TECHNOLOGY IN VIEW
FROM IAN INSIGHTS
Oracle’s Cloud Journey Can Withstand Hurd’s Departure
By Ian Campbell
CEO of Nucleus Research
For more mature enterprise technology companies, the path from on-premise to the cloud has been challenging — a unique, nonlinear journey that each vendor has achieved with varying degrees of success. Oracle’s transition has been no different — and while the company no longer breaks down its cloud vs. on-premise revenues with any granularity, the headlines from its most recent quarterly results cited cloud shortfalls for investors’ tepid reception.
This continued earlier this month when, in unveiling its first quarter results a day early, Oracle also announced that CEO Mark Hurd would be leaving the company for undisclosed medical reasons. While certainly my first thoughts are on hopes for his quick recovery, it did lead me to wonder what sort of affect his departure might have on the company’s near-term fortunes as it further embraces the cloud (while simultaneously pushing its customers to do so, too).
As we see it, Hurd’s presence will definitely be missed. Yet as Larry Elison re-assumes day-to-day leadership with Hurd’s co-CEO Safra Catz, Oracle is well-positioned for three reasons:
Oracle Cloud delivers demonstrable value. Our research has found the average cloud deployment of enterprise software delivers 3.2x the return-on-investment (ROI) of an on-premise deployment. For Oracle, the results are even stronger. Our analysts found that by connecting finance and human resources in the unified Oracle Cloud platform, companies facilitate collaboration and shared insights, thus improving efficiency, incorporating best business practices and assessing emerging technologies — far exceeding the typical 3.2x ROI from a cloud deployment.
The company has embraced a cultural shift more aligned with the cloud. Historically, enterprise technology has not been laser-focused on customer success: difficult implementations, integrations and upgrades with unmet promises have plagued the industry for decades. But the cloud has changed that, particularly for companies like Oracle — a subscription-based model requires a culture more squarely focused on innovation and customer success. From what we saw, Hurd had the company moving in the right direction, evangelizing a roadmap to the cloud for customers while embracing cultural shifts, such as innovation hubs that rethink the possibilities for the company’s solutions and cultivating a digital sales team to navigate the landscape of informed, tech-savvy customers.
Ultimately, there’s still a market for Oracle’s on-premise implementations. I understand that no one has been particularly hot-and-bothered about on-premise enterprise software since the late 1990s. If you only read TechCrunch, you’d think there’s zero market for software you install in your own data center — and you’d be wrong. In May, Rimini Street, a provider of third-party support for enterprise software, surveyed Oracle customers and found 80 percent aren’t planning to replace on-premises Oracle software with cloud offerings. Many are looking to an on-premise/off-premise hybrid deployment. We’ve also seen “cloud-native” startups that offer hybrid solutions. The takeaway? On-premise license-based deployments aren’t going away any time soon.
As it embraces cultural change and innovation while continuing to demonstrate a value-driven approach for its customers, from where we see it, Oracle remains well-positioned in the cloud wars.