Eye on Oracle

Nov 11 2008   10:28PM GMT

Can Oracle’s former Fusion chief rescue SAP’s on-demand strategy?

Shayna Garlick Shayna Garlick Profile: Shayna Garlick

One may find it surprising that SAP, the company who wanted to keep its on-demand efforts geared toward small and medium-sized business (SMB) customers, has hired an “executive vice president of Large Enterprise on Demand.”

But what may be even more surprising is who was chosen to fill the new role.

John Wookey, Oracle’s former long-time head of development for Fusion Applications who left the company last year, will now lead SAP’s on-demand enterprise efforts, SAP confirmed yesterday.

What does this mean for SAP and Oracle?

For SAP, it means a surprising strategic shift in the market. SAP’s SMB-focused on-demand product Business ByDesign has been met with little success and even less profitability. Even NetSuite and Salesforce.com, considered leaders in the SaaS market, have had their struggles profiting from on-demand software.

Now, SAP is trying something new, as Wookey won’t be in charge of Business ByDesign, according to this Wall Street Journal blog post, “SAP Gets Serious About Online Software.” Instead, Wookey will be in charge of selling on-demand software to SAP’s “core customers.”

It will be interesting to see how Wookey’s new role — and whether it’s successful — affects the strategies of his former employer.

Oracle CEO Larry Ellison’s SaaS strategy has never been straightforward. At last month’s Oracle OpenWorld, he had little to say about cloud computing at a meeting with analysts, except that “we’ve redefined cloud computing to include everything that we already do.”

Ellison continued to express his contempt for the subject, saying: “”I can’t think of anything that isn’t cloud computing with all of these announcements… Maybe I’m an idiot, but I have no idea what anyone is talking about. What is it? It’s complete gibberish. It’s insane. When is this idiocy going to stop?”

Back in July, ZDNet blogger Larry Dignan summarized Ellison’s SaaS strategy:

“Let SAP figure SaaS out and crow if the rival fails. If SAP is successful — it probably will be over time — Ellison buys NetSuite [the SaaS ERP provider that Ellison owns a majority stake in] from himself.”

So, will SAP be successful in its quest to “figure SaaS out?”

Analyst Joshua Greenbaum thinks it will be a great challenge, but points out that Wookey “has some experience in accomplishing what looks almost impossible to do.” According to Greenbaum, this will include dealing with the complexity of SAP’s business portfolio and going up against “the elusive on-demand business model.”

Greenbaum also says that the fact that SAP made this move now says a lot: “SAP clearly sees that there’s no time like the present to invest in the future, and bringing John Wookey on board is a remarkable vote for future success that SAP is willing to make at what otherwise might look like a pretty bleak hour for the global economy.”

With Wookey’s new role, it seems like SAP has really stepped up and shown that it thinks its on-demand strategies are important — now let’s see if Ellison will follow.

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