Application vendors and SOA

In an article looking forward to trends in 2006, an Oracle executive raises an interesting point. The applications market for large enterprises has now essentially reduced to a field of two giants, SAP and Oracle, with a long gap now in size between them and vendors in particular niches such as supply chain or customer relationship management. Yet CIOs are demanding, as he puts it, “hot pluggable” applications, which is another way of saying easy inter-operability between applications. For example a company might like to be able to call up a specialist pricing application from a small vendor within their SAP or Oracle ERP application.

This creates a tricky dynamic for Oracle and SAP, who ideally would like to expand their own footprint within customers at the expense of each other (and other vendors). If SOA actually works, then they will be enabling customers to easily switch out the bits of their applications that customers dislike in favor of others, which is not in their interest. Of course Oracle also sells a middleware stack, and now SAP has entered the fray with Netweaver. By doing so they hope to switch the ground: if someone is going to call up a non-SAP application from within SAP, then SAP would rather that they did it using Netweaver protocols than a rival stack, such as IBM Websphere. Indeed they would really prefer that people didn’t do this at all, but instead just use more and more SAP modules. The same goes for Oracle. Hence these two application vendors need to be seen to be playing the game with regards to inter-operability, yet it is actually more in their own interest if this capability does not work properly. IBM, who does not sell applications, is in a much cleaner position here, since they can only benefit by having genuine application inter-operability via Websphere, whoever the application vendors are. IBM does not sell applications, so only has a vested interest in selling more middleware in this context (and of course the consulting to implement it).

Customers need to be very aware of the desire by the application vendors to lock them into their offerings through their middleware, and should question how genuine the commitment of application vendors to true inter-operability really is. Just as turkeys don’t vote for Christmas, why would a dominant application vendor really want their application to be split into bite-sized pieces that could be each attacked by niche application vendors that would not have the reach to challenge their monolithic applications without this capability?

Of course Oracle and SAP cannot actually say this out loud. IBM (and other independent vendors like Tibco), however, should, and potentially this ought to give them an edge in the coming middleware wars.

3 thoughts on “Application vendors and SOA”

  1. I agree…however even today, the best set of specialized tools that deliver the business needs are so hard to deploy and integrate, it still makes sense to lock into one platform and product. Its like between the devil and the deep sea, only the devil isnt a 800 lb gorilla, just an ERP vendor.

    Email me at if you wish further exchanges. Thanks.

  2. Thanks for you rcomment. Indeed if the customer commits to Fusion or Netweaver only then they will inded be locked into (respectively) Oracle and SAP’s platforms. Indeed that surely is why Oracle and SAP are pushing these middleware offerings, but why customers should, in my view, look at alternatives that keep their options more open.

    The other point that you raise is very interesting. A key question is just how good the coverage actualy is in Oracle and SAP. As discussed in the blogh elsewhere:

    there are clearly large gaps in functionality. You are right in that the wall-to-wall ERP approach has largely won out over best of breed, but that is because of the alluring message of “simplicity” that it has for CIOs. It is less clear that companies are actually getting what they really want out of their ERP systems, and I doubt that either of these mega vendors are really up to delivering across all the different business processes and industries. Hence I think there will be pressure from business people to deploy specialised tools that deliver to their needs, even though this will conflict with the “single vendor” approach often taken by CIOs.

  3. There are 2 aspects to this:
    1. Is Oracle or SAP getting real “exit barrier” from the platform or their application modules? The answer is that it is the platform that makes it hard for the customer to switch. Of course he can take other pieces of software from other vendors, but ultimately they will have to run on Netweaver or Fusion only.

    2. How do Oracle and SAP ensure most of their stack runs at a customer site and not some hotch potch “best of breed” formula? Simple. Give the customer the choice to deploy whatever he wants. We have been that road, when the customers tired best of breed and it didnt work. The situation isnt different today. You have to be very courageous, or foolish, to try the best of breed thing again, even with Fusion and Netweaver and all the interoperability.

Comments are closed.