Oracle Among Cloud Top 500

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Oracle Recent Developments

Oracle recently unveiled a bevy of new products and initiatives for its Infrastructure As A Service and Platform As A Service offerings. Two things stand out with the IaaS and PaaS announcements. First, Oracle’s IaaS strategy rests with building the data center of the future with a host of services and technologies that piggy back on its Autonomous Database, which will become generally available in 2018. Second, such an extension will help facilitate the enterprise lift and shift that is underway for Oracle customers to redistribute their workloads, again outsourcing both Oracle and non-Oracle workloads that encompass an assortment of databases, applications along with emerging technologies like Blockchain, chatbots, Internet of Things as well as the interplay between physical assets and virtual replicas in what Oracle calls it Digital Twin.

Oracle M&A Activities

In 2017, Oracle acquired Moat, the fastest-growing digital measurement cloud company, followed by its $1.2-billion purchase of Aconex, an Australian-based Cloud ERP vendor for construction vertical, in early 2018.

Oracle Key Enterprise & Cloud Applications

LogFire, NetSuite ERP, NetSuite HCM, NetSuite OneWorld , NetSuite PSA, NetSuite SCM, NetSuite SuiteCommerce, Oracle Analytics Cloud, Oracle CX Cloud, Oracle Data Cloud, Oracle EPM Cloud, Oracle ERP Cloud, Oracle HCM Cloud, Oracle Hospitality Cloud Solutions, Oracle PPM Cloud, Oracle SCM Cloud, Oracle Social Cloud, Oracle Utilities Cloud, Oracle Utilities Opower Cloud, Textura Cloud Solutions

SCORES Analysis

Oracle Strengths

Following its acquisition of NetSuite, Oracle has been on a roll with its Cloud-first strategy.

For its fiscal 2017, Oracle showed above-average growth rates in Software As A Service and Platform As A Service product categories with the former posting a 60% revenue increase and the latter rising 205%.

Many of its peers were clocking in 30% to 40% growth last year, while the SaaS market as a whole is expected to increase by 10% in 2017.

At the same time, the vendor is boosting its investment in Infrastructure As A Service by hiring hundreds of developers for Oracle Cloud.

The robust performance of Oracle SaaS products in fiscal 2017 coincided with Release 13 of its Cloud suite covering hundreds of new features across Oracle Supply Chain Management (SCM) Cloud, Oracle Customer Experience (CX) Cloud Suite, Oracle Enterprise Resource Planning (ERP) Cloud and Oracle Human Capital Management (HCM) Cloud.

Now with 14,000 active SaaS customers running these products, Oracle has been able to consolidate its gains with considerable cross-selling and upselling opportunities.

At least a quarter of its ERP Cloud customers are also picking up HCM or CX Cloud and the attached rate is rising fast.

Similarly, many of these ERP Cloud customers are also accessing the vendor’s PaaS offerings such as Data As A Service.

Make it easy to do business with has also become a top priority as Oracle offers free trials and simple pricing, backed by a new initiative to boost customer experience by putting under a single umbrella its global Cloud global service and support operations, which amount to 15,000 resources who speak 27 languages.

Cloud Express implementations for Oracle ERP Financials, Procurement and Project Portfolio Management can be done in weeks or months, a far cry from what it took to implement on-premise software.

For instance, GE Digital was able to go live on Oracle ERP Cloud in five months.

Its Customer Connect community for Cloud apps now sees 20,000 monthly posts from more than 13,000 member companies.

With thousands of developers working on optimizing its Cloud applications, Oracle Senior Vice President Rondy Ng said as much as 40% of such resources is dedicated to meeting new enhancement requests directly from customers.

Ng said the result is not just better apps for the Cloud, but also the most relevant for a specific user group, adding that Cloud-based E-Business Suite, which is part of the vendor’s Oracle ERP Cloud, offers the most advanced localization capabilities for users in any region it sells into.

Another key differentiator is the staying power of Oracle ERP products in high-tech vertical, or any fast-growing entity for that matter.

For these companies, rolling out Oracle ERP Cloud globally to accelerate push into new markets, while mitigating risks through a single system of record has been one of the key reasons behind the increased momentum of Oracle’s SaaS strategy.

Oracle Revenues, $M:

Type/Year 2015 2016 YoY Growth, %
Total Revenues, $M 37159 37429 0.73%
Enterprise Applications Revenues, $M 9671 10154 4.99%
Cloud Applications Revenues, $M 2001 3211 60.47%

* Enterprise Applications Revenues = License + Support & Maintenance + SaaS
** All revenue figures are estimates based on public records, Cloud and Non-Cloud business models in Apps Run The World's vendor database, and annual survey results including vendor feedback.

Oracle Revenue Breakdown By Type, $M:

Type License Services Hardware Support & Maintenance SaaS
% of Total Revenues 19.4% 9% 14% 49% 8.6%
Revenues, $M 7261.2 3368.6 5240.1 18340.2 3218.9

Oracle Enterprise Applications Revenues By Functional Markets, $M:

Split by Functional MArkets % of Total Revenues 2016 Enterprise Apps Revenues, By Functional Markets, $M
Analytics and BI 8% 812.3
Collaboration 5% 507.7
Content Management 3% 304.6
Customer Relationship Management 15.75% 1599.3
eCommerce 5% 507.7
Enterprise Performance Management 6% 609.2
ERP Financial Management 15% 1523.1
ERP Services and Operations Management 10% 1015.4
Human Capital Management 9% 913.9
IT Service Management 0% 0
PLM/Engineering 5.5% 558.5
Project Portfolio Management 5% 507.7
Procurement 6% 609.2
Sales Performance Management 1.25% 126.9
Supply Chain Management 5% 507.7
Treasury and Risk Management 0.5% 50.8
Total 100% 10154

Oracle Enterprise Applications Revenues By Verticals, $M:

Split by Verticals % of Total Revenues 2016 Enterprise Apps Revenues, By Verticals, $M
Aerospace & Defense 1% 101.5
Automotive 2% 203.1
Banking and Financial Services 10% 1015.4
Communication 7% 710.8
Construction and Real Estate 5% 507.7
Consumer Packaged Goods 5% 507.7
Distribution 4% 406.2
Education 4% 406.2
Government 6% 609.2
Healthcare 9% 913.9
Insurance 3% 304.6
Leisure & Hospitality 3% 304.6
Life Sciences 3% 304.6
Manufacturing 10% 1015.4
Media 1% 101.5
Non Profit 1% 101.5
Oil and Gas 2% 203.1
Professional Services 6.5% 660
Retail 11.5% 1167.7
Transportation 3% 304.6
Utility 3% 304.6
Total 100% 10154

Oracle Revenues By Region, $M

Region % of Total Revenues 2016 Total Revenues, $M 2016 Enterprise Applications Revenues, $M 2016 Cloud Applications Revenues, $M
Americas 55% 20586 5584.7 1766.1
EMEA 30% 11228.7 3046.2 963.3
APAC 15% 5614.4 1523.1 481.7
Total 100% 37429 10154 3211

Oracle Direct vs Indirect sales

Region Direct Sales Indirect Sales Total
Type % 60% 40% 100%
Revenues, $M 22457.4 14971.6 37429

Oracle Customers

No. of Customers: 100000

No. of Enterprise Applications Customers: 100000

No. of Cloud Customers: 16000

No. of Cloud Subscribers: 35 million

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During its earnings call in June 2017, Oracle disclosed that it has nearly 14,000 active SaaS customers.

Our estimates show that half of them are running ERP, HCM or both, contributing to larger deals and more extensive use of Oracle Cloud applications across its multinational clients.

The acquisition of NetSuite has brought in another 10,000+ ERP customers.

NetSuite also has thousands of customers using its PSA, eCommerce and HCM products.

Other tucked-in acquisitions included BlueKai for marketing data management with 200 customers, LiveLook for customer service and support with 500 customers, TOA Technologies for field service automation with about 100 customers, and Datalogix for Data As A Service with 650 customers.

On the on-premise side, Oracle has more than 25,000 customers using such products as E-Business Suite, JD Edwards, PeopleSoft and Siebel.

That does not include its industry-specific solutions like Micros for retail and hospitality, iFlex for core banking and PhaseForward for life sciences.

Altogether Oracle has over 400,000 customers worldwide.

Oracle Opportunities

While the integration between Oracle Cloud apps and NetSuite could be years away, the vendor is putting additional resources behind the two product sets to ensure clear segmentation and abundant synergy.

For NetSuite, the target audience will remain mostly midmarket companies typically with less than 1,000 employees.

What NetSuite customers can expect is increased field-level sales, customer service and Cloud infrastructure support that Oracle can deliver around the globe.

On the other hand, the Oracle ERP Cloud will be mostly marketed to mid to large entities with more than $250 million in revenues.

In 2018 Oracle is also banking on a raft of Adaptive Intelligent applications that can add significant value to its different Cloud applications by leveraging artificial-intelligence insights from Oracle Data Cloud.

Since Oracle Data Cloud contains billions of consumer profiles, the off-the-shelf Adaptive Intelligent apps will help companies identify the buying preferences of their customers with precision.

Naturally, Oracle CX for customer experience will be among the first product set benefiting from Adaptive Intelligent applications due out at the end of calendar 2017.

Beyond the familiar territories of recommendation engines in ecommerce marketing, Adaptive Intelligent applications could help address other shortcomings in finance, procurement, HR functions such as dynamic discounts in working capital financing, cash optimization from procure to pay, etc.

Oracle Risks

As Oracle expands into the Cloud applications marketplace, it is not abandoning its stronghold in on-premise software.

Its maintenance revenues remain healthy accounting for half of the company turnover from technology products like Database and apps like E-Business Suite.

In fact, they rose 2% to reach nearly $20 billion in its fiscal 2017.

The question is how long will that last as its on-premise license revenues are bottoming out following its shift to the Cloud.

A fair amount of its maintenance revenues is derived from industry-specific products for verticals like banking(iFlex), construction(Primavera) and utility(Lodestar).

And it could take years before Oracle integrates these on-premise applications with the rest of its Cloud suites.

Even some of its Cloud applications like Textura operate separately from Oracle PPM Cloud.

What that underscores is that fact that Oracle’s acquisition history has left it with as much recurring revenues as there are disparate units that would probably never be unified into a cohesive voice.

The question is whether Oracle’s big-tent strategy will continue to prevail despite massive changes that are sweeping through the marketplace rendering some of its pillars more susceptible to shifting customer sentiments than others.

Oracle Ecosystem

In July 2017, Oracle announced the Cloud Excellence Implementer program to elevate the skills of consulting firms responsible for implementing Cloud applications for their customers through further recognition and differentiation.

These CIE partners are expected to invest additional project management and consulting resources and submit themselves to surveys in order to achieve desired satisfaction levels from their customers.

In return, partners will receive training, enablement and Market Development Fund benefits, along with priority listing on Oracle Partner Network catalog and Oracle Cloud Marketplace.

Across its ecosystem, the number of Oracle partners has been rising steadily – now hovering at 28,000 mark, compared with 25,000 a few years earlier.

Much of the increase was attributed to increased use of Value Added Distributors like Avnet and Arrow that carry both hardware and software products.

These VADs can support more resellers than what Oracle or Sun was able to fulfill their needs in the past.

Since 2012 Oracle has successfully upgraded its partners through more rigorous certifications programs in 60 specialization areas for its hardware and software products.

Hundreds of these specialized partners have been added covering tens of thousands of new Oracle Partner Network product specialists.

Majority of Oracle's Cloud Solution Partners have been coming from firms like Accenture and Indian systems integrators.

These partners also include Managed Service Providers that offer Cloud hosting support to ISVs.

Overall speaking, channel contributions to Oracle's revenues have improved considerably as the vendor aims to drive more indirect sales in markets where it has limited presence.

Oracle Cloud Infrastructure Insights

Microsoft Azure, Amazon AWS, Dell Boomi, RackSpace, VM Farms, CenturyLink

Research Methodology

Data used in research reports are derived from publicly available documents, continuous surveys of applications vendors, customers, resellers, Independent Software Vendors, systems integrators and other verifiable sources.


Vendor shares and market forecast results are based on a combination of existing databases as well as demand side and supply side research conducted throughout the year with validation from vendors, customers, channel partners and documentations such as earnings releases and 10Q and 10K filings, vertical industry studies, regional and country-level statistics from public and private institutions(i.e. colleges, universities, government agencies and trade associations).




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