​Oracle eyes ERP as next phase of cloud push

One of Oracle's big area of focus for the next 12 months will be around enterprise resource planning as the company continues to push its way into the public cloud market.
Written by Aimee Chanthadavong, Contributor

Oracle's next "monstrous opportunity" for potential growth will be in enterprise resource planning (ERP), according to Tim Ebbeck, Oracle Australia and New Zealand managing director.

"I think from a product perspective, ERP cloud will be a big area," he said.

Currently, the company globally has over 1,000 ERP cloud customers, including some local customers already live on the platform and hosted out of the company's Sydney datacentre.

"We believe that customers in this region that have already adopted cloud services such as HCM (Human Capital Management) or Sales Cloud will look to expand their footprint into ERP Cloud. Experience has shown that the suite capability will succeed over various cloud point solutions.

"We have also seen our traditional on-premise customers look to simplify their IT environments via the adoption of Oracle's ERP cloud solutions as an alternative to time consuming and expensive upgrades typically associated with on-premise applications."

Since Oracle first joined the public cloud party in 2012, the company has been pushing its way into the market with solutions for platform-as-a-service (PaaS), software-as-a-service (SaaS), infrastructure-as-a-service, and most recently data-as-a-service.

The progress being made by the company in those areas have started to show. During its Q4 results, SaaS and PaaS revenues grew at 34 percent constant currency, with expectations that revenue growth rate will jump to around 60 percent in constant currency this fiscal year.

Despite positive outcomes for newer areas of growth, the company's core application business for software licenses dropped 17 percent year-over-year in Q4. Similarly, revenue for hardware systems declined slightly by two percent to $1.3 billion during the same period.

Ebbeck said there are two main reasons for the change in earnings revenue for the company. The first is the increasingly strong US currency, and the second is the market shift customers are making towards more cloud-based solutions, where it is seeing the growth of its cloud solutions exceed the growth of its on-premise business.

"There's nothing we can do [to alleviate the impact the currency has], and every multinational is in the exactly same position, so there's nothing else any of us can do, whether it's BHP, National Australia Bank, Salesforce.com, IBM, HP, or Apple.

"There is no question any on-premise company that is making a shift like we are -- and very successfully so -- is going to see their traditional perpetual upfront licensing starting to slow down, which it has in our applications business, but it's being replaced by massive growth in our SaaS business.

"I think the obvious for us is as that trend continues -- and we're not for second saying that the on-premise business is going to completely go away, but the SaaS growth is immense -- we're going to see the softening of on-premise and a build up of our subscription type revenues, and that's exactly what we're seeing."

Ebbeck suggested that unlike most of its competitors who are "traditional businesses" that are also making similar shifts; improvements of the company's efforts have shown. Ebbeck drew on results from Australia and New Zealand as an example, saying last year for the first time the company grew locally -- in all areas, with market share in particularly increasing in its SaaS business.

He said this was mainly due to the reorganisation of its application business, and teams are now being more focused on specific tasks, whether that's "focusing on making Salesforce number two in the space"; or improving its real-time capabilities in computing and storage -- an area that Ebbeck said Oracle has lagged in, but is now catching up.

"The business was a bit flat, and one of the reasons I was brought in was to build on the great work my predecessor had done in the business, but perhaps take it in a more aggressive way into some of these new areas, which is what we're doing.

"We have refocused the business locally here; we have a number of new leaders, and added to the great talent and brought new people in the business to give it fresh energy, but also to give it clearer direction," he said.

To support the company's push into the cloud market, Oracle committed to recruiting 1,000 cloud sales staff in APAC in March, including up to 150 in Australia and New Zealand. Ebbeck said the company's recruitment number is another testament to the company's growth in comparison to competitors that are laying off staff, alluding to companies such as Microsoft, which announced that it will be cutting 7,800 jobs.

The company's growth in Australia and New Zealand, according to Ebbeck, signals the company is on track "to be the largest cloud company in the world".

"Where we differ from our cloud competitors, we make a lot of money, which is why invest $5 billion per year in R&D; but the second thing is we're going through a transition as well, and what we're seeing is massive growth in our SaaS and emerging PaaS revenues, as well," he said.

But it's not just from a product front that Oracle has been changing. Ebbeck said internally efforts have been made to refresh the company's culture, which previously had somewhat been more traditional. As part of the APAC recruitment program, Oracle launched an initiative known as Rainmaker. This has led to the creation of the Young Oracle Group Australia (YOGA), which is responsible for working with customers, venture capitalists, and education institutions.

The company also relaunched its women's leadership diversity program to bump up the headcount of women in the company. Currently women make up 45 percent of total staff in Australia and New Zealand, Ebbeck said.

But the main focus for Ebbeck in the coming 12 months will be to change the customer perspective of Oracle from previously being a difficult company to deal with.

"Having sat on a major competitor when I ran SAP, I looked at Oracle as an arrogant disruptor. I think what we are now is we're hopefully losing the arrogant tag, and so obviously in the local market we're more focused on the customers and less on our products," he said.

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