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Oracle HCM Software Review

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An Independent HR & Payroll Software Review and Analysis

Headquartered in Redwood City, CA, Oracle Corp. is a hardware and software giant (employing one of the largest workforces in the technology industry at roughly 108K workers worldwide), specializing in enterprise software products and driven by co-founder Larry Ellison (who has served as CEO since the company's founding). Originally started in 1977 as Software Development Laboratories (SDL), the company is particularly well known for its database management systems—fueling growth in this market largely through one of the industry's broadest and most aggressive acquisition strategies (which to date has netted 70+ solutions company-wide). In turn, these purchases, partnered with organic growth, have boosted the company to enormous profits—posting 2011 Q3 GAAP revenues of just shy of $9B (an increase of 37%).

Yet, Oracle has also seen its share of turmoil, especially in legal battles; most notably in the recently-settled $1.3B lawsuit with SAP over copyright infringement (the largest piracy suit of its kind worldwide); a 2010 U.S. Department of Justice suit for fraud; the ongoing Java suit against Google (which Oracle seeks $6.1B); and the occasional PR nightmares associated with allegedly failed ERP implementations such as the recent case with a New Jersey school filing a $20M suit against the company. These issues, many of which are not unique to Oracle, and coupled with the volatility of the enterprise software market and the fact that large-scale purchases (a historical staple of the company) are declining, have proven that even the largest of technology vendors within the technology space are not immune from trying times.

However, Oracle remains cognizant of these issues and has continued its advancement in emerging markets and newer revenue models to maintain market position. In fact, the company's foray into hardware with the acquisition of Sun Microsystems (while potentially dilutive if allowed to bifurcate the company) is one of Oracle's top strategies; thanks to the fact that integrated and optimized hardware and software provides the end-to-end opportunity for Oracle to "own the technology stack". The other major strategy, discussed further in this review, is the expansion of the Oracle applications cadre with Fusion—the company's answer to bridging the gap between previous on-premise deployments (and sizeable license/maintenance revenues) and the industry's movement toward the cloud.

The Strategy of "Fusion"

With 14,000 HCM software customers spread out over 140 countries and servicing 40M employees, Oracle wields a sizeable share of the HR software market (in fact CedarCrestone's 2011 HR Systems Survey found that between Oracle E-Business Suite and PeopleSoft, nearly 50% of the sample use Oracle products). Indeed, in no large part this market presence is driven by the fact that the company has multiple HCM software offerings for multiple market segments; including PeopleSoft, JD Edwards (World & Enterprise One), and E-Business Suite. As mentioned earlier, the newest offering that Oracle brings to the table is Oracle Fusion Applications (OFA)—which, aside from just HR software, also encompasses business software products in the customer relationship management (CRM), supply chain, and financial software markets.

Almost simultaneously announced in 2005 alongside the acquisitions of PeopleSoft, JD Edwards, and Siebel Systems, OFA had a painfully slow gestational period—only releasing to early adopters towards the end of 2010 and becoming generally available June 2011. In large part this delay was due to working out the kinks of deployment models, integration and upgrade points for Oracle's already existing applications; however, Oracle's original intentions for OFA also served to slow down the process. Indeed, Oracle Fusion Applications were initially designed to be a veritable "best-of" modular application suite—cherry-picking functionalities from each of its legacy products; developing the application in Java; and architecting the application's code in order to run the systems through on-demand or on-premise deployments.

While Oracle's strategy sounds promising enough, the problem with this approach was that customers revolted; citing concerns that OFA was being forced upon them with no regard to the energy and expense that customers had already expended to deploy those legacy systems. These complaints in turn forced Oracle to create a parallel application stream called Oracle Applications Unlimited—essentially an assurance roadmap that outlined support/advancement for each of Oracle's already existing solutions. Ironically enough though, it is this roadmap that has shed light on the inescapable fact that next generation releases do not appear to be planned for any of Oracle's legacy solutions—even those that fall outside of the HCM realm. That's not to say that Oracle won't support those offerings, or that updates to functionality will stop, but major architectural changes do not seem to be in those applications' futures—mainly because OFA is the application future for Oracle. Here we outline in more granular detail what Oracle's HR software future looks like by diving deep into the Oracle Fusion HCM solution.

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