Rocela responds to the Oracle Q3 results

Earnings growth indicates tech spend recovery but should concern strategic vendor managers

Beating its own forecast from last quarter and also Wall Street estimates, Oracle’s recent Q3 results reported a 13% increase in new software licenses; with its applications business reporting an impressive 21% increase in new license sales.  Support and maintenance fees also grew by 13%, illustrating that businesses have once again turned their attention to software.

In light of all this, it’s becoming clear that strategic vendor managers need to be aware of the potential impact the company’s increased market dominance may have.  While the increase in earnings marks a turning point for IT spend, there are still challenges to be faced by Oracle’s user community.

Strategic vendor managers must now approach their Oracle relationship with more consideration, but this can actually lead to positive change, enabling them to build a relationship with Oracle that suits their terms.

Overall, these trading results reflect what Rocela is seeing in the high-end enterprise market- our clients are still cautious about how Oracle will handle the Sun acquisition but we are seeing a definite bounce back in the economy as budgets get freed up.

A lot of the Oracle growth in new license sales is coming from ULA’s (Unlimited License Agreements) for both technology products and applications.  EMEA growth is much slower than the US markets although we typically see this type of lag even with our global clients.

It’s also worth considering that delays in Fusion, now scheduled for release in H2 FY10, have not dampened applications growth, which when benchmarked against SAP declining sales, is impressive.

With the indications that Oracle is ripping out inefficiencies quickly, I expect they’ll continue to gather enterprise level traction in the coming months. Oracle users should be comforted by the strength of this progress but it will add to fears of lost vendor leverage and many enterprise clients are currently reviewing their strategic vendor management strategies.

Martin Mutch, CEO Rocela.

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