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More transformation coming at Oracle

Oracle has moved to embrace the cloud but more change is needed if it is to become easier to work with

Oracle has seen attitudes to the cloud in Europe change over the past three years and has highlighted how customers are now keen to shift towards the technology.

Senior executives at the vendor were quizzed by analysts following the announcement of its third quarter results and revealed that Europe was catching up with the US in terms of cloud adoption.

I think the maturation of the cloud market or if you will the acceptance of cloud market is becoming – is global. And I think we’ve seen that over the past couple of years. It used to be three, four years ago, when I was talking about cloud in Europe, I would get incredible amounts of resistance to issues around security, data sovereignty, et cetera. Many of those are beginning to go away,” said Mark Hurd, CEO of Oracle.

“Many of these customers want to know their data is in their country and that’s much of the CapEx we invested a couple of years ago. That we put in and that’s a big advantage for us. Most of our competitors don’t have that infrastructure deployed around the world that we now do,” he added.

As well as customers going through a transition to the cloud CEO Safra Catz revealed that Oracle itself had also changed its business and had not yet completed that process.

“The move to cloud is a generational shift in technology that is the biggest and most important opportunity in our company’s history. We embarked on this transformation over 10 years ago, when we began rewriting all of our software to enable our customers to leverage our solutions as cloud solution,” she said.

“We ourselves have been going through an operational transformation…we’re not quite at the end of the beginning as we’re actively working to transform our entire business, but I think you’re going to see the results,” she added.

“We are far enough along that our financial statements will begin to show our success with accelerating revenue growth, operating margin expansion over time leading to very solid EPS growth. We feel very good about the progress of our cloud transition and clearly customers are rapidly adopting Oracle,” stated Catz.

Customers might have started to shift and Oracle itself has done a lot to develop a cloud portfolio but the comments from Catz indicated there is still some work to do, which is also likely to be felt in the firm’s partner programmes.

“Though Oracle seems to have a well-rounded cloud portfolio in place and has promised lower capital investments in cloud for the coming FY17, Oracle co-CEO Safra Catz notes that Oracle is “not quite at the end of the beginning” of transforming the entire business, which indicates the Oracle portfolio, sales teams and partner programs will continue to adapt to customer needs to drive cloud adoption and revenue growth amid harsh competition,” said Meaghan McGrath, analyst at Technology Business Research.

The Q3 numbers revealed that the shift towards cloud is happening, with revenue up by 40% year-on-year. But that has not yet translated into revenues with sales of less than 1bn in overall turnover of $9bn for the quarter.

The traditional on-premise business is falling quicker than cloud sales can make up with revenue down by 4% and new license sales dropping by 15%.

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