Larry Ellison: Oracle's cloud ERP biz will be "a lot bigger" than $20B in 5 years

Oracle on Thursday published second-quarter financial results showing continued momentum in its cloud business, particularly from its cloud enterprise resource (ERP) products. The cloud ERP business is growing at a healthy rate, roughly on pace to hit about $20 billion in five years, Oracle co-founder and CTO Larry Ellison said on a conference call Thursday. 

"I think it's going to be a lot bigger than that," Ellison said before outlining his vision for the business. The ramped-up growth will rely on partnerships with key industries, he said -- namely, logistics and financial services. 

Working in concert with banking and logistics, he said Oracle could add features like delivery tracking, invoicing, payments, and more directly into cloud ERP systems. Oracle, he said, will "soon bring an entirely new level of automation to B2B commerce," creating new B2B procurement flows that resemble the ease of B2C digital transactions. 

This plan, Ellison said, "will dramatically simplify procurement and supply chain processes. "It represents a huge new opportunity for Oracle to grow cloud ERP systems." 

Establishing the partnerships to pull this off will be made easier by Oracle's existing relationships, Ellison suggested. Financial services, he has said, will represent one of Oracle's two largest verticals going forward (the other being healthcare). The company also already does significant business with logistics companies.

Currently, Oracle has 8,500 Fusion ERP customers with revenue growing 35%. It has an additional 28,400 NetSuite ERP customers with revenue growing 29%. The overall cloud ERP business currently brings in around $5 billion for Oracle, Ellison said. 

Of the 8,500 customers using Fusion ERP, only about 1,000 moved from Oracle's on-premise product -- the remaining 7,500 were completely new customers. 

"The vast majority of our cloud ERP business is not coming from our install base," Ellison said. "They're coming from someone else's install base."

Meanwhile, the company has another 6,500 on-premise ERP customers it expects to move to the cloud. "That's all upside," Ellison said.

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