Oracle's On Demand Procurement Launch

Earlier today, Oracle announced the formal launch of its On Demand suite of procurement products. These solutions, which Oracle labels as Oracle Procurement On Demand should be no surprise to Spend Matters readers (check our recent coverage here and here.) When Oracle actually launched its On Demand procurement capability at OpenWorld last year, I noted: "The full range of Oracle's procurement products are now available in an On Demand delivery format including supplier management, spend analysis, strategic sourcing, contract management, requisitioning and procurement (both buy and settlement). In Oracle's words, what they've essentially done is 'to allow customers to deploy strategic procurement on the cloud with payment options that can still leverage behind-the-firewall ERP.' To support this vision, Oracle continues to plan to deliver hosting capabilities both internally and through partners (their internal delivery capability is limited to a single tenant format which is not true SaaS as others define it)."

According to the announcement this morning, Oracle is making available a range of On Demand capabilities including: "Oracle Procurement and Spend Analytics with Oracle Spend Classification to help uncover cost savings opportunities; Oracle Sourcing and Oracle Procurement Contracts to negotiate and enforce better agreements; and Oracle iProcurement for controlling employee spend and streamlining processes." The announcement today flushes out some additional details about the offering from when Oracle introduced it at OpenWorld. However, the announcement fails to examine in detail some of the business and competitive market implications of what this deal means for Oracle. In this regard, I previously wrote that with On Demand, "organizations are free to separate ERP and IT upgrade decisions entirely from a move to a hosted Oracle procurement environment...[But Oracle believes that] many companies could potentially embrace a hybrid or dual deployment strategy leveraging both behind-the-firewall and On Demand applications at the same time." In comparison to SAP's On Demand procurement capabilities, Spend Matters previously suggested "the key difference between Oracle and SAP, however, is not in their respective tenancy structures, but rather the fact that to take full advantage of Oracle's hosted capabilities, you do not need to be on any specific back-end instance of Oracle (or any other back-end for that matter). For example, you could have a PeopleSoft back-end and still use a hosted version of Oracle iProcurement if you preferred its capabilities (or simply wanted to avoid a traditional installed software deployment)."

Oracle Procurement On Demand goes beyond just hosting, however. To wit, they're putting their On Demand "enablement money where their mouth is by delivering enabling technical services designed specifically around a hosted deployment model. These include a specific 'hosting and functional service desk' and 'hosting implementation' for On-Demand as well as a 'rapid implementation' capability to help companies get up and running more quickly." Still, Oracle is drawing the line in some areas: "Process and content expertise appear to largely remain the responsibility of either the buying organization or other Oracle partners (in contrast to how Hubwoo is supporting SAP or how organizations like Ariba, Basware, Perfect, Ketera and others bundle these types of enabling P2P capabilities into the delivery equation)."

It will be interesting to watch how Oracle Procurement On Demand plays out in 2010 relative to SAP. From my vantage point, it appears that Oracle's strategy is much closer to Ariba's when it comes to delivering hosting and enablement capabilities for their own P2P platform in comparison to SAP, which has invested heavily in building a procurement BPO ecosystem for hosting and enablement.

Jason Busch

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