Steve Miranda, EVP, Applications Product Development at Oracle briefed analysts about this week's co-located Modern Business Experience (MBX) and Modern Customer Experience (MCX) in Las Vegas. He also blogged about it: "we are bringing together marketing, sales, and service with HR, finance, and supply chain, because we are seeing more and more similarities between each area."
On the earnings call last week, Mark Hurd, co-CEO of Oracle glowed about the applications business
"Fusion Apps, 35% up, Fusion ERP revenue was up 47% organically. NetSuite revenue was up 28%."
Steve is one of the nicest guys in the software industry. He is also one of the smartest application architects in the industry. Mark has run some of the most sophisticated supply chains and salesforces in the tech industry. I have talked to him about complex business processes and applications. I know they know business applications cold.
And yet when I was researching my new book, SAP Nation 3.0, I repeatedly saw Oracle miss out over the last two decades on opportunity after opportunity to become the dominant enterprise application vendor.
"Oracle continues to dominate the database market. By many measures, Oracle should also by now be the undisputed leader in enterprise applications....Starting with the PeopleSoft acquisition in 2004, Oracle went on its own binge, claiming it was time for "industry consolidation." They made significant acquisitions: PeopleSoft for US$10.3 billion, NetSuite for US$9.3 billion, Siebel for US$5.6 billion, Micros for US$5.3 billion and Hyperion for US$3.3 billion. Other investments like i-flex, Portal, Primavera and Retek brought them banking, telecom, complex project and retail functionality, respectively. By 2006, they were loudly celebrating that they were "halfway there" in developing their own next-gen Fusion cloud applications....For all that, Oracle has done just OK. It has seemed more intent in going after Amazon for the cloud infrastructure and platform markets ...Around business applications, Oracle has focused more on Workday and Salesforce with HCM and CRM functionality, and not so much in manufacturing or other verticals where SAP has greater presence.....While it has launched an exciting autonomous version of its database—which it calls "self-driving"—it has not brought a similar level of automation to enterprise applications. "
Mark explained during the q&a during the earnings call that he is not that concerned that his on-prem customer base is not moving to the cloud. He said "our user base actually knows our cloud roadmap. They actually have confidence in our R&D, they know we’re going to be there to migrate them when they want to be there. They actually have less of a sense of urgency in many cases to move than the (competitors like Deltek and Lawson) you’re describing, Brad, because they’re in much more desperate situations without a roadmap, without knowing how they’re going to get from here to there, knowing their competitors are beginning to move."
In the book, I point out that after two decades of cloud applications (Netsuite was founded in 1998), we actually now have an industry crisis. CIOs are reporting it is increasingly difficult to recruit talent to their on-prem environments. The customizations and technical debt around those applications are increasingly a security and compliance risk. And they have little hope of seeing the benefits of better UX, multi-tenancy, machine learning or IoT any time soon.
In this post I called for SAP, Oracle, Infor, Microsoft and other on-prem apps vendors to "tilt the bell curve". Of their own customers - not worry about those of competitors.
Mark also said "Our vertical revenue was up 38% and our annualized revenue in the verticals is now over $800 million." I would love to see details - to me vertical applications do operational stuff - merchandising in retail, claims processing in insurance, net metering in utilities, support robotics and wearables on the shop floor etc. If it has those, why is Oracle not aggressively showcasing these capabilities? I like the fact that they are bringing marketing and hcm executives under the same tent in Vegas, but why not operational executives in various industries? I asked Steve and he basically said the risk was the agenda would become unwieldy. On the other hand, that would hugely differentiate them from what Workday, Salesforce, SAP and others can offer today or in the foreseeable future. Also, in the last wave of ERP and CRM projects customers mostly implemented back office functionality and showed poor payback. This time around many want to start with operational areas.
Under NDA, Steve described exciting new features in the horizontal applications they will showcase in Vegas this week. Every time I listen to Steve and Mark, I get excited about Oracle's application future.
But when I step away and look at what could have been, I turn cautious. The industry could use a much more focused and vibrant Oracle applications business. Are we seeing the start of a new chapter with the new event format in Vegas? I hope they can turn my caution to enthusiasm.