Oracle’s Fusion Applications Are Ready. And So Is the Go-to-Market Strategy. Now The Fun Can Begin

The lid is finally off on a 12 month-old NDA for Fusion Applications, and in this case the long delay between when analysts were first shown Fusion Apps in the fall of 2008 and when we were given free hand to describe what we’ve seen now looks like a impressively smart move.

What was smart was that, while the apps looked pretty snazzy a year ago, the go-to-market strategy wasn’t as zippy. In fact, it really didn’t exist at all. Now, in anticipation of a 2010 release date (new revenue recognition rules at Oracle have clamped down on any specifics, but you can be sure that the Fusion team would be less vague if the lawyers would let them) Oracle’s Fusion team not only showed off a well-designed set of applications: they’ve got a pretty well-designed GTM strategy as well.

The basics are this: Fusion Apps can be consumed as a suite or as individual components, on-demand or on-premise. This means that existing Oracle customers – the target market, at least at the initial roll-out – won’t have to look at Fusion Apps and start planning a rip-and-replace of their eBusiness Suite/PeopleSoft/JDE/Siebel applications. Instead, they can look at the different modules of Fusion and decide that, for instance, Fusion Talent Management is the tool that will clean the competition’s clock. The customer then buys FTM (upgrading to Fusion Apps is free only for the components that fit the “like for like” free exchange that Oracle is offering its customers) and automagically hooks it up to their existing application. On-premise, on-demand, whatever. It’s up to the customer.

The automagic part of this is, of course, based on Oracle’s Application Integration Architecture, which is more and more becoming the linchpin of the company’s ultimate choice strategy. AIA, once it is fully decked out with process integration scenarios that cover the main pieces of Fusion and the Applications Unlimited suites and standalone packages, becomes the interstate highway system of the Oracle customer base. That automagic, of course, isn’t exactly as simple as anyone would like, nor is the uptake of AIA exactly reaching the stratosphere in the Oracle market today. But the roadmap to best-of-suite nirvana has at least been carefully drawn, and that big orange highway connecting all the points is called AIA.

This AIA strategy, of course, works for the SAP customers that Oracle wants to lure to its existing products and, eventually, to Fusion as well. As a testimony to the SAP-lust that inspires so much of Oracle’s marketing efforts, their erstwhile German-American rival was mentioned in Larry’s keynote and the ensuing Fusion Apps demos at least six times that I could count. Only IBM was mentioned more (in the competitive category, anyway. Larry said Sun so many times the folks in row one were getting a tan). The idea that an SAP customer could consume Talent Management, or Fusion CRM On Demand, in a Trojan-horse strategy, is one that Oracle is already executing with its existing apps, and will be executing for Fusion Apps as the products and GTM strategy mature.

Which brings us to the question weighing on SAP’s minds as the reality of Fusion Apps begins to head to the market next year: how much will Fusion Apps cramp the expected re-launch of Business ByDesign, which SAP has been carefully nurturing back to life after a false start two years ago? The answer is complicated, and full of unknowns, but here’s a try. The main reason for the comparison isn’t about market focus — Fusion Apps won’t specifically target the mid-market that ByD is focused on – but about the fact that Fusion Apps and ByD represent each company’s first foray into fully functional on-demand ERP. My opinion is that this distinction, particularly by later in 2010 when one could envision a head-to-head competition between the two might actually take place, will be the least important issue on the table. The companies that will consider on-demand will quickly move past that check-list item to the more important issues of feature/functionality, cost, and consumability that will drive the ultimate buying decision. And, at that point, may the product with the right fit for the job win.

There may be an advantage in the compartmentalization strategy of Oracle, which will make it easy to sell to an installed base in the large enterprise market, whereas ByD’s initial GTM was about finding net-new customers in the SME market interested in a highly configurable, model-driven suite. That will likely get more early adopters raring to go with Fusion, as this product will fit nicely into an existing market for Oracle. (The number of Oracle customers who were making the pilgrimage to Redwood Shores to test drive Fusion Apps was huge, and many were, of course, also SAP customers.) ByD will need to find net-new customers, and that’s always harder.

But these distinctions also mean that there will be little head-to-head competition between Fusion Apps and ByD, unless SAP changes its focus for ByD and starts more actively pursuing large enterprise opportunities as well. Or Oracle changes its focus and starts moving more Fusion Apps towards the SME market. We shall see.

Two companies have a lot more to worry about with Fusion Apps than SAP. Salesforce.com is the first: Fusion CRM On Demand many just be the perfect fix for some lingering antipathy towards Siebel in the market. Fusion CRM On Demand will represent a clean break from the Siebel past, and will have many of the cool bells and whistles that was shown in the Fusion Apps demo yesterday. And it will be positioned as an on-demand/on-premise product, unlike Salesforce’s OD-only offering. I think Salesforce, despite Marc Benioff’s marc-keting coup at this year’s Open World, will have a lot to worry about when Fusion CRM On Demand hits the market next year.

Also in trouble is Netsuite, which never really did much to market itself as anything more than a on-demand ERP provider. With two more such offerings now hitting the market in 2010, Netsuite will need to gen-up some means to distinguish itself against Fusion and ByD with some message other than “we’re on-demand.” Good luck with that.

So, Fusion Apps are finally here, and we NDA-bound analysts can finally start opining on one of the most anticipated, hyped, and poo-pooed product launches in recent memory. We’ll be watching carefully as these products start hitting the market next year to see if Oracle can meet the SLAs that are required in the on-demand market, particularly in light of SAP’s missteps in that regard with ByD. We’ll also watch for signs that customers are stalling buying decisions now that they have Fusion Apps to add to the short list: this is Oracle’s nightmare scenario, and the reason why the GTM strategy came so much later than the product development strategy. I think the compartmentalization of Fusion Apps will work to Oracle’s benefit, but only the market will tell.

Finally, we will need to see how SAP responds to Fusion Apps, and what Microsoft can do between now and mid-2010 to solidify its own on demand strategy for its ERP apps.  This is going to make 2010 a great year for customers, who will now have more choice and more offerings than ever before – and more eager vendors like Oracle anxious to prove that their big investments will pay off in revenues and market share. Stay tuned.