Oracle Sourcing Goes SaaS

Oracle continues shifting software that has been available in licensed form for years over to new distribution models, furthering its efforts to take advantage of burgeoning interest in the trend of Software as a Service (SaaS).

That’s the case with Oracle Sourcing, which helps enterprises manage their vendor selection and purchasing. On Monday, the company announced Oracle Sourcing on Demand, the SaaS version of the software.

The launch aims to tap into the growing appeal of cloud- and SaaS-based solutions, which are often seen as a way to cut expenses associated with installing and maintaining on-site software. But it also plays on Oracle Sourcing’s core promise to make companies’ purchasing more efficient and cost-effective.

“It’s fair to say that we are not in the brightest of economic environments,” said David Hope-Ross, Oracle’s senior director of procurement. The idea behind Sourcing is that companies buy a lot of stuff, so if you can save a portion of that each year, the total amount of cash saved could be large.

“The calculus of strategic sourcing is very simple,” Hope-Ross said. “An organization might spend $100 million or $2 billion each year. It’s tough to just get your arms around all the sourcing opportunities out there. We put companies in a position to conduct sourcing operations in fewer steps over a shorter elapsed time and to expand the diameter of sourcing pipeline.”

While offering Oracle Sourcing in an on-demand model might increase the software’s appeal to smaller customers, Hope-Ross said the company is expecting it to be equally appealing to large enterprises.

“It is common for organizations to upgrade from one release to another, and during that time, the entire IT group might be occupied,” Hope-Ross said. “This is a hot opportunity right now to save lots of money and the chief purchasing offer may wish to use Oracle Sourcing on Demand in order to roll it out right away.”

The move marks the latest in Oracle’s growing embrace of cloud- and SaaS-based offerings, which represent a major strategic shift away from a long history in deployed software. The company’s already moved a slew of its apps to the SaaS model, including its full e-business suite, as well as Oracle CRM and its Siebel, PeopleSoft and JD Edwards offerings.

“We want to provide our customers with the options they need to be successful,” Hope-Ross said. “I’m not sure that you’ll find the same answer if you ask 100 people how best to deploy software. Some will argue that it’s best behind a firewall, others that it’s best on demand. Some will say that on-demand is not SaaS.”

Procurement on demand

The move lends additional flexibility to Oracle Sourcing, which has been available as licensed software for over three years. The service is hosted out of Oracle’s datacenter in Austin, Tex., with a fully redundant datacenter in an undisclosed location, the company said.

The software is designed to facilitate a variety of bid types, Hope-Ross said, such as two-part blind bids, in which the suppliers are graded on quality before the financial aspects of their bids are examined; or sealed bids, a procedure in which all bids are evaluated at the same time to ensure that none get preferential treatment.

“Our goal is to provide a set of apps … that enables customers to run sourcing events as they see fit,” he said. “The discipline of sourcing is as much about reducing risk and improving quality as it is about cutting price.”

Pricing for Oracle Sourcing on Demand begins at $850 per user per month, plus a $5,000 startup fee.

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