Oracle's Steve Miranda on SaaS progress - 'We're comfortable'

Profile picture for user gonzodaddy By Den Howlett June 21, 2019
Summary:
Steve Miranda explains why he is upbeat about Oracle's progress with cloud apps following a better than expected FY19 Q4 earnings report.

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Steve Miranda

Recently, I've been fielding a bunch of conversations about the momentum (or otherwise) for cloud/SaaS-based ERP among enterprise customers. Depending on who I talk to, things are either going really well or are kind of OK. So it was refreshing to hear Steve Miranda, executive vice president of Oracle Applications product development talk candidly about Oracle's progress. Here's what he said:

We're pretty comfortable with our strategy of supporting customers who are on-premise and want to stay that way (with support from Applications Unlimited) until the time is right for them to make a move. I feel good about that. Right now, I'd say it's not overwhelmingly 'lift and shift' but there are some patterns. So, for example, a group might have done a lot of M&A, they've sorted out the technical infrastructure but didn't streamline ERP processes. In HR, the new generation workforce wants a better user experience and in other cases - like Oracle - they're going from a product to a service-based business model. 

It's worth putting this into perspective based on data I was given by G2, formally known as G2 Crowd. They say that among the installed PeopleSoft/OracleEBS/JD Edwards customers, those who are doing cloud deployments are in the 12-18% range.

As with all data, we should caveat that no survey result is ever truly accurate although in a conversation with Mike Fauscette, who leads G2 Crowd's data analysis team, he believes they have enough by way of review checks to be satisfied that the results are representative of the market. 

Moving on, I asked Miranda about the impact of buzzwords du jour machine learning and IIoT. I was particularly interested to understand whether those technologies are encouraging Oracle to innovate or whether, as we have seen among some SAP customers, innovation is happening on a build only basis. 

The moonshot scenarios we hear about? They don't exist. On the other hand, we can do relatively small things like establish patterns of reporting usage and see what leaders are focusing on. As you might imagine, they want to see where the highs are but also where there is the most variability. We prefer to use a 'push' style of approach where we can help them focus on the things that matter. It's at that point where they come back to us with more nuanced questions. But to get there, customers need a few examples. 

That's an interesting take because right now, the evidence I am seeing and which is confirmed by peers, is that customers are looking to in-house build versus buy. A part of that might be explained by the fact that the incumbent ERP players haven't really innovated across industries for some years. But here, Oracle enjoys an advantage Miranda expressed this way: 

Where the center of gravity is around data and that's with us, then we get a lot of pressure to provide solution help. 

How much of that turns up in GA product has yet to be revealed since Miranda said that Oracle is reserving product release announcements until closer to the upcoming Oracle Open World event, slated for September.

We also touched on NetSuite progress which we have seen come on in leaps and bounds following the 2017 acquisition. At SuiteWorld 2018, Brian Sommer showered the company with unreserved, and rare, praise saying:

I have to give it to both Oracle and NetSuite’s leadership teams for executing a very good M&A deal. It’s extremely rare for me to say so but I will in this situation. 

Later in the year, I said:

NetSuite is maturing well as the de facto mid-market cloud ERP solution of choice. The fact it is free to expand and build partner capabilities, has a firm customer success program in place, is focusing customers on less customization as it fleshes out the solution offering while also expanding its vertical market footprint are all solid points in its favor.

Today, those feel-good sentiments remain. And it should come as no surprise that Miranda said:

Having Oracle ERP for enterprise and NetSuite for mid-market is certainly working out well for us. 

My take

As always in conversations with Miranda, I came away thinking that Oracle has good reason to be quietly confident. The earnings call which preceded our discussion focused on wins against SAP but then as Miranda pointed out, there is general uncertainty in the market which is allowing Oracle to come back into contention across many competitors.  

As with others in the market, I remain concerned about vertical market-specific functionality but then I understand that enterprise ERP is sufficient of a horizontal opportunity for it not to matter so much to the vendor. The proofs will come in the customer conversations the diginomica team has at the upcoming OpenWorld event.