Being second isn’t good enough for Oracle when it comes to cloud revenue, co-president Mark Hurd told investment analysts this week following the company’s fourth-quarter and year-end earnings report.
As part of its earnings announcement, Oracle trumpeted that at an annual cloud subscription revenue run rate of nearly US$2 billion, it is now the industry’s second-largest cloud vendor behind Salesforce.com.
But meeting with analysts to lay out the company’s cloud software strategy, progress in the market and expectations for its fiscal 2015, Hurd made it clear that Oracle isn’t quite satisfied, telling them, “Make no mistake, we’re laser-focused on being number one in the cloud.”
Hurd’s presentation was predictably full of such bullish commentary, but also provided a wealth of specifics on where Oracle stands with respect to the cloud. Here’s a look at some of the highlights.
Plenty of runway
Oracle sees the potential for US$10 billion in annual cloud subscription revenue from its large applications customer base alone. The company so far has penetrated only 5 percent of that installed base with cloud products.
Oracle sees “green-field” opportunities in areas such as marketing and service, and even ERP (enterprise resource planning), albeit for midmarket customers, Hurd said during the conference.
The company estimates there is a $74 billion addressable market for its cloud apps, Hurd said.
Getting customers on board
Oracle has 5,000 on-premises CRM (customer relationship management) customers, 7,000 on-premises HCM (human capital management) customers and 15,000 on-premises ERP customers, according to Hurd’s presentation.
In some cases, Oracle will convince customers to extend their on-premises installations by adding cloud modules for marketing, talent management, procurement and other areas. It will also pursue full-blown migrations of core on-premises suites to the cloud.
Oracle’s cloud army
The company now has thousands of SaaS (software-as-a-service) sales representatives in more than 60 countries, according to Hurd.
There are also nearly 19,000 consultants certified on Oracle cloud products, he said. The bulk are in service, e-commerce, ERP, sales and HCM, with comparatively few for marketing and social software.
Fusion taking hold?
Oracle is set to release version 9 of its Fusion Applications products in the next few months. While Fusion is available to be run on-premises, most customers have gone with the cloud option, likely due to the complexity of running them in-house.
Fusion had well-publicised growing pains, becoming generally available in 2011 after a lengthy development process.
The software has come a long way since then and it’s emboldening Oracle’s troops, according to Hurd. “The confidence our sales force has in our products now over the past couple of years has leaped exponentially.”
That confidence is translating into sales for Fusion.
Oracle picked up 363 new Fusion SaaS customers in its fourth quarter, with 121 in ERP, 110 in HCM and 132 in CRM. Seventy-one new customers went live in the quarter.
The new signups represent 2.29 million subscribers, bringing the total Fusion Cloud to nearly 8 million subscribed users, according to Hurd’s presentation.
All ISVs are welcome
Many SaaS vendors already use Oracle technologies, but now that Oracle is in the IaaS (infrastructure as a service) and PaaS (platform as a service) businesses, it wants an even deeper relationship with ISVs.
Oracle has 19 data centres around the world. That coverage, combined with its unified technology stack makes a full-fledged move a no-brainer for ISVs, Hurd argued. “You don’t work your way through these complex regulatory and data sovereignty issues and you get it all in one-stop-shopping. This is a really big deal.”
“I can make an argument now that you can see Oracle participate in a bigger way than before with startups,” given the cloud option presents a less expensive way to get up and running than purchasing software licenses and hardware, Hurd added.
Ready for the world
Oracle has now added support for 13 additional languages in its cloud apps, bringing the total to 33. This covers 98.5 percent of Oracle’s revenue base, according to the company.
In addition, its SaaS applications have received localisations for more than 100 countries.
The company also isn’t done expanding its data-centre footprint. “Some customers still have concerns about data residency,” Hurd said. “They want it in their country.”
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