The Oracle On Demand for ISVs program, announced last week, enables the thousands of small and midsize ISVs that develop applications around Oracle's E-Business Suite to sell their software as a hosted service.

In the program, Oracle, of Redwood Shores, Calif., will provide setup and maintenance of the Oracle application server and management tools, as well as monitoring, security and upgrades. ISVs will host their own applications.

"Typically, it's only been the Amazon.coms of the world that can afford this type of infrastructure," said Bjorn Espenes, president and CEO of Infopia Inc., in Salt Lake City. Infopia, which makes e-commerce-enabling software, is using Oracle's On Demand program to provide 24-hour support and maintenance to its 120 customers.

Prior to adopting Oracle's On Demand infrastructure, Infopia pumped $300,000 and more than three years into running its own data center to host its customers' applications. It turned out to be a losing proposition.

"We're really good at writing software but really bad at managing data centers," said Espenes.

Click here to read about Oracle's new hire of former Hewlett-Packard exec Juergen Rottler to lead the company's On Demand charge.

The On Demand offering from Oracle is geared primarily toward ISVs that do not have the financial wherewithal to offer their own hosted applications to customers. Oracle primarily expects ISVs that develop vertically oriented applications for the E-Business Suite—retail, for example—to be the ones most interested.

It's likely that some ISVs will compete with Oracle, but, according to Paige O'Neill, senior director of Oracle On Demand, in most cases, there won't be an issue since the ISVs are so vertically aligned.

The potential glitch in the On Demand offering is that customers may have to deal with more than one vendor to solve issues—a situation Infopia's Espenes said he is avoiding by structuring his contracts with customers so that his company takes responsibility for the infrastructure.

"If there are issues, [customers] come to us, and we go to Oracle. Dealing with a small business and putting them directly to Oracle—that wouldn't work," Espenes said. "We have the relationship with the customer. It gets so intertwined.

"You have the Oracle infrastructure, then the application layer on it and our applications that run on top of it ... with dozens and dozens of other applications tied in—and tied in with the customer's legacy system. There are a lot of different moving components. Just to figure out which moving components problems reside in—that's something we have to do."

Oracle's income has grown on database software sales. Click here to read more.

Oracle began offering a hosting service more than four years ago under the name Oracle Business Online. A year later, it became Oracle Outsourcing. About six months ago, the company updated the name to Oracle On Demand and increased marketing and development resources for it.

Oracle offers On Demand apps for ISVs

$10 per user/per month buys Oracle Collaboration Suite for e-mail, file management and Web conferencing.

This article was first published on eweek.com.

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