Oracle Observations on Forrester Research Note Titled Oracles Dilemma: Applications Unlimited Versus Oracle Fusion Applications1

Oracle welcomes the opportunity to make the following four factual observations related to this research note authored by Forrester on Oracles application strategy: 1. This is a speculative note based on misconceptions and wrong hypotheses. Readers will notice the repetitive use of we believe, our theory, we think, and we dont know for sure. 2. Forrester is misrepresenting Oracles business application strategy, implying that customers have a choice to make between Oracle Applications Unlimited and Oracle Fusion Applications. This is a wrong hypothesis from the start that conditions the rest of the note. Facts: Oracle has a co-existence strategy between Oracle Fusion Applications and Oracle Applications Unlimited, where Oracle Applications Unlimited customers can adopt modules of Oracle Fusion Applications incrementally and at their own pace to co-exist with their existing deployments. Never have we forced existing customers to move/migrate out of Oracle Applications Unlimited to adopt Oracle Fusion Applications. See for instance this white paper: http://www.oracle.com/us/products/applications/fusion/fusion-apps-new-standard-bus-wp505097.pdf Customers may not know what to do in the context of their specific implementation as each deployment is more or less specific, but Oracles strategy is very clear. We do not have a dilemma. 3. Forrester does not acknowledge the investments that Oracle has made in Applications Unlimited stating that existing customers are missing out on innovation. In contrast, IDC reported after Oracle OpenWorld 2012 that The Oracle product teams conducted many sessions at Oracle OpenWorld that focused on plans for future releases (e.g., Oracle E-Business Suite 12.2, PeopleSoft 9.2) and long lists of enhancements. Road maps were detailed for the overall product families and later expanded for specific areas such as financials, HCM, projects, and more. Plus, the enhancements are not just the minimum required to meet legislative regulations but are features (including mobile and social) requested by customers and that continue to drive the product capabilities forward. This speaks well of the coexistence strategy that Oracle promotes for its applications as many customers use a variety of products (e.g., Oracle EBusiness Suite Financials, PeopleSoft HCM, and Oracle Fusion Talent Management) to run their businesses and are not ready to move off these products. 2 Fact: Oracle has been investing in bringing innovation to Oracle Applications Unlimited, for instance with the iPad certification in PeopleSoft or with the new mobile capabilities and enhanced user interface in Siebel. 4. As a basis for this speculative research note (or as Forrester puts it to test our theory), Forrester did a survey of 139 clients who self-identified as users of Oracle applications. According to Forrester, this survey shows that of the clients we surveyed, 65% had no plans to implement Oracle Fusion Applications, and another 24% did not know if they would. This survey was done eight months ago in June 2012, so it doesnt necessarily represent current market conditions.

Forrester, Oracle Dilemma: Applications Unlimited Versus Oracle Fusion Applications William Band, Andrew Bartels, Paul D. Hamerman, and China Martens February 11, 2013 2 IDC, Oracle OpenWorld 2012: Oracle Applications Update Christine Dover, Michael Fauscette, Vanessa Thompson, Mary Wardley, Robert P. Mahowald, Amy Konary November 2012
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Forrester didnt specify the number of unique companies being surveyed only the total number of respondents. 45% of the respondents are using Oracle Hyperion. Hyperion doesnt really have anything to do with the context. The survey was limited to the US (60% of respondents) and to Europe (40% of respondents). There is no representation from Asia Pacific, Japan, Latin America, Eastern Europe, Africa or Middle East. The survey was heavily targeted to manufacturing companies (27%); and government, education, and healthcare (17%), so not representative of the entire industry spectrum. Moreover as IDC highlighted it in a research note published in November 2012, the coexistence strategy is important as Oracle Fusion Applications do not yet have all of the capabilities of some of the more established Oracle applications, particularly in manufacturing. This is not a knock on Oracle Fusion Applications as they are a relatively new suite of products that are focused more on non-manufacturing industry verticals and need time to mature.3 We also question the ability for an Oracle Applications user in Manufacturing (for instance) to address questions such as Why doesnt your firm plan to use Oracle Fusion Applications? with options to respond such as Oracles applications strategy is unclear, not mature enough, or high licensing costs. How would a manufacturing worker know? And actually 26% responded Other, suggesting that some respondents didnt really know how to respond. And of course, there is no need to elaborate more but many questions were phrased in a negative way see for instance What do you dislike most about your firms most important Oracle applications? or Why doesnt your firm plan to use Oracle Fusion Applications?. Fact: In December 2012, Oracle publicly stated that Oracle Fusion Applications is doing very well4 and publicly reported over 400 customers for Oracle Fusion Applications that is any module of Oracle Fusion Applications excluding RightNow, Taleo, or any other recent acquisitions. This is more than when Salesforce started. 5 Resources The following resources are available to provide a fact-based perspective on our applications strategy and business: Constellation Research, Market Maker 1:1, Steve Miranda, Oracle Fusion Applications Update - The Inside Story http://www.constellationrg.com/blog/2012/12/market-maker-11-steve-miranda-oracle-fusionapplications-update-inside-story IDC, Oracle OpenWorld 2012: Oracle Applications Update http://www.oracle.com/us/corporate/analystreports/idc-apps-openworld-2012-1877446.pdf Nucleus Research, Technology Value Matrix Second Half 2012 http://www.oracle.com/us/corporate/analystreports/enterprise-application/nucleus-crm-value-

3 Source: IDC, Oracle OpenWorld 2012: Oracle Applications Update Christine Dover, Michael Fauscette, Vanessa Thompson, Mary Wardley, Robert P. Mahowald, Amy Konary November 2012 - http://www.oracle.com/us/corporate/analystreports/idc-appsopenworld-2012-1877446.pdf 4 Source: Constellation Research, Market Maker 1:1: Steve Miranda, Oracle Fusion Applications Update the Inside Story December 31, 2012 - http://www.constellationrg.com/blog/2012/12/market-maker-11-steve-miranda-oracle-fusion-applicationsupdate-inside-story 5 Source: Constellation Research, Market Maker 1:1: Steve Miranda, Oracle Fusion Applications Update the Inside Story December 31, 2012 - http://www.constellationrg.com/blog/2012/12/market-maker-11-steve-miranda-oracle-fusion-applicationsupdate-inside-story

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matrix-1873753.pdf Ovum, Oracle closes a solid fiscal year 2012 with strong Q4 earnings http://www.oracle.com/us/corporate/analystreports/corporate/ovum-q4fy12-1702759.pdf Ovum, Cloud leads the agenda at Oracle OpenWorld 2012 http://www.oracle.com/us/corporate/analystreports/ovum-oracle-cloud-1878211.pdf Ovum, Oracle: Supporting CX through the customer-adaptive lens http://www.oracle.com/us/corporate/analystreports/ovum-cx-customer-adaptive-1885445.pdf

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