Sunday, June 28, 2009

Maybe Oracle is just bending the truth

In its typical boastful style Oracle took shots at the competition during its latest earnings announcement, claiming to be taking share from SAP. I find myself in the unique position of having to agree with Oracle on this one. They did just have a better license revenue quarter than SAP, but it follows a bunch of gains by SAP. And at the end of the day, when both numbers are double digit negatives, isn't this a silly argument to be having? 

Oracle actually claimed to be taking share from SAP "in every region of the world". I don't have the data in front of me to comment on each region individually. I could get it, but I'm not sure that you care that much. This is more a commentary on the way Oracle is spinning the overall message.

Michael Hickins was very blunt about it, and wrote that Oracle is lying about SAP. This caught the attention of Oracle, no surprise, and led to the following comment from Karen Tillman of Oracle. 


Michael ? Lying? If you look at year-over-year growth rates of Oracle and SAP for the last two quarters, whether in constant currency or in USD, we are outperforming SAP in every region.

And, that doesn't take into account that SAP includes Business Objects sales in their applications numbers. Oracle's apps numbers are purely applications. If you took Business Objects out of SAP's applications number for an apples-to-apples comparison, the difference would be even more dramatic.

The beauty about facts is, they don't lie.

Hickins comes back with a post today and says it's odd that Tillman suggest we back the revenue from Business Objects out of SAP's figures, but didn't suggest we pull Siebel, PeopleSoft, J.D. Edwards, and Hyperion out of Oracle's figures.

By this time I'm pretty curious to look at the spreadsheets I track on these two companies and try to make some sense of this. I've looked at the numbers for the past two quarters. If Oracle isn't lying they at least can be said to be severely bending the truth. If I go back and look at what each company reported two quarters ago (that's the quarter ended 12/31/08 for SAP and 2/28/09 for Oracle) I can't find a single comparable metric where Oracle did better than SAP. That must not have been what Tillman meant when she said "for the last two quarters".

She must have meant Oracle last quarter (ended 5/31/09) and SAP's last quarter (ended 3/31/09) which between the two of them are "the last two quarters" reported by these companies, I guess. Here, I'm going to side with Oracle. Can't imagine siding with Oracle on anything, but on the narrow point about the impact of revenue from Business Objects, I have to. SAP closed that acquisition in mid-January of 2008. That means SAP's 1Q09 includes three full months of BO revenue, which is compared against 2-1/2 months of BO revenue during 1Q08. There is some small inorganic component to SAP's last reported quarter.

The major Oracle acquisitions Hickins lists, Siebel, PeopleSoft, J.D. Edwards, and Hyperion, all closed long enough ago that there is no inorganic boost from them during Oracle's last quarter. They've made a bunch of smaller apps related acquisitions that are providing some inorganic growth, but many of the recent deals have been smaller private companies making it nearly impossible to back them out of Oracle's figures.

But let's look at what Oracle is boasting about here…in its most recent quarter it reported that new license revenue in its apps business was down by 19%. In SAP's last reported quarter it reported Software revenue down 33%. Oracle wins that argument.

Now just a bit broader look…combine license, maintenance, and support revenues. Oracle's apps business is down 9% in its last quarter, compared to SAP being flat over the prior year. Or stick with just license/software revenue, but over a longer time horizon. Over Oracle's last four reported quarters its apps new license revenue is down 16%. SAP's is down 2%.

So Oracle has had one arguably better quarter against a series of losses to SAP. That's Oracle's narrow victory. Maybe they shouldn't jump up and down about it too much. Right now it just looks like an argument about whose ship is sinking a little more slowly.

1 comment:

  1. Thanks for link -- and a nice post yourself. Interesting tit for tat, that's for sure.