Last week, I attended an Oracle virtual tradeshow, featuring a virtual session titled Oracle Applications Unlimited 'Experts Live'. The session I sat in on was titled "Opportunities to Optimize Strategic Sourcing" and was hosted by former Gartner analyst and current Senior Director for Oracle Procurement and SCM, David Hope-Ross. I was planning on staying relatively quiet most of the time, but most of the other participants appeared not overly eager to ask questions so I chimed in a number of times. Below is a slightly edited (and corrected) transcript based on the dialogue. In it, David provides some additional details into Oracle's latest Sourcing On Demand offering as well as some product roadmap hints. Check it out below.
03/11/09 01:00 (PDT) David-Oracle: Hello and welcome, my name is David Hope-Ross and I'm Senior Director Procurement and SCM. It's great to have the opportunity to join everyone for today's discussion on optimizing strategic sourcing.
03/11/09 01:03 (PDT) ATTENDEE QUESTION: David, what are the top trends driving companies to implement sourcing and procurement solutions today?
03/11/09 01:03 (PDT) David-Oracle: First, and perhaps above all, there is a widespread desire by top executives to save money. And given that purchasing is often a company's largest expense, and procurement staff are in the business of saving money, it makes a good target for cost reduction. When coupled with falling prices resulting from declining demand, there's a huge opportunity for organizations to revamp their cost structure.
03/11/09 01:05 (PDT) David-Oracle: In year's past, the emphasis was on getting more efficient internally. But today, the objectives are more in line with promoting best practices and increasing the capacity of the purchasing organization to be effective.
03/11/09 01:06 (PDT) jbusch: I'd like to ask you about how you see the ERP provider role evolving when it comes to delivering services beyond just implementation when it comes to sourcing and supplier enablement? Thanks.
03/11/09 01:07 (PDT) David-Oracle: Although we are more than an "ERP Vendor", I'll be happy to comment. From a procurement perspective, you can expect to see us offer services that are 'technical' and 'functional' in nature -- e.g. support, hosting, functional, helpdesk, some trading community management.
03/11/09 01:12 (PDT) David-Oracle: However, we don't currently expect to get into the business of delivering deep category expertise, trading community management, or data services. We're going to depend on our partners for those services. [For those who are not aware of this new offering] Oracle Sourcing On Demand is a SaaS solution that enables organizations to optimize their strategic sourcing programs. Its designed to enable more efficient and effective sourcing, accelerate time to value, and eliminate IT inhibitors.
03/11/09 01:14 (PDT) jbusch: David, Thanks. Next question: How do you see the role of traditional Oracle partners (Accenture, Deloitte, IBM) evolving in an on demand world? How can they replace the revenue from large implementations in new areas?
03/11/09 01:17 (PDT) jbusch: Not to get overly specific here, but regarding the SaaS sourcing announcement, I have two quick questions: 1) Is Oracle hosting the multi-tenant version (and if not, who is) and 2) what services does Oracle provide directly vs. OEM from third parties like eThree as part of this offering?(I am not asking about services provided by folks like Archstone -- rather, the basics such as training, surrogate bidding, etc.)
03/11/09 01:18 (PDT) David-Oracle: I don't really see a replacement. There will be plenty of customers who continue to choose behind the f/w implementations. For those who choose OnDemand, there's still plenty of scope for their talents. These include some of the services I mentioned earlier -- like category expertise -- and there are others like process reengineering, etc. So the mix may change, but customers still need help.
03/11/09 01:20 (PDT) David-Oracle: Early this week we announced Oracle Sourcing On Demand -- a single tenant, On Demand delivery of Oracle Sourcing. Oracle provides all of the delivery -- e.g. hosting, technical support, functional helpdesk, etc. If a customer needs additional services (e.g. assistance with cold rolled steel), we'd bring in partners like Archstone, e-Three or others. In a separate but related effort, we have been working with e-Three to launch their multi-tenant delivery of Oracle Sourcing. In that case, e-Three provides all of the hosting, help desk, as well as expertise like potato products, automotive tooling, and fleet.
03/11/09 01:24 (PDT) jbusch: Another question considering everyone else is quiet. You guys have traditionally had a somewhat impressive finance arm (relative to other vendors at least). How does an on demand model impact this business? Does it alleviate the need to offer financing? Have you seen procurement customers take you up on financing purchases in the past, etc.?
03/11/09 01:29 (PDT) David-Oracle: Fundamentally speaking, Oracle doesn't have a religious position on where customers should run software, how they should pay for it, or the duration of license entitlements. We think customers should be able to make these decisions separately and choose location, license, payment structure, etc. on an independent basis. That means that Oracle Financing is an important tool for customers who would like to 'pay as they go', but would rather own a license in perpetuity. Likewise, Oracle On Demand is an important tool for customers who would prefer hosted delivery. And term licenses are an important tool for those who don't need the licenses forever.
03/11/09 01:33 (PDT) David-Oracle: Although I can't comment with dates, we'll be announcing major enhancements to Oracle Advanced Procurement and PeopleSoft SRM in the form of Release 12.1 and 9.1 respectively. In the future, we will also be announcing an MDM solution for improving the quality of supplier data and a solution that provides cleansing, normalization, and enrichment of raw spend data to improve results from spend analysis.