Oracle's cloud ambitions may be nearing moment of truth

Oracle is moving closer to what some analysts predict will be a cloud moment of truth for its big transition to a subscription-based business model and the company is starting to have enough reference customers to make its case.

The enterprise applications and database company's CloudWorld powwow in New York kicks off Wednesday. CloudWorld is a series of regional events where Oracle pitches enterprise and business decision makers on its cloud wares. Last year, Oracle outlined how it would make its software easier to consume and maintain.

This year, Oracle has been allowing more of its customers do the talking. Reference customers are a big deal in enterprise software as industries tend to follow each other. Meanwhile, customers with decent stories to tell help Oracle's case that it's a cloud player. Wall Street has put Oracle in a "prove it" corner and frets about whether it can grow cloud fast enough to offset enterprise licenses. Oracle's fiscal second quarter was mixed.

For Oracle, the game is pretty clear. Convert its customers to its cloud products over time. The challenge is that Salesforce, Workday and a bevy of others are aiming at Oracle and have had traction. However, there is evidence that Oracle can convert customers and keep its stack intact. Boingo Wireless CEO David Hagan went with Oracle's enterprise planning cloud as it upgraded from Great Plains, now owned by Microsoft. The win for Hagan was that Oracle's enterprise cloud tied to its on-premise financial planning tools, which are used by Boingo. The upgrade took six months and Hagan, a veteran of more than a few traditional enterprise resource planning implementations, sees Oracle differently than before.

Now Oracle still has a cloud menu that's massive, but its case is that it can grab a foothold with existing customers and build from there.

At an analyst meeting on Tuesday, Oracle outlined the following via Constellation Research analyst Holger Mueller:

• Oracle is pushing its data as a service as a large category.
• The company's cloud is completely built on REST APIs.
• Oracle is looking at human capital management, ERP and supply chain as key cloud beachheads.
• From Black Friday to Cyber Monday, Oracle's CX Cloud sent more than 1 billion verified emails.
• Oracle has been focused on integration and implementations support. Each customer has a "success specialist" and Oracle has an Integration Cloud Service to tie silos together.
• On-premise is a leverage point for Oracle's cloud deployments. The company is betting that prebuilt integration keeps customers in the fold.
• CEO Mark Hurd said that platform as a service is a large opportunity for the company and software as a service is accelerating.

A few analysts are starting to see Oracle as a credible cloud player. Stifel analyst Brad Reback recently noted in a research report:

With a growing list of referenceable cloud customers (both Fusion and acquired), along with a rapidly growing PaaS offering that is ramping faster than expected, we believe Oracle has a credible cloud portfolio, as evidenced by increasing win rates against SaaS competitors. We expect SaaS/PaaS booking momentum to remain strong due to a number of reasons, including Oracle: 1) simply has more SaaS/PaaS products to sell; 2) continues to roll out products into new geographies; 3) is more effectively able to target the mid-market where it could not previously; 4) has a more experienced salesforce; and 5) has a more referenceable customer base.

To Reback, Oracle is about to hit an inflection point where revenue for its cloud products should accelerate. If the cloud can deliver consistent results, Oracle may be able to make the cloud transition that Adobe led and others followed.

BTIG analyst Joel Fishbein said in a research note, that he thought Oracle's "moment of truth" for the cloud is approaching. "While the field remains competitive, we believe ORCL is one of the few SaaS players with both product scope (a full suite of applications across ERP, CRM and HCM) and enterprise-class customer scale," said Fishbein.

CloudWorld will provide an excuse to check out Oracle's cloud efforts and rest assured the company remains a work in progress. The primary item to note is that there is progress at a steady rate.