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Oracle (Nasdaq: ORCL) is offering to support clients' PeopleSoft and Siebel applications in its own data center -- a managed service option that it has offered with its own Oracle applications for the last few years.
Oracle is including these new offerings in its On Demand portfolio, although the name is confusing. Basically, clients purchase a traditional license for the application, which is then held at Oracle, where the application is managed, maintained and upgraded as necessary.
It is an ideal option for companies that would like to avoid the headaches and costs of maintaining software in-house. For instance, companies that already have investments in Siebel's enterprise licenses today could hand over management of those applications to Oracle for a monthly fee.
Yankee Group analyst Sheryl Kingstone tells CRM Buyer there are pros and cons to both approaches. "Companies have to evaluate if they want a managed service environment or a typical Software-as-a-Service environment -- they are two completely different products."
On Demand vs. Managed Services
Oracle's PeopleSoft Enterprise On Demand managed service offering includes human resources, finance, IT, procurement, marketing 
, services and sales across all industries. Oracle On Demand for Siebel CRM -- the managed service offering for Siebel -- includes advanced order management, analytics capabilities and vertical functionality, including comprehensive business process support for 23 industries.
In exchange for the services' monthly fee, Oracle accepts responsibility for deploying, managing and updating the associated software.
"With these Oracle On Demand offerings, customers will benefit from the repeatable processes [of] implementation, upgrades and operation that ultimately help speed deployment, as well as provide customers a comprehensive suite of management services to protect, extend and evolve the value of their Siebel CRM and PeopleSoft Enterprise investments," said Marc Schwarz, senior vice president, Oracle On Demand.
Waiting for Fusion
To be sure, handing over responsibility to a third party to manage an application -- be it an Internet-based application or on-client server-based application -- can be an attractive option for many firms. As much as 90 percent of an IT budget can be devoted to maintenance, Kingstone notes.
In addition, she said, it is possible that a managed service environment could ultimately be less expensive for companies, since Oracle is providing the management services in a one-to-many environment. In other words, companies could realize the same economic returns as they would with any outsourcer.
Companies that already have invested in Siebel or PeopleSoft and are interested in staying with Oracle are poised to benefit the most from the new offerings, she adds. "In a managed service environment, it could be easier to shift to [Oracle's new] Fusion application when it comes out."
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