Oracle wants users to hand over app management

IDG News Service - Putting muscle behind the outsourcing model of application management, Oracle Corp. said it is starting an international campaign to persuade customers to hand over maintenance of their Oracle software.

"We have decided to go in and actively go after our installed base and tell them that this is a better way to [run Oracle applications]," said Jeff Henley, Oracle's chief financial officer, speaking to financial analysts in New York yesterday. "We will put the sales guys on it and invest heavily in capacity."

Businesses can save significantly on IT costs and improve product and service response time by as much as 50% by letting Oracle manage and maintain its own software, company officials said, citing costs savings of 31% to 84% from existing customers.

Stienstra Holding BV, a Heerlen, Netherlands-based real estate business that uses several Oracle 8.17 databases, was approached last year by Oracle with an offer of database management outsourcing. Stienstra declined then and has no intention of giving in this time around, said Marco Schreijen, e-commerce manager at Stienstra.

"Outsourcing means losing a lot of flexibility that we currently have with our own database administrator," said Schreijen. "We would lose database administrator rights if we let Oracle take over. We can't afford to have to wait for Oracle if something needs to be done."

Security is another issue for Stienstra. The company manages 13,000 homes for rent, sells homes and offers insurance and mortgage services.

"We don't want our confidential information to get out. We check our own staff, but you never know who you are dealing with at Oracle, no matter how strict your contract is on security," Schreijen said.

Oracle offers two forms of outsourcing: one where the software is hosted on Oracle systems in an Oracle data center, and another where Oracle manages software installed on the customer's systems at the customer's location, said Timothy Chou, president of E-Business Suite outsourcing at Oracle.

Customers who choose to have Oracle host and manage the applications pay 5% per month of the list license price in addition to base license, product support, update and other standard costs. Those who choose to have applications managed by Oracle but run at their own site on their own systems pay 3% per month of the list license price in addition to the other costs, Chou said. As a promotion for users signing up for the on-premises service, Oracle is offering unlimited software upgrades for the next five years.

Oracle isn't doing anything new, according to Eamonn Kennedy, a research