros in the third quarter. Analysts had expected SAP to generate 14% growth.
License revenue had grown just 8% in the second quarter. “We reported a strong third quarter with an impressive win rate and double-digit software revenue growth in all regions,” said Henning Kagermann, chief executive, in a statement.
Oracle, SAP’s leading rival, reported a 19% profit rise in the quarter ended Aug. 31. SAP fared well in Oracle’s home market, with U.S. license revenue up 1 5%.
“This long track record of outstanding performance can be largely attributed to our successful strategy of growing SAP organically. This disproves our major competitor’s claim,” Kagermann said in a clear reference to Oracle.
Conclusion :
Oracle's enthusiasm for bad-mouthing the competition doesn't help the industry.
Oracle's made full-page advertisement that mimicked SAP's ad campaign.
The Oracle ad said: "Computer Associates (CA) Runs SAP.''
The implication was that CA's well-publicized troubles, including a $2.2 billion accounting fraud, were connected to the SAP software it uses. CA has applications from both rivals. These kinds of guerrilla marketing tactics, combined with puffed up rhetoric and carpet bombings are tedious distractions.
But ultimately, knowing how the enterprise software sales cycle works, experts guess, the playing field is far more balance than what either side contends.
For a while, SAP is just dominating Oracle (particularly in the U.S.).
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