Computerworld Australia — The business model used by Oracle and SAP is fundamentally flawed and will lead to their downfall within the next decade, said Technology One chairman Adrian Di Marco.

Speaking exclusively with Computerworld, in a wide-ranging interview Di Marco said that the fact that SAP and Oracle use third party implementers has lead to growing customer dissatisfaction.

"Oracle and SAP are expensive, and the question is whether they are delivering value for money," Di Marco said. Technology One competes with Oracle and SAP for mid-range businesses, educational institutions and municipalities that turn over between $250 million and $2 billion.

Di Marco said his company has a competitive advantage because it does its own implementation. "People are replacing Oracle and SAP in our target market with our new generation Connected Intelligence product," he said. "It's a vindication of our strategy of developing in Australia, doing our own R&D and doing our own implementations."

He also called into question Oracle, and to a lesser extent, SAP's acquisition strategies. "Buying Sun just doesn't make any sense at all," he said, of Oracle's recent decision to acquire the iconic Silicon Valley brand for $US7.4 billion. "A decade ago, who would have thought that a brand like CA could fall, yet it has," he said. "The same thing will happen to Oracle and SAP."

He also called into question the viability of cloud computing in the enterprise space, saying that it was at least a decade away. "It's a point solution - like Salesforce.com - as opposed to an enterprise solution," he said. "There is a minefield of issues for enterprise, such as where the data is, the security and protection aspects of the data in the cloud," he said. "We simply aren't seeing it as a big thing."

Where it will make inroads, he said, is with early-stage companies that are geographically dispersed and agile. In fact, it's these agile companies, he said, that will come along and out-innovate the incumbent players. Technology is a process of renewal, and the incumbents aren't always willing, or able to take advantage of new technologies or new ideas, he said.

He points to the iPhone as an example; it took a company from outside the telecommunications space to show the big players - Samsung, Nokia and Motorola - that a phone was essentially a software-based device. "And the thing is that something like the iPhone could have been done in Australia," he said. "I firmly believe it."

That's because Australia has outstanding R&D and great educational institutions. We also have to learn how to do things on a budget, he said.

"The problem is that we don't build enough IP [intellectual property] in Australia. We're still stuck in that mentality of digging things out of the ground. The NBN is the one exception to this, and even that is aimed at old industries rather than encouraging new ones."