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Oracle Open World 2018: CEO Mark Hurd says SAP ERP customers will defect

Oracle co-CEO Mark Hurd opined at Open World that SAP ECC6 customers will defect, in some measure, to Oracle in preference to S/4 Hana

Oracle co-CEO Mark Hurd said he could see SAP ECC6 customers defecting, to some degree, as the Germany-based company’s enterprise resource planning (ERP) system reaches end of life.

SAP has some 30,000 ECC6 customers, of which SAP’s chief financial officer, Luka Mucic, recently said it expects “roughly half” to migrate to S/4 Hana, the ERP system based on the German giant’s in-memory, columnar database, Hana.

At Oracle Open World, Hurd said he expected CIOs who are SAP customers and who are contemplating their next big ERP move to be at least thinking about switching from SAP to Oracle, specifically to the latter’s core ERP as delivered over the cloud.

SAP has said ECC6 (ERP Central Component 6), its older ERP system, will not be supported after 2025.

“We would not have done that. We will support Oracle E-Business Suite for a long time,” said Hurd.

Winning business from SAP

“We are seeing wins [from SAP]. Ten years ago, in the on-premise ERP market, you just didn’t move. Once you had SAP or Oracle, you stayed with it. Imagine a CIO going to a board and saying, ‘We’re going to spend $400m on S/4 Hana’. A board member will say, ‘What do we get for the $400m?’ And the CIO will say, ‘We get new plumbing’. The house is the same, but there is new plumbing. And then the board will say, ‘What happens if we don’t spend this $400m?’ And the CIO will say, ‘They’re going to end-of-life us’.

“At a minimum, the board is going to ask what the other options are. End of life means a lot of problems. The core of the workflow is the same [with S/4 Hana], it’s just a new database and front end.

“I don’t know what percentage of SAP’s core base will defect, whether 10%, 20%, 30%, but it is going to be a number.”

Hurd added that half of the ERP market was not in the hands of SAP and Oracle, and that none of the other market participants had more than 3% market share, “so there is a lot of market share to be gained, without even disturbing the SAP base”.

He also said Oracle had so far moved 10% of its core ERP customers to the cloud, though another 20% or so were using specific Oracle cloud applications for HR, financials, or other business functions.

Multipurpose business apps

In the same session, Hurd said software suites that combine back-office and front-office functionality would dominate the business applications market.

“Each app has to be the best at what it does, the leader in its market, whether it’s a procurement application or an HR app. But just as important is that they have to work together in one suite,” he said. “Our HR app looks the same as our sales automation app, as well as our ERP. Customers can move data back and forth.”

Hurd also advanced the Oracle view that artificial intelligence (AI), machine learning and blockchain were features, not solutions. “These are integrated directly into the applications themselves. We don’t believe in a great AI application in the sky, like an IBM Watson,” he said.

Read more on Oracle versus SAP

Read more on Enterprise resource planning (ERP) software

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