Parts 1 & 2 of this short series laid out a full and positive measure of Oracle’s new advantages in the ERP application software space. But Oracle still has work in front of it as competitors will try to spin their stories and make some bold competitive moves, too. So, what does Oracle have to do to conclusively win the ERP wars?
The whole product
If you read Geoffrey Moore’s initial bestseller, Crossing the Chasm, he described a concept called the whole product. Wikipedia actually offers a good definition of Whole Product:
a whole product is a generic product (or core product) augmented by everything that is needed for the customer to have a compelling reason to buy. The core product is the tangible product that the customer experiences. The whole product typically augments the core product with additional elements required for the product to have compelling value to a customer. For example, if a personal computer is the core product, then whole product would include software applications, training classes, peripheral devices (mouse, keyboard, printer, etc.), and internet service. Without these additional product components, the core product would not be very useful.
Today’s Oracle Fusion Cloud apps represent a solid core product. And connecting these with OCI, Oracle’s Autonomous Database, etc. help rounds out the solution and gets it closer to a whole product. But Oracle may need to do a bit more to complete the whole product. That extra something involves the manner customers must go through to consume the cloud services.
A different Fusion economic relationship
Oracle should simplify its contracting and pricing mechanisms. One point I heard from a couple of large Oracle customers is that they want/need more certainty in what their fees will be from year to year. It’s hard to plan or budget when the pricing has so many variables (e.g., document counts, users, etc.).
Oracle’s Cloud Infrastructure team in Seattle showed me one such agreement a couple of years ago. Can Oracle do the same for its apps?
Oracle should try to:
- Shorter the overall length of their agreements
- Remove URLs from its contracts
- Provide static pricing in 1-year increments
- Rethink the document pricing approach (if only to provide competitive differentiation)
- Make the agreements easier for a lay person to understand
The model Oracle should emulate is Apple’s iTunes store. There are only a few price points there that cover thousands of songs. Apple makes it super easy to contract with them. It’s frictionless. If Apple customers needed to get outside counsel, hire negotiators to help them and then pore through hundreds of pages of legalese, then no one would have done business with them.
Pricing, or contracting complexity, has become a software selection issue. A recent client of mine intentionally choose one solution over the others because of this factor. If the customer can’t understand or trust a vendor’s agreement, then that solution gets kicked to the curb.
Given all of Oracle’s new advantages in the ERP space, a simpler, kinder agreement would help Oracle siphon away even more ERP business from competitors. That kind of economic relationship would round out Oracle’s whole product today. As one Oracle customer mentioned to me, it would make Oracle an even more ‘trusted’ partner than they are now.
Selling the Oracle Suite
I was a bit surprised at how many Oracle cloud application customers were:
- Previous users of Oracle products
- Cleaning up a lot of accumulated ‘stuff’ their firm had gathered over the years
While every vendor wants to retain its customer base, Oracle isn’t bending over backwards to build all kinds of on-ramps for old PeopleSoft, JDE, etc. customers to lift and shift to the cloud. Instead, Oracle’s offering material functional upgrades and the immediate elimination of accumulated technical debt for those customers. This is important as customers aren’t looking for a new “platform” with old functionality. They want a new cloud platform AND new capabilities.
Every customer I spoke with shared that their firm had, over time, accumulated:
- Technical debt
- Systems from acquired entities
- More spreadsheets
- Inefficient or error-prone processes
These customers are using the move to new applications as an opportunity to clean up their messes and put in place a better, more productive and more efficient operation. These are not lateral moves or technical upgrades. The changes are more pronounced as firms want to get material value in several dimensions as part of the project’s scope.
Oracle did a lot less talking at this show and let the customers and customer stories take more of the limelight. It was the customers (and their enthusiasm) that convinced people as to the new reality of Oracle’s applications. Interestingly, much of what the Oracle executives covered at OOW concerned technology and performance improvements while the customers spoke to the business outcomes and value they got from the new applications.
Oracle’s cloud suite is now functionally large and fairly solid. I would advise them to populate it as fast as possible with all manner of advanced analytics, data visualizations, algorithms, etc. This takes the suite from being a large application collection to a large SMART solution for modern businesses. Every application needs its fair share of WOW factor capabilities.
Likewise, Oracle should pour on the development resources to get the process (and other) manufacturing capabilities mainstream fast. This opens up a competitive window for them against other ERP vendors.
Likewise, it may be time for Oracle to pursue the aerospace and defense vertical. This space has seen little to no investment from major ERP vendors in years. It’s ripe for reinvestment and A&D firms are all sitting on old/obsolete solutions today. This market will go to the first ERP vendor to get there with a real, integrated and modern solution.
I rarely write a piece like this. It’s very positive on Oracle and much less so to Oracle’s competitors. But, Oracle has done a lot to its application portfolio and technology stack and this should be recognized. You have to respect what they’ve done.
ERP vendors have had a long time to get their product lines fully cloud enabled. Unfortunately, many chose to put forth a half-hearted or poorly thought out program. Now, those birds have come home to roost.
When I look at the ERP landscape now, you have to wonder who else has done as nicely as Oracle? My vote would be for Zoho. They, too, have a large suite of applications, one architecture, etc. Zoho’s edge, though is in how they price their solutions and how frictionless they make it to use their technology.
Now, let’s see what Oracle’s competitors have to say and what they’re going to do….