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SCMP Reporter

The software firm has restructured to better compete in the Asia Pacific against larger rival SAP

The long-established mantra for homebuyers and property agents is location, location, location.

In the highly competitive software industry, Oracle may have found confidence in another mantra: organisation, organisation, organisation.

After accomplishing a string of strategic acquisitions that included PeopleSoft, Retek and Oblix, Oracle is banking on its strong organisation to help dislodge German software giant SAP from its spot as Asia-Pacific's top enterprise applications supplier.

Mark Gibbs, senior vice-president for applications at Oracle Asia-Pacific, said a move to realign the firm's regional business to applications, technology and industries served to boost sales and accelerate the integration of its recent acquisitions.

'The realignment in September last year was the single most important event in our history in the applications business in the Asia-Pacific,' Mr Gibbs said.

'Last year, we saw that we were competing with pure-play applications vendors who were completely focused on applications sales. Our realignment gave us more focused sales professionals in the field and our growth since then shows how successful that move was.'

In the quarter to February 28 this year, Oracle posted a 13 per cent year-on-year increase in total revenues from Asia-Pacific to US$425 million. The region accounted for 14 per cent of total revenues worldwide and 20 per cent of new licence revenues worldwide in the same quarter.

Still, SAP has more than 5,000 applications customers in the Asia-Pacific. That is well ahead of Oracle's more than 3,500 users in the region.

Worldwide, SAP counts more than 26,000 users, while Oracle has more than 23,000 customers.

SAP and Oracle are the two dominant players in the business-automation software arena.

The two firms both offer an extensive suite of financial management systems, human resource management systems, supply chain management and customer relationship management applications.

To close the market share gap with SAP at a quicker pace, Oracle had set up an organisational structure 'designed to reduce the amount of complexity in engineering technology infrastructure, to help customers more effectively, and to grow faster than the competition', Mr Gibbs said.

'In this region, we call it our 20-block strategy.'

Oracle has formed a group of 20 general managers, each assigned to an industry group in a specific geographic business area, to handle day-to-day business operations.

Four industry general managers are designated in each of these markets - Greater China, Australia and New Zealand, Southeast Asia, India and South Korea.

They report to their respective group vice-presidents, each of whom oversees one of Oracle's four priority industry segments.

These industry groups include manufacturing, retail and distribution; communications, media and utilities; financial services industry; and government, education and health care. A layer of managing directors in each of Oracle's five geographic markets in the Asia-Pacific handle strategic planning and business development.

Each of those layers of management in the geographic business areas are supported by a team of specialists, including engineers and analysts, involved with developing Oracle's various enterprise applications.

Mr Gibbs said that Oracle could well be years ahead of the competition in building a management infrastructure that reached customers faster and closer, which was critical to supporting Asia-Pacific's vast community of small and medium-sized enterprises (SMEs).

More than half of Oracle's customers in the Asia-Pacific region are SMEs.

'To meet their needs, Oracle has a network of more than 1,500 partners across the region,' Mr Gibbs said. 'We also generate more than 80 per cent of Asia-Pacific revenues through these partners.'

Despite those efforts, research firm Gartner predicted that Oracle would face 'rising competition from SAP, Microsoft and application support providers' this year.

Oracle's realignment strategy, for instance, has not been lost on SAP.

Last January, the German business applications powerhouse created its SAP Asia-Pacific organisation, which covers four market hubs - Australia and New Zealand, Japan, North Asia and South Asia.

Following that move, Hans-Peter Klaey, president and chief executive of SAP Asia-Pacific, said that SAP would accelerate growth in all enterprise applications market segments in the region, especially in the SME space.



Oracle devises strategy to beat the big kid on regional block