Interesting article in today's IBD...
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Oracle Targets Sales Groups For More Sales
Date: 2/23/99
Author: Matt Krantz
Oracle Corp. wants to help its customers get to know their customers better.
In April, the company plans to release a new version of its front-office software. It will help companies track customers and salespeople.
The release is key for Oracle. The company is the first maker of back- office business software to pursue front-office software. Front office refers to operations that deal directly with customers, such as sales and marketing. Back office deals with a company's internal operations, such as accounting, human resources and manufacturing.
The front-office market, a niche much smaller than the back-office market, is dominated by Siebel Systems Inc. and Vantive Corp.
Is Oracle too late? Will the other makers of back-office business software, also called enterprise resource planning software, follow suit?
Mark Barrenechea, Oracle's vice president of front-office applications, recently spoke with Investor's Business Daily.
IBD:
Is the front-office product the answer to slowing sales of ERP software?
Barrenechea:
I look at Oracle as an applications company. That covers financials, manufacturing, supply chain, human resources, sales automation, call centers, commerce and customer care. We're focusing on all corporate applications. SAP (Oracle's biggest ERP rival) sees itself as the No. 1 financial oftware) company, which is (not the same as) being the No. 1 applications company.
IBD:
How are the other ERP players approaching front-office software?
Barrenechea:
If we look at companies like SAP, Baan Co., J.D. Edwards and PeopleSoft, it's interesting. PeopleSoft has no stated (front-office) strategy at this point and no product. It's the same story from J.D. Edwards.
Baan acquired a front-office software company but hasn't done much with it. They've only maintained it as a mobile sales force automation tool. Baan still isn't into customer care and call centers.
SAP has made many announcements but continues to delay its products. When they finally do offer a product, it'll just be a mobile sales force automation product. The ERP players are three years behind (Oracle).
IBD:
How did Oracle address this market?
Barrenechea:
Oracle a year and a half ago recruited me from Scopus (a front-office software maker that was acquired by Siebel Systems). We've been able to deliver a robust solution. With version 4 of our front-office software coming out this year, we will even be ahead of most of the (longtime) front- office vendors.
IBD:
Is it too late to catch up with the companies that were making front-office business software long before Oracle?
Barrenechea:
If we look at the forerunner, Siebel, we see a very low market penetration of only 5% (of U.S. companies). It's easy to catch up. With the next version of our front-office software, we should be ahead of Siebel.
IBD:
Which industries is Oracle targeting?
Barrenechea:
We're targeting a variety of industries. We have financial services. We have communications companies. We have traditional high- tech industrial companies and retail and utilities. Those are the most customer-facing industries with large direct sales forces.
IBD:
Do most of the companies you're selling to already have Oracle back-office business software?
Barrenechea:
I would say that we're seeing a 50-50 split of those who have Oracle ERP and those who don't. About 75% of the companies we sell to have ERP (from any vendor) and 25% don't have ERP.
IBD:
Does Oracle's front-office business software only work with Oracle's back-office business software?
Barrenechea:
You don't need Oracle ERP software to run our solution. We can stand alone.
But if you have Oracle ERP, many things become easier because you have already done them. You've already set up your customer information. You've already set up your product and pricing catalogs. That means you don't have to go through all the data cleansing. I don't know if it's better to have Oracle ERP, but implementation costs will go down because you've already done much of the work.
IBD:
Can you think of a company that's benefited from Oracle's front-office software?
Barrenechea:
Look at a company like National Instrument Corp. They've had a large direct sales force. But since they sell commodity products, they needed to increase market share and reach.
So they opened their Web ite) up to do electronic selling. That way they have their expensive sales force concentrate on the top 20% of their customers, who generate 80% of their revenue. The low-margin, high-volume products are now sold over the Web or through a call center. The sales force then concentrates on winning larger deals.
They use our sales automation and call center (front-office) software.
IBD:
Will front-office products change how Oracle competes in ERP?
Barrenechea:
If you look at the ERP market, it's gone from 200 players to 50 to five. Now you're seeing it consolidate. The industry keeps going through waves of consolidation. It's now down to Oracle and SAP fighting for the No. 1 spot.
Four years ago, there were 200 players fighting over the front- office space. The market's now down to four players. It's interesting. One of the four is Oracle. And we're the only ERP player in that space.
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(C) Copyright 1999 Investors Business Daily, Inc.
Metadata: ORCL SEBL VNTV SAP BAANF JDEC PSFT NATI I/2761 E/IBD E/SN1 E/TECH |
