Overshadowed by chairman Larry Ellison’s claims that Amazon’s decision to rip out its Oracle databases and replace them with home-grown databases defies normalcy, Oracle now has an apps business with more than $11 billion in revenue for the past 12 months.
And the fastest-growing segment within Oracle’s SaaS surge is its internally developed Cloud ERP business, whose revenue grew 44% in Oracle’s fiscal second quarter ended November 30.
Here are some highlights about the Oracle apps business from its Dec. 17 earnings call—and bear in mind that Oracle has two separate cloud ERP businesses: its own internally developed Fusion ERP services, and its NetSuite ERP offerings from the 2016 acquisition of the SaaS pioneer Ellison funded as a startup 20 years ago:
- Of Oracle’s $11-billion-plus in trailing 12-month apps revenue, 91% is now recurring revenue;
- Oracle’s two biggest SaaS businesses, ERP and HCM, grew in the “mid-20s” and are now on an annualized run rate of $2.6 billion, which means they combined for quarterly revenue of about $650 million;
- revenue growth for all of Oracle’s Fusion Apps—including but not limited to ERP and HCM—was 34%;
- NetSuite ERP revenue grew 25%; and
- revenue for the company’s extensive fleet of vertical applications grew 35%, giving it annualized revenue of about $800 million.
On a more existential plane, Ellison made the significance of Oracle’s cloud ERP business unmistakably clear in the first sentence of his prepared remarks on the earnings call: “Oracle has two strategic products that will determine the future of our company: Cloud ERP and the Autonomous Database.”
Well, no pressure there, eh?
Oracle’s performance with its complementary cloud ERP products clearly demonstrate big demand in the marketplace for modern SaaS apps for the big components in ERP: financials, supply chain, procurement, budgeting, planning and more.
But other cloud vendors—most notably SAP and Workday—are also aggressively pursuing leadership positions in cloud ERP, a subject we explored in Cloud Wars earlier this week in Oracle, SAP and Workday Driving Red-Hot Cloud ERP Growth Into 2019.
So yes, it’s a massive market—but it will also definitely be a buyer’s market for the next few years as each of those three highly capable companies competes intensely for market share. At SAP—the company that invented the whole ERP category a few decades back—one of the big bets in their cloud ERP strategy centers on the incredible growth and impact of machine-learning algorithms, which we explored this week as well in From Killer App to Killer Algorithms: SAP’s Franck Cohen on Cloud ERP’s Disruptive Innovation.
For Oracle, an essential element in its SaaS strategy is the growing tendency of big customers to follow up deployments of Oracle’s cloud ERP products with other Oracle SaaS apps, particularly HCM.
In the Q&A portion of the earnings call, CEO Safra Catz said, “A number of our customers that may use one of our cloud products are now moving to our other cloud products without even doing a full RFP and competitive analysis because they’ve been so satisfied with our products.
“In fact,” Catz added, “just today I got a call from a very well-known company and they’ve already picked our ERP and we’re so happy they’re just going to roll out HCM and Supply Chain Management now next. So there’s a lot of enthusiasm around our products.”
And CEO Mark Hurd added, “The thing that I tried to make sure was clear on the wins we’re describing is the pull. When we sell ERP, the ability for us to pull other solutions with it is growing particularly rapidly.”
Disclosure: at the time of this writing, Oracle is a client of Evans Strategic Communications LLC.
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RECOMMENDED READING FROM CLOUD WARS:
The World’s Top 5 Cloud-Computing Suppliers: #1 Microsoft, #2 Amazon, #3 Salesforce, #4 SAP, #5 IBM
Amazon Versus Oracle: The Battle for Cloud Database Leadership
As Amazon Battles with Retailers, Microsoft Leads Them into the Cloud
Why Microsoft Is #1 in the Cloud: 10 Key Insights
SAP’s Stunning Transformation: Qualtrics Already “Crown Jewel of Company”
Watch Out, Microsoft and Amazon: Google Cloud CEO Thomas Kurian Plans To Be #1
The Coming Hybrid Wave: Where Do Microsoft, IBM and Amazon Stand? (Part 1 of 2)
Oracle, SAP and Workday Driving Red-Hot Cloud ERP Growth Into 2019
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