Oracle Readies SaaS Applications Expansion

A story in Friday's Wall Street Journal, quoting unnamed sources and an Oracle document the newspaper said it obtained, said Oracle is close to announcing seven new on-demand applications, including software for employee recruitment and for running sales campaigns. Just when Oracle might unveil the new applications wasn't clear.

Such a move would mark a significant departure for Oracle, which largely sells its ERP, financial and CRM applications for on-premise implementation. One exception is the Siebel CRM On Demand application Oracle acquired when it bought Siebel Systems in January 2006.

It also would put Oracle into more head-to-head competition with such SaaS vendors as Salesforce.com and NetSuite, the latter in which Oracle CEO Larry Ellison and his family own a significant stake.

SaaS applications are gaining in popularity during the current recession because they require less IT infrastructure than on-premise software. Also, customers generally pay for on-demand applications on a monthly or annual subscription basis, as opposed to the up-front capital expenditure traditional software requires -- a plus when many businesses today are strapped for cash.

But SaaS applications could be problematic for Oracle, given that many customers who buy its on-premise applications also buy the vendor's flagship database software, middleware and other products that make up the bulk of the vendor's sales.

Oracle, nevertheless, has been expanding its software hosting and cloud computing efforts. Last fall, Oracle announced that it would allow customers to run some Oracle products within Amazon.com's EC2 cloud computing environment. It also has been expanding into providing hosting services for its software products. Oracle is constructing a massive 200,000-square-foot data center facility in West Jordan, Utah, to support its on-demand business.