As Published In July/August 2005

Cover Feature

Great Expectations
By David A. Kelly

Today's small and midsize businesses tackle significant IT challenges.

For years, small and midsize businesses (SMBs) were considered local operations, more concerned with cash flow than competing with larger enterprises. But not anymore. In terms of IT, today's SMBs often have just as many challenges as, if not more than, large enterprises.

"Everything a big company does, from an IT perspective, a small company needs to do. But the scale and the technology being applied are different," says Ray Boggs, vice president of Small and Medium Business Research at technology research and analysis consultancy IDC. "Today's customers expect higher levels of performance, even from small companies."

SMBs face numerous challenges in competing with enterprise and global companies—rapid growth requirements, the need for flexible solutions, heightened security requirements—but they have limited IT resources and funding.

"We can't keep throwing bodies at technology problems whenever our requirements change," says Charles Berry, IT director at Copper State Bolt & Nut Company, in Phoenix, Arizona. "From the technology side, we need to have something that can grow, and there's no question that Oracle Database Standard Edition One can grow with us."

Copper State is one of the largest fastener companies in the southwestern U.S., generating more than US$44 million in revenue in 2004 through its 16 locations across Arizona, Colorado, and Texas. Although Copper State is growing rapidly, it has just four full-time IT personnel to manage critical customer data, business applications, and infrastructure needs for the 315-person company.

A new Oracle customer, Copper State has already developed and deployed full-featured Oracle-based applications. "We have already seen tremendous results in the power of the information we can put at people's fingertips, from sales and branch managers to the company chairman," says Berry. "We couldn't have done that with other products."

In many cases, lack of extensive IT investments makes it possible for SMBs to overcome these challenges and build enterprise-class IT infrastructures that can grow with their business. With special editions of Oracle Database 10g, Oracle Application Server 10g, and Oracle E-Business Suite, Oracle offers enterprise-class technologies in practical, solution-oriented packages for SMBs, independent software vendors, value-added resellers, and systems integrators at compelling prices.

Oracle Database Standard Edition One

"We've priced and packaged Oracle Database Standard Edition One so that small-to-midsize customers can get the No. 1 database on Windows, Linux, Mac OS X, or UNIX for just US$149 per user. It gives customers the security, performance, scalability, and reliability Oracle is renowned for," says William Hardie, senior director of Database Product Marketing at Oracle. "Also, many third-party independent software vendors' applications tailor-made for small-to-midsize businesses are available on Oracle's platform. Oracle Database Standard Edition One installs in minutes, is easy to use and manage, and has a low entry cost."

Oracle Database Standard Edition One is available on single servers with one or two processors. The next step is Oracle Database Standard Edition, which supports up to four processors and includes Oracle Real Application Clusters. After that, businesses can proceed to Oracle Database Enterprise Edition, which supports an unlimited number of users and processors.

"A typical customer deploying Oracle Database Standard Edition One is a small business or a branch office or department of a larger company," says Valerie Ashe, product director for Oracle SMB Database Marketing. "Many organizations have Oracle in their data center and standardize on Oracle Database Standard Edition One in their branch departments for better total cost of ownership."

Because all three Oracle Database editions share the same code base, there's no fundamental difference between them, other than the processor limitations and options. "It's a great growth strategy for companies, because they can purchase Oracle Database Standard Edition One to meet current requirements, while having a built-in path to easily scale operations as their business grows," says Ashe. "Oracle Database Standard Edition One's per-user price is very attractive. Using it is an easy way to get all their processes and information in one place while their business is still small, so they can grow quickly and inexpensively. Plus, they don't have to worry about rewriting applications or migrating data."

Oracle Database Standard Edition One, like other Oracle Database editions, provides complete support for the Windows and .NET development environments common to many small businesses. "Oracle offers developer tools that are tightly integrated with Visual Studio .NET," says Ashe. "So if .NET developers are interested in developing against Oracle databases, it's easy for them—in fact, they can download developer tools free from Oracle Technology Network (OTN)."

Ashe says Oracle Database Standard Edition One simplifies deployment and management through improvements in installation, self-management, and automation. "Customers can learn to use it within two days," she explains, "using our free two-day DBA tutorial on OTN. You don't need a full-time DBA to manage traditional manual administrative tasks such as memory and storage management. It's all handled by Oracle Enterprise Manager Database Control, so it's attractive to SMBs looking for a database solution to manage and store data for their business applications."

Oracle Application Server Standard Edition One

Traditionally used as an enterprise middleware platform for server-side applications, Oracle Application Server is now optimized for SMBs, with the recent release of Oracle Application Server Standard Edition One. It includes a new feature, designed for SMBs, called Instant Portal. "Rather than just giving a customer a portal server and a toolkit for building their own portal, Oracle Application Server Standard Edition One includes a prebuilt portal application that can be edited and customized by end users, not by developers," says Rick Schultz, vice president of Product Marketing at Oracle. "Not all small businesses can build their own portal, so we've included an out-of-the-box portal application."

Like Oracle Database 10g Standard Edition One, Oracle Application Server Standard Edition One is a good fit for numerous situations, such as bringing applications deployed on Oracle Database Standard Edition One to internal or external Web users. It's also good for midsize businesses that want a Java-based middle-tier environment and are doing custom development work or building applications to solve specific problems. "One of the most popular ways SMB organizations will use Oracle Application Server Standard Edition One is through an ISV solution," says Schultz. "They might buy a packaged application running on top of Oracle Application Server Standard Edition One."

Although Oracle Application Server Standard Edition One (US$4,995 list) includes all the components of the Standard Edition and the ability to run on two CPU machines (for scalability), there are two main differences from the Enterprise Edition. Some of the complexity is hidden to make it easier for smaller organizations to install, deploy, and manage, and it is easier to use, with features including Instant Portal. "A fundamental difference between SMBs and larger companies is that they [SMBs] lack a full set of DBAs or system administrators who can operationally manage an application server," says Schultz. "Besides providing Instant Portal so that those familiar with a Web browser can customize and configure their own interface to their business applications, we've created an administrative interface that lets non-system-administrators set policies governing which groups can access which applications and Web pages. You can't assume that the midmarket will have a large IT staff—or necessarily any at all."

For organizations without an IT staff, or even those with a small one, Oracle is collaborating with its channel partners to help them go to market with Oracle Application Server Standard Edition One. "There's a huge ISV play here, and over the next year, we'll see more and more ISVs, systems integrators, and VARs that have built specific solutions around it," says Schultz.

Oracle E-Business Suite Special Edition

Oracle E-Business Suite Special Edition weaves some of the key modules together through 28 cross-departmental business flows focusing on business processes. "The flows comprise modules with full out-of-the-box integration. We've made assumptions based on our vast repository of implementations and preconfigured these business flows to solve SMB business problems," says Frank Prestipino, Oracle vice president of Global Enterprise Strategy. "With a simple implementation tool, customers and their implementing partners can personalize the system and complete the configuration."

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With a series of personalization and configuration questions, the implementation tool lets the partner and the customer produce a tailored instance of Oracle E-Business Suite and move quickly into value-add implementation steps, including user acceptance, data migrations, conversions, and testing. "This reduces the implementation time significantly; makes it quite affordable; and removes much risk, making it far more predictable for customers to know what they are getting," says Prestipino. Because Oracle E-Business Suite Special Edition includes the option of full Oracle E-Business Suite functionality, as customers grow and gain sophistication, they can absorb more functionality and grow the system as needed.

"With Oracle E-Business Suite Special Edition, SMBs have a credible, competitive platform, because with the same application as some of their enterprise-size competitors, they're on a more level playing field," says Prestipino.

Investing for the Long Run

Being a small or midsize business is much like being a large enterprise, but without big budgets and extensive IT resources. "SMBs face challenges that can be just as complex as they are for enterprises, but they don't have the same budget for technology and infrastructure," says Nigel Montgomery, European research director at technology research and analysis firm AMR Research.

SMBs can't afford to make bad decisions—nor to have a technology they've invested in become obsolete.

"When technology changes, a small business doesn't have many IT resources," says Copper State's Berry. "When we were evaluating Oracle, we saw how it makes a decision and sticks with it, so if you make an investment in something like PL/SQL, you can continue to take advantage of it. We can't throw away what we've done over the last 10 years, which we've had to do with Microsoft."

Managing IT systems for a rapidly growing fastener company that stocks and sells over 40,000 parts is a big job. Copper State has developed business applications internally for more than 20 years but was facing aging technology and a user base seeking more-powerful information. Copper State turned to Oracle Database Standard Edition One and Oracle Application Server 10g Enterprise Edition on a two-processor Dell 2850 server running Red Hat Linux.

With limited IT personnel, Copper State couldn't waste time integrating point products to solve problems but needed to build value by creating new applications or streamlining business processes—which was easy to do with Oracle. "Another reason we bought Oracle is that everything works together seamlessly—something you can't say about other products," says Berry. "For example, publishing our Oracle Reports directly to Oracle Portal works seamlessly. We also replaced our intranet in about two weeks, and our users can contribute content and information without involving the IT department. You don't need to know HTML, and it's very interactive and robust."

Although most large companies have backup-and-recovery strategies and business-continuity plans, smaller companies suffer if critical data is lost or systems are down. Choosing a database technology with sophisticated enterprise features such as Oracle Database 10g's Recovery Manager turned out to be fortuitous for Copper State. "We accidentally erased our stored procedures, and Oracle Recovery Manager saved us," says Berry. "We blew them away on Friday and didn't notice until Tuesday, at which point we rolled back to Friday and got everything back."

Getting Company Owner Buy-in

GAL Manufacturing Corp.'s business is always going up and down. The company has been building and repairing elevators since 1927, when Herbert Glaser, a German emigrant, and two partners started G.A.L. Electro Mechanical Services in New York City. Still family-owned and -run, the company designs and builds elevator signal fixtures, door equipment, and controllers. You've probably seen GAL's push buttons, door operators, control panels, and other parts in elevators. GAL uses Oracle Database Standard Edition to support its VISUAL Manufacturing ERP system and Web-based applications.

Much of GAL's revenue comes from companies worldwide who use GAL's Web site and online configuration application. The system integrates the Web site with GAL's Oracle database, letting customers log in, order parts for their elevators, or even build an entire elevator package online.

"We don't shut down any of our production databases at night, because we have international customers and sell worldwide," says Rexy Philips, GAL's IT manager. "In fact, we ran Oracle nonstop for 260 days without shutting it down once, until we accidentally pulled the main power plug and the whole thing came down. But we didn't lose a thing. When we started Oracle back up, it started in exactly the same place, with zero loss. If it had been any other database server, one would imagine a certain amount of legwork, time lost, and maybe even reinstalling and redoing everything."

Another challenge facing smaller businesses is that IT decisions often have to be made by, or at least involve, a company owner; president; or other senior, non-IT manager. "The smaller you get, the farther up the tree the decision is, so the CEO or the owner might make the IT-spending decision," says AMR's Montgomery. "Our research has found that in companies of 250 to 999 employees, IT makes 52 percent of the decisions; with 50 to 249 employees, that decreases to 35 percent; and in companies of 10 to 49 employees, only 32 percent of the decisions are made by IT-related people."

Although knowing what you're doing is important for any IT manager, it's especially important in an SMB, where approvals for IT investments typically come from the top, as at GAL. "One of the core owners is involved in IT, so we meet with him to say what we need strategically and what we need to purchase, and we have discussions so he's comfortable with our decisions and purchases," says GAL's Philips. "Because it's family-owned, trust and experience are always factors."

Those decisions have been successful for Philips and his team. They're in the process of expanding their Oracle-based enterprise resource planning (ERP) solution to a business-to-business (B2B) solution linked to a business partner. But such success doesn't mean that everything else is easy, says Philips. "Every day is a challenge in a small company; you need to step up to the plate and deliver." It's an appropriate statement from the IT director of a company in the shadow of Yankee Stadium.

Achieving High Reliability for Remote Deployments

Snapshots COPPER STATE BOLT & NUT CO. Phoenix, Arizona www.copperstate.com Industry: Fasteners Year founded: 1972 Number of employees: 315 Oracle products: Oracle Database Standard Edition One, Oracle Application Server 10g GAL MANUFACTURING Bronx, New York www.gal.com Industry: Manufacturing Year founded: 1927 Number of employees: 350 Oracle products: Oracle Database Standard Edition on Linux 3LOG SYSTEMS Richmond, B.C., Canada www.3log.com Industry: Logging Year founded: 1997 Number of employees: 40 Oracle products: Oracle Database 10g Standard Edition, Oracle Database 10g Standard Edition One SEKO WORLDWIDE Itasca, Illinois www.sekoworldwide.com Industry: Transportation and logistics Year founded: 1976 Number of employees: 125 Oracle products: Oracle Database 10g Standard Edition with Real Application Clusters, Oracle Application Server 10g, Oracle Collaboration Suite JOPARI SOLUTIONS Concord, California www.jopari.com Industry: Insurance payment automation Year founded: 2003 Number of employees: 11 Oracle products: Oracle Database Standard Edition One, Oracle Database 10g Standard Edition with Real Application Clusters MAINSTREAM TECHNOLOGIES Little Rock, Arkansas www.mainstream-tech.com Industry: Application hosting, outsourcing, and software development Year founded: 1996 Number of employees: 25 Oracle products: Oracle Database 10g Standard Edition, Oracle Database Standard Edition One

Although it still takes fertile soil, clean water, and sunlight to grow trees, today's logging operations and forestry management companies rely increasingly on technology. 3LOG Systems, based in the Vancouver, B.C., Canada, area, develops forest inventory and management software for timber companies, including Boise Cascade and Weyerhaeuser, with installations ranging from a single user to hundreds of users. 3LOG uses Oracle Database to meet the scalability and high-reliability requirements of its customers, including more than 300 North American mills.

Ensuring high reliability is one of 3LOG's key challenges, because the systems tend to operate 24/7. The systems gather real-time information on shipping, receiving, and managing logs and forestry products from very remote or rugged radio-frequency-identification- or Geographic Information System-based global positioning systems. "We have customer installations in the very remote wilderness, so reliability is really important. You can't be driving out every day to reset the systems when it takes hours to reach a site," says Hassan Farzadeh, 3LOG's director of software development. "We have one customer installation running Oracle that's so remote there's no power supply. The system runs on a generator and uses Oracle synchronization via a satellite phone to transfer data on a scheduled basis."

As a software developer, 3LOG needs to create solutions that address the widest-possible market, from both a cost and a scalability perspective. "We chose Oracle Database because it is scalable from very, very small—single-task, single-user—situations to large installations with hundreds of users without infrastructure change," says Farzadeh.

But even if its application can scale effectively, 3LOG won't be successful unless it can make it cost-effective and help its customers manage it efficiently. Therefore, ongoing management costs are also an important consideration for 3LOG. "When our customers compare Oracle against Microsoft SQL Server, Oracle is cheaper by far in terms of not just the initial cost but over a year, including the time needed to reboot or upgrade other solutions," says Farzadeh. "Most of our customers using Oracle Database Standard Edition One don't even have an IT staff in-house and may not even know their system is running on Oracle. As long as it's running and not giving them a headache and they don't have to reboot weekly, they're happy, and we've done our job."

Maintaining High Availability Across the Supply Chain

In the centuries-old freight transportation business, SEKO Worldwide relies on technology for its competitive edge. Using Oracle technologies, Itasca, Illinois-based SEKO helps companies dynamically manage shipment processes, from purchase order to consumption, through its global supply chain and logistics network. Key architecture components include Oracle Database 10g Standard Edition with Real Application Clusters running on Red Hat Enterprise Linux Advanced Server 3.0, plus Oracle Application Server 10g.

"Oracle let us create an almost infinitely scalable, high-availability platform that will let users worldwide securely access our system," says Chris Johnson, system/network administrator at SEKO. The company used Oracle Database Standard Edition as the core database for its critical freight-forwarding solution, with Oracle Application Server for the middle tier. "We chose Oracle so we could maintain a common vendor over the entire platform and to ensure flawless integration between the Web, application, and database tiers."

An alternative freight-forwarding software solution SEKO considered did not meet its scalability, high-availability, and security requirements. "The package, based on Microsoft SQL server and Citrix, made use from other parts of the world over the Web difficult and rather insecure," says Johnson. "The Oracle solution required only a Web browser on the client side, so locations in other countries didn't need to be directly connected to our network."

SEKO isn't stopping there. The company is upgrading its mail system and consolidating it with other parts of its Oracle infrastructure, using Oracle Collaboration Suite to help manage critical data in e-mail and file systems. "We chose Oracle Collaboration Suite over Microsoft, because of the centralization model," says Daniel Schrock, infrastructure manager at SEKO.

Maximizing Limited IT Resources

Jopari Solutions, a business process improvement outsourcing company based in Concord, California, specializes in helping insurance companies with automation of claims payments and value-added connectivity between claim intermediaries and their payee base. By removing manual steps and automating traditional paper-based payment processes, Jopari lets companies significantly reduce direct and indirect claim-payment costs—typically eliminating more than 60 percent of conventional processing costs.

Although Jopari's business is delivering savings by automating payment processing, it faced a problem common to small companies during product development and initial deployments: conserving cash assets and using limited resources wisely.

"We needed a robust, scalable system with the ability to start out small and grow rapidly as we add major accounts," says Patrick Stack, Jopari's chief technology officer. "It had to be secure and had to perform. We chose Linux as our deployment system, because of its clustering capabilities, and Oracle for its database performance and scalability. We chose Oracle Database Standard Edition One when we were starting out, because it offered optimal cost-effectiveness and the most horsepower at the price we were comfortable with in a startup development environment."

So far, Jopari's development and deployment strategy has been highly effective. Jopari achieved full production with its first client in late 2004 and has signed reseller agreements with several nationally prominent bill review and claim management companies, representing more than 300 insurance payers. The company's projected five-year capacity to process hundreds of millions of financial transactions annually is on target. "Oracle Database Standard Edition One gave us an affordable, highly practical upgrade path, because we could start by upgrading the processors and then upgrade to Standard Edition, with its clustering capabilities. It gave us a nice migration path for moving forward as our business grows," says Stack.

Serving Cost-Conscious Customers

Like many other systems integrators and ISVs serving the small-and-midsize market, Mainstream Technologies, in Little Rock, Arkansas, needs to deliver value quickly and affordably.

"We've been working with Oracle for seven years, because we've always thought it's the best database out there. You can't beat it on technical merit," says Eric Jenkinson, manager of information technology at Mainstream. "But time and time again, when we've proposed it as part of a solution, smaller companies push back with concerns about price, management difficulty, or lack of UNIX hardware. We could always knock out two of those arguments, but the one we couldn't beat was price. Now with Oracle Database Standard Edition and Standard Edition One, we talk with customers considering Microsoft SQL Server and can beat them on price and functionality hands down."

Next Steps LEARN more about Oracle's solutions for small and midsize businesses DOWNLOAD Oracle Database 10g Oracle Application Server 10g Oracle Collaboration Suite Release 2

With a wide variety of customers from across the U.S.—from law firms to retail companies to those dealing with hazardous waste—Mainstream needs to meet a wide range of systems analysis, process management, and custom development needs. The company uses Oracle Database Standard Edition One and Oracle Database Standard Edition with Real Application Clusters.

Perhaps the biggest challenge Mainstream faces is surmounting the small-business mentality that using desktop-based applications is the best way to solve its problems. "We've had customers that would pick up 5 or 10 copies of Microsoft Access or spreadsheets, but they can't communicate with each other easily and don't have a central location for their information or any way of managing them. Yet customers choose that because it's perceived to be cheaper," says Jenkinson. "But they're not looking at the overhead required to build new processes to link them together or the time they'll spend reconciling information that's out of sync. We've found that some of our customers will spend hours each week just reconciling spreadsheets. They've got 15 sales managers and all they have is 15 spreadsheets, not a centralized database or system of record. All the time they spend reconciling is time taken away from identifying what they can do for, and sell to, their customers."

Fortunately, Oracle HTML DB provides an alternative. This browser-based application development environment lets users take data out of spreadsheets and desktop databases, drop it into Oracle Database 10g, and quickly build Web applications. Instead of distributing data, applications, and spreadsheets throughout an organization, using traditional desktop solutions, a company can use Oracle Database Standard Edition One with HTML DB to centralize all that information and create easy-to-use, easy-to-manage Web applications.

"Oracle HTML DB gives us a way to give them one centralized database and help them eliminate those meetings and need for reconciliation," says Jenkinson. "The sales managers can just go to a Web browser and look up their information through an HTML DB Web application and see what everyone's doing. They can have better insight into what's happening in their organization, there are no syncing issues, and it's more cost-effective. Oracle HTML DB gives us the table format, approximates the column sizes well, and loads the data very quickly—there's no need for any more importing from Excel. We can now get things done very quickly and cost-effectively."