​INSIGHT: As revenue grows, what is Oracle’s trump Cloud card?

Larry Ellison - Chairman and CTO, Oracle

Fresh from announcing first quarter fiscal year 2016 results, Oracle OpenWorld 2015 came around quickly for the tech giant.

And as pointed out by Chairman and CTO Larry Eliison, fiscal 2016 is going to be a “pivotal year” for the company, on the back of a series of Cloud-related announcements in San Francisco this week.

“The company has a complete portfolio of SaaS, PaaS, and IaaS Cloud services,” observes Laurent Lachal, research analyst, Ovum.

“It does not expect to make any more large datacentre infrastructure investments. It deems itself ready to move out of its Cloud start-up phase into a Cloud expansion phase that will see rapid growth of cloud revenue, as well as margins.

“This is a good message. It should have used it prominently at OpenWorld too.”

But instead, as Lachal explains, during the event the company preferred to highlight its achievements in terms of customer base.

So far, the company has added 612 new SaaS customers in the first quarter of fiscal 2016 (brand new logos), while 616 existing customers expanded their SaaS usage.

“It currently has 5000 SaaS CRM and 5000 SaaS HCM customers (4000 from Taleo), however its biggest achievement recently has been in the area of SaaS ERP, with 1300 customers, including more than 300 in production,” Lachal adds.

“It also has more than 2,500 customers using its Oracle Cloud Platform, which includes services for application development, business analytics, content and collaboration, data management, integration, and mobile.

“This includes 400+ Business Intelligence Cloud Service customers. In addition, it now has 2259 database Cloud service customers, up from 87 in October 2014.”

Furthermore, Lachal points out that Oracle has added 800 new PaaS customers in the first quarter of fiscal 2016, while PaaS bookings increased to more than $65 million.

“PaaS is clearly the next area of growth, to be followed by IaaS, which was one of the key focuses of the OpenWorld keynotes,” Lachal adds.

Trump card?

Delving deeper into Lachal’s analysis, fellow Ovum analyst Adrian Ho believes there is a “strong belief” within Oracle that being best-of-breed in cloud will not quite make the cut in today’s Cloud world.

“Oracle believes that its full suite of Cloud solutions gives it a strong competitive edge, with more than 30 percent of its customers buying more than one cloud service from it in the past year.

“There is definitely a segment of the market that will have a strong preference for a “one-size-fit-all” approach, and there was evidence within Oracle’s customer base, with some buying a variety of SaaS tools (e.g., HCM, CRM, sales and marketing), usually starting off with smaller pilots.”

But for Ho, the challenges of cloud integration will continue, especially for organisations with a multi-cloud strategy.

“The allure of having Oracle’s full stack of Cloud services will be very tempting for some enterprises, and this could be one of Oracle’s biggest trump cards in this industry,” he adds.