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Oracle Users Reluctant to Outsource

Oracle users may not be ready to outsource their applications, according to an Aberdeen Group survey of the Oracle Applications Users Group (OAUG). In fact, only 5 percent of respondents have implemented an outsourced ASP solution, and more than 82 percent have no plans to do so.

"The OAUG's membership serves as a cross section of Oracle Applications users, providing an accurate reflection of users' views," said Edward Black, senior vice president of western operations for Aberdeen Group. "Our most recent membership survey shows changed perceptions consistent with the changing tech landscape and developments in Oracle Applications over the past year."

The survey suggests increased reluctance for ASP outsourcing strategies among Oracle Applications users since last year. Fifty-six percent of those responding negatively to ASP outsourcing cited "no control around critical business process" as their reason. Forty-one percent cited "cost" and 30 percent cited "too many customizations." In addition, compared to Q2 2000, there were more respondents that believed ASPs did not reduce implementation times, implementation risks, operational risks or demand on IT resources.

Some Oracle ASPs are not seeing the same attitudes in the marketplace. "I think the idea that Oracle users are not willing to outsource is incorrect," Ravi Kulasekaran, CEO of Appshop, told ASP News. "Last year, we signed 1 customer a week. In the last couple of months, customers are taking longer to make decisions, but it's not a matter of 'should I go ASP or not,' but 'when do I want to do it.'"

Kulasekaran also said that his company's client base is moving toward bigger companies, with larger deals resulting. "More companies are paying attention to our value offerings: predictable costs and cost savings resulting from economies of scale."

OAUG is the largest independent Oracle applications users community. A follow-up to its first survey, conducted at OAUG's Spring 2000 Conference in Philadelphia, the latest survey results were announced at the Atlanta-based group's 2001 European Conference and include input from Oracle Applications users of all sizes, including 20 percent with more than 10,000 employees and 26 percent with more than $1 billion in revenue.

The Oracle Applications Users Group was formed in the San Francisco Bay Area in May 1990 when 32 Oracle Applications users gathered to create an independent forum for the exchange and expression of information concerning the effectiveness of Oracle Applications. At that time, members agreed that the OAUG would remain an independent voice, promoting education, networking, communications and information sharing and opened a dialogue with Oracle representatives about product development, quality and support.

Today, the OAUG has more than 2,200 member organizations worldwide, including more than 25 of the Fortune 100 companies, and representing diverse backgrounds, industries and geographic locations. Members include end users, service providers, hardware vendors and third-party software solution providers, and represent 75 affiliated geographical and special interest groups from around the world.