Thursday, March 27, 2008 / Companies / IT - Oracle says customers delaying spending / Companies / IT - Oracle says customers delaying spending

Oracle says customers delaying spending
By Richard Waters in San Francisco

Published: March 26 2008 22:42 | Last updated: March 26 2008 22:42

Oracle on Wednesday said some corporate customers had delayed their spending on new software in recent weeks, triggering a 7 per cent fall in its shares in after-market trading as Wall Street suffered another bout of nerves about a wider slowdown in technology demand.

However, company executives also said the pipeline of potential new business entering the all-important fourth quarter of the company’s fiscal year was much stronger than usual at this stage.

Also, stronger profit margins enabled the database software maker to hit earnings forecasts in its latest quarter, with net income rising 30 per cent to $1.3bn, or 26 cents a share.

Most big technology companies do not report earnings for another month, making Oracle’s figures a closely watched barometer of broader IT demand.

The spending delays that took hold in February, at the end of Oracle’s third fiscal quarter, left the company’s revenue growth for the quarter at 15 per cent after stripping out the effects of the falling US dollar, slower than the 17 per cent growth Wall Street had been expecting on this basis. Including currency changes, Oracle reported revenues of $5.3bn, up 21 per cent from a year before, helped partly by acquisitions.

”Customers got a little more cautious in the light of what’s happening in the financial markets,” said Safra Catz, Oracle’s co-president. “We just saw a few things get delayed a little bit.” Some customers added “a second level of approval” before signing off on purchases, slowing buying decisions, she added.

The shortfall was particularly marked in Oracle’s application software business, where it has mounted a series of acquisitions to compete more aggressively against German rival SAP. Sales of new application software licences grew only 2 per cent in constant currency terms, to $415m, or some $100m short of Wall Street forecasts.

Ms Catz said Oracle had seen “a massive increase in the pipeline” of potential new business for the fourth quarter, which represents a disproportionate share of its total annual sales. On the basis of the greater caution shown recently by customers, Charles Phillips, co-president, said Oracle was assuming that the proportion of these potential deals that are completed in the current quarter would be five percentage points lower than normal.

Despite that more conservative expectation, Oracle said it expected revenues to grow between 10-20 per cent in the current quarter, with pro forma earnings per share up 14-18 per cent. “The could be some upside – quite a lot of upside – to the guidance, but we want to be cautious,” said Ms Catz.
Copyright The Financial Times Limited 2008

Friday, March 21, 2008

Of Terabytes, March Madness, and Network Performance

Terabytes, March Madness, and Network Performance
Friday, March 21, 2008
Bruce Richardson

If you haven’t had a chance yet, read Derek Prior’s recently published piece on “The ERP Terabyte Club.” The only requirement for membership is to have an ERP production database with at least a trillion bytes.

For his research, Derek surveyed 67 SAP customers in conjunction with the American SAP User Group (ASUG). Their average databases were 3.7TB and growing by 10 to 100 gigabytes per month. The largest ERP production database uncovered was 18TB.

Many of the survey respondents are running large, single global instances of SAP and supporting up to 11,120 logged-on ERP users. The dependence on the global instance puts increasing pressure on IT to reduce the planned downtime windows needed for emergency fixes, problem resolution, upgrades, and enhancements.

Reading his research gave me a great sense of déjà vu. In the early days of ERP, clients would often call us for help on sizing up the computing power and storage needed to run their brand new applications. Sadly, this usually happened after they had already purchased the hardware. This issue went away as vendors and integrators gained more experience with the new software.

The issue surfaced again when SAP introduced SAP BW, its business information warehouse, in 1998. Early adopters called again, asking for assistance in sizing the processing power and database needed to effectively run BW.

Databases growing like kudzu

Until I read Derek’s piece, I had assumed there were no additional issues. Not true. It turns out Lora Cecere has been talking about this with our consumer goods clients over the past few years. She had been warning them that they needed to rethink their database strategies as they began pulling global order line-item data into their SAP systems.

Her concern was verified by a quick discussion with IBM executives that described a current customer project where the company is testing SAP NetWeaver and SAP BW sitting on top of a very large DB2 implementation. We will provide the details as soon as IBM obtains its customer’s permission.

The IBM team also warned that database sizing concerns are not limited to consumer goods companies, with consumer electronics and telecommunications companies facing similar issues. If you look at several of the large cell phone companies offering games, music, ring tones, television programs, movies, sports, and other content and services, these transactions are also being stored in SAP. It doesn’t take long before the production database exceeds 30TB to 35TB.

Affecting the network too?

When talking to one CIO about Derek’s research, he asked if other companies were having network problems too. He was concerned about running out of capacity. Ironically, his question came on the same day that The Boston Globe ran the story “Analysts Predict Internet Congestion.” One professor said that digital traffic is growing 50% a year, which is no doubt aided by YouTube and other multimedia applications. As a result, firms are predicting that demand will exceed network capacity by 2011.

But we may not have to wait three years. According to, the annual March Madness college basketball tournament may drive network performance down to dial-up levels as employees watch video clips or entire games on their PCs. While I don’t plan to watch any streaming video (my alma mater didn’t even make the NIT), I did find it curious that automatically linked my picks to my Facebook account.

Join us April 2nd for our first SAP Terabyte Club webcast

I have asked Derek Prior to join me in Boston on Wednesday, April 2, at 11:00 a.m. EDT, for our first webcast focused exclusively on managing large production ERP databases. During the call, Derek will share findings from the study, provide insights on what it means for CIOs and SAP Basis administrators, and explain how SAP Solution Manager might help address part of your concerns. You can register here.

In the meantime, do you share my concerns? Is your database spreading like kudzu? Are you seeing a causal relationship between growing databases and network performance? Will more widespread adoption of business intelligence and performance management software have any affect on the size of your database or your attempts to manage it? Finally, who do you have winning the NCAA tournament?

As always, I welcome your ideas and comments—

© Copyright by AMR Research, Inc.

Wednesday, March 19, 2008

What’s new: SAP woos mid-sized enterprises

What’s new: SAP woos mid-sized enterprises
By Geoff Nairn

Published: March 19 2008 00:28 | Last updated: March 19 2008 00:28

SAP hopes to woo mid-sized businesses with a range of pre-configured solutions that combine Intel-based hardware with a range of software.

The software includes Novell’s Suse Linux Enterprise operating system, SAP’s MaxDB database and its Business All-in-One enterprise suite.

The aim is to drive down the total cost of ownership of SAP software, which has traditionally had a pricey reputation among SMEs.

Tuesday, March 18, 2008

SAP's Enhanced GRC Offerings Expand Integration Options

SAP's Enhanced GRC Offerings Expand Integration Options

SAP's governance, risk and compliance offerings align to financial, supply chain, and environmental safety and health functions. New releases of these offerings enhance integration but an overarching GRC platform awaits.

Saturday, March 15, 2008

Convergence 2008: Microsoft Is Serious About Business Applications | AMR Research

Convergence 2008: Microsoft Is Serious About Business Applications | AMR Research

Productivity, adaptability, and innovation took center stage at Microsoft Business Solutions’ (MBS) annual Convergence conference this year. The keynotes from executives as well as the common usability and extensibility showcased across the products signaled Microsoft’s commitments to the business applications market and moving forward with all four ERP products, as well as a long-term commitment to software plus services. It also showed a company with a vision: supporting a diverse set of customer shapes and sizes with a blend of hosted services and on-premise software.

Friday, March 14, 2008

SAP Insights: The View From the Castle | AMR Research

SAP Insights: The View From the Castle | AMR Research

We caught up with SAP’s Holger Fritzinger at the Dromoland Castle in County Clare, Ireland, where he had just finished hosting a two-day meeting with high-tech executives. This was the spring meeting of the company’s twice-yearly high-tech advisory council, one of the first vertical customer groups established by SAP.

The 12-year SAP veteran was recently named vice president of the company’s lucrative high-tech business unit. His domain includes thousands of customers across the whole ecosystem, from original equipment manufacturers to semiconductor firms, contract manufacturers, original design manufacturers, and software companies. While not part of his official business unit, the ecosystem also extends out to media (many consumer electronics companies now market or sell music, games, television programs, movies, and other content) and professional services firms (most of the large integrators run SAP) as well as retail since consumer electronics firms have added their own stores.

While SAP no longer breaks out revenue by specific verticals, high tech has long been one of the top performing sectors. This has been true since the very early days of R/3. In the past 15 years, SAP has generated billions of dollars in software and services from tech customers.

But so did many other smaller vendors. i2 Technologies amassed a very impressive base in supply chain management (SCM). PeopleSoft did the same in human resource management. Siebel had a very strong tech presence in CRM, as did Agile Software in product collaboration and product lifecycle management (PLM). Ironically, three of those four are now part of the Oracle product portfolio, purchased in part because of their presence in SAP accounts. As these applications mature, however, large customers are looking to bring the functionality back within the SAP Business Suite.