Oracle Fusion Gets a New Boss

Thomas Kurian is taking over the pivotal effort to make sense of the bevy of business software products acquired during CEO Ellison's three-year spree

by Aaron Ricadela

Oracle CEO Larry Ellison

Oracle's (ORCL) fastest-rising executive has just stepped into a job that could determine how successful the world's second-biggest software company will be during the next decade.

Thomas Kurian, described by turns as thoughtful, charismatic, eloquent, and ambitious, took the helm of Oracle's Fusion project on Oct. 15 amid growing worries that the pivotal, complicated initiative may underwhelm customers and investors when it arrives in late 2008. The aptly named project is a grand plan to stitch together the wide array of business software products Oracle has acquired in the course of a three-year, 35-company takeover binge costing $24 billion.

Kurian, previously the chief of Oracle's fast-growing middleware application business, has big shoes to fill. He's taking over for John Wookey, a well-regarded veteran beloved by developers and customers, who has been reassigned within the company. "There are lots of stars inside Oracle, but they put multiple stars next to [Kurian's] name," says Brent Thill, director of software research at Citigroup (C).

Will Fusion Deliver?

For customers and investors, a lot is riding on Fusion's success. So they'll be listening closely for rare public clues about the potential financial and technological impact when Kurian gives a speech on Nov. 13 at the Oracle OpenWorld conference in San Francisco.

The new suite of applications—used for functions such as managing a company's books, keeping track of customers, managing payrolls, and planning manufacturing schedules—is supposed to cherry-pick the best of Oracle's software collection. That includes applications from Oracle's homegrown line, as well as from PeopleSoft, J.D. Edwards, Siebel Systems, and smaller acquisitions such as Retek and i-Flex Solutions. The first version will likely include what Oracle considers its biggest guns—its own accounting software, PeopleSoft's human resources product, and Siebel's customer management application—melded together with a unified approach to storing data and interacting with the programs.

Many Oracle customers and Wall Street analysts are skeptical that Fusion can deliver what the company has promised. Corporate IT departments have been left in the dark about what to expect since Oracle has eschewed the usual practice of testing a major product upgrade with select customers at least a year or two before it's released. "No one knows because no one's seen anything," says Charles Di Bona, a senior equity analyst at Sanford C. Bernstein & Co. And some chief information officers still have a hangover from a buggy version of Oracle applications released in 2000.

For now, Oracle's customers are stuck with a passel of aging products for which they pay hefty annual technical-support fees, and which aren't particularly easy to combine with one another or the latest Web technologies. The first Fusion version of Oracle's applications will attempt to solve those problems using the Java programming language and "Web services," an industry term for a set of Internet communications protocols. If successful, Fusion will lower customers' IT costs, yet keep them doling out lucrative support and maintenance fees to Oracle for years to come.

Diamond or Dud

Oracle is already tops in database software. But with all the acquisitions, culminating in Fusion, it wants to unseat archrival SAP (SAP) for control of the applications market. SAP controlled 20.8% of the $56.4 billion market for enterprise applications in 2006, nearly double Oracle's 10.7% share, according to industry consultancy AMR Research.

If Oracle gets Fusion right, delivering cutting-edge technologies that make it cheaper for customers to build on its platform, the company may add to its applications market share. It would also help extend Oracle's reach into new markets such as retailing and transportation. And with one underlying software code to support instead of the current five, the company could make better use of, or cut, its $2.2 billion in annual research and development spending.