Oracle Unveils SDP Plans
The company admitted back in February it had plans to take on the existing SDP crowd -- including BEA Systems Inc. (Nasdaq: BEAS), IBM Corp. (NYSE: IBM), HP Inc. (NYSE: HPQ), Microsoft Corp. (Nasdaq: MSFT), and Telcordia Technologies Inc. among others -- when it snapped up SIP developer Hotsip AB . (See Oracle Buying Into Service Delivery and HP, Telcordia Hop SDP Bandwagon.)
Since then, it has made two further acquisitions to strengthen its telecom portfolio. Last week Oracle announced it will buy billing and CRM specialist Portal Software Inc. (Nasdaq: PRSF) for $220 million in cash and stock, then on Tuesday, as part of its SDP announcement, it said it is buying Norwegian applications development platform firm Net4Call for an undisclosed sum. (See Oracle Acquires Portal.)
The move is another sign that IT-based service creation and delivery systems are increasingly regarded as the future workhorses of telecom service providers, and that companies traditionally seen as enterprise software and service firms are gearing up to take on the telecom system vendors as key suppliers and partners. (See Global Crossing Puts SDP Into Action, FT Commits to MS SDP, and SDP Costs Get a Grilling.)
Now Oracle reckons it has the punching weight to land Tier 1 carrier deals. Vittorio Viarengo, VP of Development for communications and mobile platforms at Oracle, says his company will target major telcos that have developed their own SDPs during the past few years and now need to rationalize their systems and cut costs.
After that, once Oracle has perfected the platform, it can pitch a more out-of-the-box offering to Tier 2 and Tier 3 telecom operators that don't have the resources to do much in the way of internal development.
But isn't Oracle trailing the market somewhat? Microsoft has been marketing its Connected Services Framework (CSF) for well over a year and picking up major accounts. Viarengo isn't phased. He says Oracle has "a great track record with its middleware and database products" with telcos, and has been very pragmatic with its acquisitions. Oracle claims 90 percent of telecom operators worldwide use Oracle applications and/or infrastructure software already, and that all top nine of the mobile operators in Europe and the U.S. use Oracle's database technology.
He adds that both Hotsip's and Net4Call's technology is already compatible with Oracle's platforms, and that those two companies bring "more telco DNA" to the company. "We needed people that had done this sort of thing before, and technology that has been deployed by carriers," touts Viarengo.
So will there be any further acquisitions to add to the DNA? "We're very focused now on customer success," he says, "but we'll always look to augment" our position. Viarengo adds that once the Portal acquisition is complete, Oracle will then have "the opportunity to combine a complete BSS suite with the service plane" for service providers. Oracle's functionality would stretch from the capabilities to acquire and provision a customer, bill for the services, and manage the customers too, using the CRM capabilities Oracle now has through another recent acquisition, that of Siebel Systems Inc. (Nasdaq: SEBL). (See Oracle Swallows Siebel.)
Heavy Reading Analyst at Large Caroline Chappell says Oracle's move "makes absolute sense -- telecoms is the one industry in which an ERP approach is long overdue," she says. "With Portal's billing/revenue management solution, Oracle is going for financial control, the core ERP function -- and an area where operators are still struggling with multiple billing systems that are costing them large sums to reconcile and integrate," she says. "Pricing and billing will be key capabilities in a next generation services world, so this fits with Oracle's SDP strategy, too."
She likens Oracle's approach to that of OSS firm Cramer Systems Ltd. , which recently reinvented itself as a sort of telecom software firm on steroids. And though Cramer hasn't yet got the billing piece," though it does have a partnership with billing giant Amdocs Ltd. (NYSE: DOX). (See Amdocs, Cramer Get Closer and OSS Firms Jump on IMS.)
"Oracle's long-expected move will put pressure particularly on IBM," Chappell says. But it likely won't disturb applications server vendors such as BEA, whose applications sit next to Oracles in a number of established SDPs.
"Long term, however, it will want its converged programming model -- something that IBM and Microsoft are also both working on -- to displace all other apps server vendors," Chappell says. The analyst also believes Oracle could tread on the toes of a current ally, Sun Microsystems Inc. , and, with its SDP-ready applications, go head-to-head with Microsoft and Siemens Communications Group , as well as a host of small start-up SDP vendors with applications to sell, such as BayPackets Inc.
Microsoft, for one, doesn't feel too threatened by Oracle's entry into the SDP space. Michael O'Hara, general manager of the firm's service provider business unit, says it's simply a validation of the space. "Oracle's approach is a bit different to ours -- it's covering a lot of ground, with SIP, call control, and service delivery issues, while we're focused on a Web services approach and building applications around that," says O'Hara. "I'm confident we have the momentum."
— Ray Le Maistre, International News Editor, Light Reading