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CEOs are looking at how consumer expectations are changing. The board of directors has approved a digital model for the business, but the IT this will require is not there.
Shawn Price, senior vice-president of cloud at Oracle, says the challenge for many businesses is that modern applications need to be enabled for social media and mobile access.
But, according to Price, ERP does not understand individual records, payment processing or e-commerce.
He argues that a lot of data in legacy enterprise systems is “obtuse” data, and is often not personalised, contextualised or searchable, making such systems a poor fit for digitally enabled business initiatives.
For instance, the face of retail is significantly different from how it was in the past. “If you built your ERP and supply chain system on-premise on a model designed 10 years ago, how does that relate to the shift from bricks-and-mortar retail to bricks and clicks?” says Price.
Many companies do not have the luxury of spending the next 24 months and perhaps €50m on redeveloping their enterprise software to support the new direction of the business.
For Price, this is where Oracle’s cloud fits.
Oracle’s goal is to remove all the costs associated with running Oracle infrastructure, including middleware integration, Java development and mobile cloud development. “Our thesis is: why would you ever not run Oracle on Oracle?” says Price. “There is a huge opportunity to take cost out of your infrastructure.
“The patching, the scripting, the regression testing and the storage are all functions that can be automated in the cloud.”
According to Price, as many as 88 steps are required to set up an on-premise Oracle database. If a CIO looked at the IT costs associated with operating an Oracle database, such as the need for SSL encryption, networking, cooling, storage and the floor space for the racks, together with governance and security-related issues, he says: “These are all automated in the cloud.”
So, from a cost-reduction perspective, “There is a huge opportunity and you can focus instead on enhancing the business,” Price adds.
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But although the concept may sound compelling, most CIOs would be wary of walking away from the on-premise enterprise IT that keeps their companies running. Price urges them to look at what is not being used.
“Customers have a lot of Oracle technology that they may be paying support for but are not using,” he says. “In our customer-to-cloud programme, we migrate these applications to the cloud.”
Clearly, Oracle does not want to cannibalise its highly lucrative on-premise maintenance and support revenue. But Price argues that for some customers, the programme offers a way to move some workloads to a modern cloud environment.
Among the easy wins for Price is application development and testing environments. “Why would you ever buy licences, the tools, the networking and physical hardware, when you can subscribe, do the development and testing and pay for what you use on a metered basis?” he says.
Price expects some of Oracle’s customers to make a wholesale change to the cloud to drive new digital business initiatives, while others will look to modernise their existing enterprise application portfolio by enhancing them with cloud services.
“As the world moves mission-critical applications into the cloud, you have to connect your new cloud ERP to the existing SAP or Oracle E-Business Suite system of record,” he says.
Rather than develop bespoke integration between the cloud and on-premise application, Price says Oracle’s platform-as-a-service enables this integration.
But Oracle’s vision is that, given a choice, people would rather buy pre-integrated packages than struggle to integrate products from different suppliers.
In a nutshell, the Oracle pitch is: the company is prepared to work across heterogeneous environments and does not necessarily want customers to rip and replace all their on-premise software.
However, Price argues that a multinational business would rather go with a single software provider capable of offering ERP, HCM and other products than spend time and effort integrating best-of-breed products.
“Why negotiate all the different licensing contracts and SLAs in best-of-breed products?” he says. For Price, suites win.
“In Oracle HCM, customers may start with a single app, such as workforce planning, recruiting or on-boarding, or they will buy the entire suite from hiring to retiring,” he says. “But then there is also an intersection between HCM workloads and the finance function. Wouldn’t it be cool if Oracle can give me my whole finance suite as well? And since they are both from the same supplier, the two products should talk to each other.”
Beyond finance and HCM, Price says Oracle can also offer a marketing cloud to run digital campaigns, which then feeds into Oracle’s CRM, e-commerce or service cloud products, providing further out-of-the-box integration.
But, clearly, some organisations have already chosen a cloud such as WorkDay or Salesforce. Price says: “Keep your WorkDay, your SAP or Salesforce if that’s what you want, but myriad work is needed to tie it all together.”
He claims Oracle’s pace of development in the cloud will eventually enable it to surpass rival cloud products. “If you have the luxury of time, then maybe you can choose the best-of-breed product for that moment in time,” he says. “ But we produce 500 feature upgrades a month. How long do you think it will take for me to catch up if I am behind on a particular feature category?”
Price claims many people are now abandoning so-called first-generation SaaS products. Referring to Salesforce, he says: “How old is that stuff? It was written 15 years ago. It’s the same age as some on-premise software. I may have used it for saleforce automation [SFA]. But my problem is not in SFA alone; it is in SFA plus other things.”
In some ways, the Oracle cloud is similar to an outsourcing contract. According to Price, all the management of the software is handled by Oracle, freeing up IT to work on business initiatives.
His goal is to convince those companies running Salesforce, WorkDay or SAP clouds to migrate onto Oracle’s integrated cloud suite.
However, although it may be the logical choice, there are many CIOs who would think twice before entrusting Oracle with a significant proportion of their enterprise IT spending.