Oracle is taking the high road by reiterating its open stance, sticking to a value-based pricing model, and even playing nice these days, a departure from its former in-your-face approach in the rough and tumble world of selling enterprise software.
At the recent Oracle CloudWorld, Oracle co-founder and CTO Larry Ellison was nothing but equanimous when he brought up his competitors from AWS to Salesforce, a far cry from the old days when he made disparaging remarks about their offerings from charging high prices to treating them as nothing but one-trick ponies.
When outlining his vision during the OCW keynote and fielding questions from investors, Ellison was almost effusive in complimenting their strengths in cloud infrastructure and CRM. Instead of engaging in a slug fest, Oracle is doing its best to stay interoperable with these rivals in the multi-cloud world.
Five days before he took the stage at Oracle CloudWorld in Las Vegas, the charm offensive was in full display when Ellison paid an unprecedented visit to Microsoft’s headquarters in Redmond, Washington, where he struck a deal with its former nemesis to make Oracle database readily available on Microsoft Azure. Ellison was ebullient and laughing as he sat next to Microsoft CEO Satya Nadella, who years ago had overseen Microsoft Dynamics ERP offerings only to find himself scrambling for ready support from Oracle because some Dynamics partners were not willing to part ways with Oracle databases.
The peace-making moves are designed to help Oracle customers easily utilize multiple cloud infrastructure providers in order to realize the benefits of open system computing without incurring steep integration costs, a promise that had been made but not kept by many vendors in the past.
Now Oracle is more than happy to oblige by playing nice and neutral as one of the top three Infrastructure as a Service providers, presumably Microsoft given the rekindled partnership between the two, is spending as much as $1.5 billion in Oracle Cloud Infrastructure capacity because its price performance serves as a better alternative to train AI models. Thou shalt not speak ill of any customer may apply to Oracle’s newfound altruism.
During his keynote, Ellison announced a raft of initiatives that probably covered everything one can expect from a responsible corporate steward. His topics included upgrading public safety for first responders by leveraging real-time communications, expanding indoor vertical farming for drought-stricken regions by relying on software and sensors to monitor agriculture production and improving population health with autonomous database and artificial intelligence to manage electronic health records for the entire country.
The turnaround comes on the heels of back-to-back disclosures that OCI has booked $6 billion in capacity to help AI companies like Cohere and others train AI models over the past two quarters.
Increasingly evident, Oracle Cloud Infrastructure (OCI) has something unique to offer that feeds the insatiable appetite of a growing number of AI companies.
Rather than painting AI all over its advertising copies, Oracle exercises restraint by simply positioning itself as the enabler that makes AI real and tangible regardless of whether it turns into a bigger money maker than the Internet revolution or something along the lines of augmented reality or quantum computing waiting to catch fire.
Similarly, Oracle customers are not going overboard with their AI strategy. A survey of 180 customers of recent purchases of Oracle Cloud ERP applications show that nearly half of them have also invested in AI tools to drive greater automation including their use of AP/AR automation, chatbots, robotic process automation and intelligent document management, according to our Buyer Insight Master Database. Some of these implementations can be found in Exhibit 1 below.
For example, Cloud Software Group, a holding company of technology assets including Citrix, Netscaler and Tibco, recently upgraded to Oracle Cloud ERP along with Oracle WebCenter Accounts Payable for AP automation after years of running legacy systems like Oracle E-Business Suite.
Additionally, utility PG&E, Italian Grocer Bennet and retailer WH Smith North America have all implemented AI tools to buttress their reporting, pricing, inventory planning and placement, along with their use of core operating systems from Oracle.
AI Shouldn’t Cost More
Steven Miranda, executive vice president of applications development at Oracle, considers AI features must-have enhancements that will always be incorporated into each release of its Oracle Fusion Cloud Applications as part of an automatic upgrade without requiring customers to pay extra.
During the conference, Oracle also announced a new generation of AI assist tools for customer service use cases including assisted agent responses, search, support resolution, and knowledge management in CX and employee recognition and performance management use cases in HCM. Miranda outlined his team’s plan to introduce more than 50 new generative AI use cases in ERP, SCM, HCM and CX over the next two product releases, in addition to traditional AI features.
Oracle CEO Safra Catz said her company is well-positioned to capitalize on a potential AI boom. At the same time, Oracle’s own use of Oracle Fusion Applications (and AI features within the suite) has enabled its internal teams to reduce costs and do more with less, said Catz who is known for her fiscal discipline.
And Oracle is holding firm on software pricing even as some of its competitors including Microsoft, Salesforce and SAP have recently raised prices.
Moving Towards Touchless B2B Processes
During last year’s event, Oracle announced integrations with JP Morgan Payments and FedEx that would enable customers to streamline B2B payments and shipping and activate services from within Oracle Cloud ERP. The latest building block of that ecosystem is the partnership between Oracle, Mastercard, and HSBC to automate end-to-end business-to-business (B2B) payment transactions with virtual cards for supplier invoice payments, corporate purchases and working capital support
Vowing to keep Oracle easy to do business with for customers, Mike Sicilia, executive vice president of Oracle Industries, said all of its vertical applications have been ported to run on OCI with Cerner scheduling to complete the migration by the end of the year. The cloud migration should make it easier for hospital networks or national health systems to offload the burden of managing electronic health records to a single platform.
Frances Chao, group vice president of enterprise business applications at Providence, a national, not-for-profit Catholic health system with over 120,000 caregivers across 51 hospitals and 1,000 clinics has strategically partnered with Oracle and Deloitte to implement a single cloud ERP instance. As part of an ongoing business transformation journey, Providence is the largest healthcare system on an integrated ERP cloud platform that was delivered at 2-3 times the typical scope in a single go-live. Adopting Oracle Fusion Cloud Applications for finance, enterprise performance management, supply chain, and HR and Payroll enabled Providence to accelerate and reduce its deployment time by 25-50% compared to other large-scale ERP implementations.
“We were one of the first major healthcare systems to sign on for the full ERP and HCM suite. I was initially skeptical if Oracle could meet all of our complex healthcare needs,” Chao said, adding that their implementation of Oracle’s integrated ERP solution has been a huge achievement for Providence. Deployment of its integrated ERP platform was during one of the most challenging times in history when healthcare was thrown into the core of an unprecedented crisis – the COVID-19 pandemic – where resources were scarce, and labor and supply costs were rising. Adopting Oracle’s cloud-based ERP solution has well-positioned Providence to accelerate its digital transformation journey to leverage advanced technologies (e.g. RPA/AI/ML) to decrease costs and increase productivity.
This is just the first step of an ongoing business transformation journey. Implementing an integrated ERP platform has not only laid a solid foundation to simplify processes and technology, but it has propelled Providence forward in the healthcare industry, eliminated its technical debt and has reduced the administrative burden for its caregivers, so they can focus on providing quality care.
“We couldn’t survive with what we have been doing in the past. We need to drive ourselves to improve performance, financially and operationally” Chao said. Case in point is the use of AI / ML to automate and streamline processes such as accounting, recruiting, and inventory management with Oracle to minimize manual and repetitive tasks, enabling Providence resources to focus on value-added activities.
Sherrie Schaufele, senior director of strategic sourcing at Western Digital, another major account that has standardized on Oracle Fusion Applications for financial, supply chain management, and procurement. These cloud applications help deliver a single source of truth that allows the storage company to identify areas for continuous process improvement, especially in sourcing and approval, that ultimately results in a touchless environment for procurement automation. “There is still too much process time to buy a product. AI can analyze our processes with 20 approvers and recommend how we streamline that” Schaufele said.
In the post-pandemic era when forces like multi-cloud, AI, and cost containment are colliding all at once, the lesson from this year’s Oracle CloudWorld is that no single vendor can call the shots and even the software powerhouse that has dominated a number of markets from database to cloud ERP has to stay resolute in its commitment to driving business value before scoring customer successes.
An ICT manager of one of the largest hospitals in Belgium commented during the conference that it has not made any decision to migrate its legacy ERP to the Cloud. Instead, he is busy writing his own code using Oracle’s low-code Apex tool in order to contain costs. That is music to the ears of Oracle with an extensive portfolio that meets almost any budget or technology requirement of its vast installed base. However, it could still be years before a major account like the one in Brussels starts migrating to Oracle Cloud ERP.
Under no pressure to rush anything, billionaire Ellison agrees with that assessment by saying that “Fusion is still in its early days”.
Exhibit 1 – Pairing Oracle ERP with AI Automation – Examples of Oracle customers running both ERP and AI assist tools
Source: Buyer Insight Technographics Database, October 2023