Oracle: All hands on cloud ERP

As a vendor with one of the largest portfolios in the industry, Oracle runs a large number of product initiatives (read our worldwide SITSI profile about Oracle). It seems that cloud ERP has become one of the major topics. In essence, it is about migrating the on-premises installed base, chasing competitors’ customers, and winning new logos.

Although cloud ERP is no longer a new topic, it hasn’t reached the mainstream yet. While in segments such as CRM and HCM, SaaS has become a commodity, ERP is not there yet. As the ERP market is transforming towards cloud, traditional ERP software vendors such as Oracle and SAP have started to deliver cloud ERP solutions.

Oracle is betting on ERP software as a service. The vendor has been developing its Fusion applications, which can be deployed in the cloud, over a longer period of time now. The portfolio comprises supply chain management, enterprise performance management, human resources, financials, and ERP. As part of a comprehensive upgrade program, Oracle wants to convince existing customers that use on-premises business solutions such as E-Business Suite, J.D. Edwards, Hyperion, and Peoplesoft to migrate to cloud-based Oracle applications.

These customers evaluate what Oracle has to offer. For them, these cloud business solutions are a possible migration path as the vendor puts most of its development efforts into cloud applications. Some Oracle customers have started migrating on-premises solutions. Others see these new cloud applications more as a way to extend their existing ERP landscapes with more modern solutions (for more details, read our SITSI report on the application strategy of Oracle customers).

Due to the vendor’s ERP product strategy, many Oracle ERP customers have started defining the future strategy for their applications. However, they will need some time before they are ready to decide which way to go in future.

A much more dynamic segment for cloud ERP is small and medium-sized businesses. Companies of this size want to replace systems from Oracle competitors or even spreadsheet-based tools. Many organizations look for a new solution that allows them to manage business processes across the different countries they operate in. In this market, the cloud-only ERP vendor Netsuite, which was acquired by Oracle, has been growing fast (see our Expert View on Netsuite). Under Oracle’s strategy, Netsuite’s core market segment are companies with less than $250 million in annual revenue. Larger companies are addressed with the cloud applications that are based on the Fusion technology.

For Oracle it is key to win market share in the cloud ERP business. Customers that use these systems run on the vendor’s technology stack and in its cloud data centers. Also, these ERP users can be offered a number of other cloud-based applications and analytics as well as new technologies such as artificial intelligence from Oracle.

Another reason why Oracle has been putting so many efforts into cloud ERP is its rivalry with SAP. The market leader in the ERP business has also been moving fast in this segment in order to remain a dominant player in the cloud age. Although at the moment Oracle, with its Fusion portfolio and with Netsuite, has a bit more to offer, it is far too early to tell which of the two will be more successful in the cloud ERP space.