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Supply Chain Matters Highlights of Oracle Open World 2016 Conference- Summary Impressions

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This Editor once again attended the Oracle Open World conference in San Francisco this week and Supply Chain Matters has been publishing impressions throughout the week. As a reference, our prior blog commentaries included: oracle_ow16_sized450

Highlights of Oracle’s Q1 FY17 financial performance last week leading-up to OpenWorld

Our initial on-site Commentary One posting highlighting Larry Ellison’s opening keynote.

Our Supply Chain Matters Commentary Two posting addressed reported uptake of Oracle SCM Cloud from last year’s announcement.

Our Supply Chain Matters Commentary Three posting explored the interrelationships among Oracle ERP Cloud and Oracle SCM Cloud, as well as highlighted announced future pipeline releases planned for SCM Cloud.

Our Supply Chain Matters Commentary Four posting highlighted the key messages from Larry Ellison’s second keynote, specifically implication of the release of Oracle Database Cloud.

In this our final on-site commentary, we share summary impressions, insights and takeaways for our readers and clients.

This Editor and analyst has been attending Oracle’s annual OpenWorld customer conferences on an off and on basis for well over a decade.  During that time span, I have observed lots of changes concerning Oracle from organizational, technical and customer applications perspectives.  Some to the good, some not so. That has been the context of our coverage of this and past annual OpenWorld events.

During this year’s as well as last year’s conferences, Oracle senior executives reminded attendees that it has taken this company ten years to reach its vision of Cloud based IT technologies and software-as-a-service (SaaS) applications. The results of that ten-year effort are now manifesting themselves in the blizzard of new Cloud based product and platform announcements that continue to unfold every year.  It is now difficult for customer’s to be able to keep-up.

I can well remember when the Oracle Fusion initiative was first introduced, and there were no initial indications of the length of the journey, only the breadth of the vision and the scope of the endeavor.  Indeed, the vision was bold, and to Oracle’s credit, it was not watered down when the challenges grew deeper. The effort took on a holistic approach to include infrastructure, database as well as applications dimensions.  Few enterprise technology companies have been able to execute such a breadth of technology.

More importantly, Oracle’s adopted a business and industry focused lens, one that could specifically respond to the overriding businesses challenges that enterprise, business and functional organizational focused technology needed to address and solve. This was an area where Co-CEO Mark Hurd plays a valuable role in his role-based articulating of the C-Suite challenges of business in so many industry settings and how IT must be able to respond to such challenges.

Such challenges include various multi-vendor based legacy ERP backbone customers who felt hobbled in their ability to ever be able to take advantage of the next generation of technologies because of the realities that upgrading was far too disruptive to existing business processes, would take far too much time and be far too expensive. Legacy ERP includes tendencies to have added too much business unique customization that provided more obstacles to overcome in adoption of newer technology.

As many technology authors and visionaries have pointed, in the prior era of ERP implementations, systems integrators were making the bulk of the initial money while ERP providers themselves gained sustaining revenue streams related to annual maintenance of systems that in essence, get the basic job done but add little to needs for more business agility, adaptability and revenue growth.

Oracle’s journey has been directed at developing a holistic Cloud based technology approach that can address IT as well as business cost control and margin challenges. It very much includes engineering based systems approach, as was often articulated by Larry Ellison himself. For our readers, that implies that Oracle’s target is to sell technology to senior leadership levels of businesses, as well as to IT or functional teams.

At the same time, the journey has led Oracle to bring along a host of other different traditional licensed application suites such as JD Edwards, E-Business Suite, Advanced APS, Siebel, Demantra, Agile, G-Log and many others. To its credit, Oracle did not stop ongoing development nor customer support programs in its own traditional suites, new acquisitions or long-time applications.  That afforded customers the peace of mind to determine which technology paths they wanted to pursue, at their own timeframes, as opposed to ‘it is my path to the Cloud or on your own’ approaches that some technology vendors tend to influence.

In its most recent financial performance briefing for analysts and investors, Oracle executives indicated that while the bulk of its installed based software applications customers have yet to make their decisions to move to Cloud based adoption models, many have begun an overall assessment strategy. At this year’s event, some executives’ views indicate a ten-year window, some view it as far less. Oracle has rightfully provided multiple paths, while assuring that legacy behind-the-firewall applications will be supported.

Many of the new early adopter customers of Cloud based platforms and applications have done so for specific business motivations, many with common themes of shedding legacy IT infrastructure costs with the ability to make more manageable technology leaps. Some view the Cloud as another form of leasing technology, or a computing utility platform that flexes with the needs of business or supply chain. That has been the declared surprise to the current momentum.  The upside has built-in momentum if Oracle continues to execute as it has done up to now, both in internal development and external acquisition.

Today there are some key new Oracle faces in senior leadership roles of development, sales and other areas while the company manages to continually balance new and seasoned experience and vision. While the bravado of the prior Oracle sometimes shows, it is now accompanied by a discernable shift toward being more customer and services focused. That includes adoption of practices directed at providing customers with what is described as zero-hassle buying, allowing more customers to try before they buy, and yes, less expensive pricing. Customer engagements are now assigned an executive sponsor for monitoring and customer feedback.

Over these past ten years, a lot has changed, most toward the better.  Today’s Oracle is one of momentum, continuous innovation and perhaps a dose of fast follower.  We continually observe this with every subsequent OpenWorld.

With the pending acquisition of NetSuite, and that of other acquisitions such as LogFire, Oracle is indeed increasing its momentum in offering a more business compelling and flexible path toward Cloud based ERP, data management, analytics and supply chain focused applications.  Indeed, acquiring 2800 Oracle ERP Cloud customers might well be just the beginning of this momentum. Oracle SCM Cloud will continue to be the recipient of that momentum as will Oracle Procurement. This Editor previously cited Oracle’s SCM development team for its slow pace toward the Cloud, but as noted in our prior commentary, we now observe that the pace of innovation is now accelerating.

Last year and again this year, Mark Hurd’s classic prediction was that by 2025, there will be but two enterprise technology vendors controlling 80 percent of the SaaS technology market.  Last year, we viewed that prediction as stick to the wall wishful.  This year it is beginning to look more likely that Oracle will indeed one of the few enterprise technology vendors that got it right.

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.


Supply Chain Matters Highlights of Oracle OpenWorld 2016 Conference- Commentary Four

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This Editor is once again attending the Oracle Open World conference here in San Francisco and Supply Chain Matters is publishing impressions throughout the week. As a reference, our prior blog commentaries included:

Highlights of Oracle’s Q1 FY17 financial performance last week

Our initial on-site Commentary One posting

Our Supply Chain Matters Commentary Two posting.

Our Supply Chain Matters Commentary Three posting.

On Tuesday, Oracle icon Larry Ellison delivered his second keynote and he did not disappoint the conference and live online audience regarding grabbing attention. His two key themes for his second keynote were advances in Cloud based database technologies as well as Cloud infrastructure.

Ellison reiterated to the audience that Oracle database technology has transitioned through three major transitions of computing starting with the original RDBMS that ran on Digital Equipment technology, through iterations of client-server and Internet technology, and now a complete transition to the Cloud. By formally announcing Oracle Database 12C Release 2 for the Cloud, Oracle is literally throwing down the gantlet in direct dead-to-head competition with Amazon Web Services (AWS) as well as all other database technology providers. As a means of reference context for many of our supply chain functional readership, AWS is the IT hosting platform service that Amazon provides, and many software technology firms utilize AWS for hosting.

Two of the compelling technology features of this new database application beyond its Cloud native platform is increased support for multi-tenancy, allowing up to 4000 databases to be managed as one.  What that implies is the potential for dramatically lower database maintenance needs as well as increased opportunities for added automation of database management and backup. Ellison flatly declared that this new release should dramatically lower business costs and make database administration far simpler. The other compelling feature is greatly enhanced in-memory capabilities for columnar store along with Active Data Guard services. With the features and functions of this native Cloud Oracle database release, IT teams should have the flexibility to host databases on the Cloud, as well as on premise, with the ability to interchange at any time. The on premise database is claimed to be technically, the exact same as that within the Cloud.  Both will be provided with the data security and encryption capabilities that Oracle claims is industry leading.

Most of Ellison’s remaining keynote was a litany of direct citing of current performance benchmarks of Oracle database performance in response time, transactional and OLTP loads in direct contrast to AWS performance.  He challenged Amazon to respond if they disagreed with Oracle’s analysis.  Tech bluster aside, SAP ERP, supply chain, as well as other best-of-breed software users should focus on the fallout and implications of Oracle’s announcement this week.

From our lens, make no mistake, this will once again change the competitive dynamics and technical performance options for the database market.  With supply chain and product management applications so data and transactional centric, database technology advancements are key enablers.  The market is already benefitting from newer in-memory database performance capabilities and the performance potential now increases. More importantly, Cloud based and enhanced multi-tenancy opens up more profound opportunities for the savings in overall IT hardware and software investment, deployment and ongoing support costs.  Oracle further provides rather strong arguments for not getting locked-in to specific database platforms but rather adopting database technology that can run in any Cloud platform, ERP focused or otherwise.  We therefore urge our functional readers to check-in with your respective IT and database technical support teams to ascertain their viewpoints and perspectives regarding this latest database technology related announcement by Oracle.

The most significant gauntlet of this week’s announcement is whether Oracle with now drive more aggressive overall pricing for its new Cloud based database.  To take advantage of the OpenWorld opportunity, an entry level version of its Cloud database, claimed to have significant technical features was announced as $175 per user. That may be an example of new and more customer friendly approach that Oracle executives declared during OpenWorld but the proof resides with consistent customer application of such practices.

If Oracle does reduce overall pricing in database technology, it will have market-wide implications. From this author’s view, it implies longer-term lowered cost and improved data analysis performance for supply chain planning, sales and operations planning, analytics and more demand-driven analytics needs.

In our next commentary, we will address summary observations and our takeaways from this year’s event.

Stay tuned to our continuing coverage of Oracle OpenWorld 2016.

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.


Supply Chain Matters Highlights of Oracle OpenWorld 2016- Commentary Three

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This Editor is once again attending the Oracle Open World conference here in San Francisco and Supply Chain Matters is publishing impressions throughout the week. As a reference, our prior blog commentaries included:

Highlights of Oracle’s Q1 FY17 financial performance last week

Our initial on-site Commentary One posting

Our Commentary Two posting.

In previous commentaries we observed that Oracle has been sharing the customer uptake counts for Oracle HCM Cloud and Oracle CX Cloud. While there was again specific mention of Oracle SCM Cloud (Oracle’s complete suite of Cloud based supply chain management and manufacturing applications) there was no customer data shared from the podium in Larry Ellison’s opening keynote. Our Commentary Two echoed customer uptake statistics shared by senior Oracle SCM executives.

We advise our readers to take context to the stated current total of 1090 Oracle SCM Cloud customers since there is the possibility of some double-counting of customers among ERP Cloud and SCM Cloud. Our on-site discussions yesterday indicated that SCM Cloud may be benefitting from the ongoing momentum of 2800 customers embarking on various applications within Oracle ERP Cloud. Development executives for Cloud ERP indicated to independent analysts that one of the current primary motivations for movement toward ERP Cloud is to undo many years of backbone systems customizations that have occurred, leading to increased maintenance and IT support costs. While the majority of on premise deployed Oracle E-Business customers remain with current deployments, Oracle executives indicated building customer inquiries and discussion reflecting on how they can take advantage of Cloud based deployments and the reduction of expensive and complex customizations. As those efforts continue towards Cloud deployment, it obviously opens up on-ramps to SCM Cloud to fill-in potential business process gaps. Oracle SCM executive Jon Chorley indicated that current active on-ramps to SCM Cloud have been early customer’s election to adopt indirect procurement, product innovation management, transportation and global trade management. Oracle SCM executives articulate such motivations towards Cloud as either:

  • Operational excellence
  • Innovate at the edge
  • Divisional level modernization (termed two-tier ERP)
  • Complete transformation to Cloud deployment model

The above stated, we did observe that the release pipeline for SCM Cloud is accelerating from previous levels.  First, SCM senior vice president Rick Jewell flatly indicated that the majority of Oracle’s development resources will be dedicated towards a continuous Cloud based applications development environment. Releases in the pipeline for 2017 include:

Supply Chain Collaboration Cloud, an application focused on supporting primarily outsourced supply chain collaboration and decision support needs.

Supply Chain Planning Cloud will introduce enhanced demand management capability via Oracle Demantra, a full sales and operations planning (S&OP) support utility for supporting multiple ERP and best-of-breed systems, and the beginning of enabling Oracle APS Release 11 Planning Central functionality to be enabled by the Cloud.

Oracle Quality Cloud was described as supporting something that Oracle SCM has not done previously, introducing end-to-end quality management support and quality management best practices.

Cloud SCM Release 13 in 2017 is expected to include some form of a supply chain analytics cloud application that would include analytics-driven navigation as well as newly developed Oracle analytics technologies pre-configured to support key supply chain decision support needs.

Other areas mentioned, not specifically in timeline include abilities to support Internet-of-Things data sensing of capital equipment and the sharing of analytics directly into manufacturing and shop-floor scheduling systems,  A sophisticated on-stage demo of potential functionality was demonstrated.

Before closing out this commentary, we share some additional thoughts. If your organization remains concerned about potential shift of applications hosting to the Cloud, you are obviously not alone.  Concerns for data and information security are natural and even acknowledged by enterprise technology providers such as Oracle.  Yet, do not be close minded as to not consider the operational, decision-making and/or financial benefits that Cloud based deployments can and will ultimately provide.  The reality remains that if your organization remains conservative, industry competitors or disrupters will move to gain important competitive advantages in cost, productivity and business agility.  Therefore, keep an eye toward developments and demand that Cloud technology providers provide required information and customer deployment references. Talk to early adopters and talk to independent analysts who have knowledge of this quickly changing landscape.

Yesterday, Oracle icon Larry Ellison delivered his second keynote and he did not disappoint. His two key themes were advances in Cloud based database technologies as well as Cloud infrastructure.  It was pointed and direct, and from this author’s view, provided many longer-term implications for supply chain planning, sales and operations planning, analytics and more demand-driven analytics needs.  We will address these functional implications in our next commentary.

Stay tuned to our continuing coverage of Oracle OpenWorld 2016.

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.


Supply Chain Matters Highlights of Oracle OpenWorld 2016- Commentary One

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This Editor is once again attending the Oracle Open World conference here in San Francisco and we will be publishing impressions throughout the week. We began our coverage with highlights of Oracle’s Q1 FY17 financial performance last week.

Last night, Oracle Executive Chairman and Chief Technology Officer Larry Ellison kicked off this year’s event with his always anticipated opening keynote. The main theme of his remarks was naturally the ongoing trends in the adoption of Cloud based computing and how Oracle is faring in the market.  Placing Ellison’s wealth and sometimes arrogance aside, in all the years that we have observed him, we have come to admire his market perceptions.  Larry Ellison knows the IT market, make no mistake about that.

From our lens, there were three important takeaways from this opening keynote that will set the tone for Oracle’s efforts in the coming year.  One was Ellison’s statements related to Oracle’s current prime competitors. For Cloud based IT infrastructure, Oracle views Amazon and Amazon Web Services (AWS) as its prime competitor and Ellison indicated aggressive plans this year for Oracle to take on AWS in the market. Mentioned as very admired and respectable in this segment was Microsoft. Not mentioned at all was the IBM Cloud. In the ERP and applications segment, Oracle continues to view Workday as its prime Cloud ERP competitor.  Ellison once again specifically stated that is was not SAP.

Of the six major design goals for Oracle Cloud, Ellison again stated that security is by far the single most critical requirement. To emphasize this ongoing concern, he reminded the audience that Russian President Vladimir Putin could be the single most important person to influence this year’s U.S. Presidential Election via alleged hacking of candidate and other governmental emails. To support required security requirement, Oracle continues with efforts to deploy always-on continuous defense and data encryption surrounding its entire Cloud infrastructure.

And then there was the statistics related to current customer adoption momentum in areas such as software-as-a-service (SaaS), platform-as-a-service (PaaS), and Cloud ERP. Ellison boasted that the company’s current run rate is to sell $2 billion of Cloud based technology this current fiscal year. Customer uptake counts for Oracle HCM Cloud and Oracle CX Cloud were shared. Specific mention of Oracle SCM Cloud (Oracle’s complete suite of Cloud based supply chain management and manufacturing applications) was made noting that Oracle sees no direct competition, similar to our Supply Chain Matters previously stated view.  However, unlike the other Cloud applications suites, no customer uptake stats were shared from the podium.  We have noticed this for months now, and our goal for the remaining sessions of this year’s OpenWorld is to probe deeper on current market uptake or lack thereof.

As usual, there was a blizzard of new technology and applications announcements also made during Ellison’s keynote, too numerous to go into at this point.  The one that did catch this Editor’s interest  was the upcoming Oracle Database 12C Release 2 was will feature increased support for multi-tenancy along with a much faster and more secure in-memory support capability.  This is noteworthy since it is clear that Oracle will offer the market technical and overall cost alternatives to SAP’s HANA database strategy in both IT infrastructure, operating cost, data security and performance dimensions. The other initial takeaway for Database 12C Release 2 market introduction is that initial deployment will be confined to Cloud based as opposed to on premise. There is obviously something more to this strategy.

Stay tuned to our continuing coverage of Oracle OpenWorld 2016.

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.


Oracle’s Latest Quarterly Financial Performance Boosted by Cloud Product Strategy

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Yesterday at the close of the stock market, Oracle reported its FY17-Q1 financial performance results. The enterprise technology provider’s headline was another quarter of strong sales gains related to its Cloud computing based product lineup. Oracle’s three senior most executives described the quarter as very solid performance in terms of strategic Cloud based product uptake but Wall Street and associated investors had a mixed reaction. The company said its latest quarter was also weighed down by a strong dollar, which reduced revenue from various businesses by 1 to 3 percent.

The financial performance included:

  • Total revenues up 2 percent in U.S. dollars and up 3 percent in constant currency, both of which were reported by business media as missing analyst expectations.
  • Cloud plus On-Premise software revenues up 5 percent in U.S. dollars and up 6 percent in constant currency.
  • Cloud software-as-service (SaaS) and platform as-a-service (PaaS) were up 77 percent in U.S. dollars and up 79 percent in constant currency.
  • Operating income and operating margin at 31 percent
  • Non-GAPP operating income was $3.4 billion and non-GAPP operating margin was 31 percent.
  • Oracle closed the quarter with a $68 billion cash position.

Like many enterprise software providers, Oracle continues an aggressive pivot toward offering the market more Cloud based software applications, services and IT infrastructure. This includes a completely Cloud-based ERP offering. Last year, Oracle was the first technology provider to announce a complete public Cloud based SCM suite.

As Supply Chain Matters and others continually point out, a shift to Cloud based computing platforms can financially be beneficial for enterprises and supply chain teams but costlier for technology providers if the shunning of traditional licensing model exceeds the Cloud adoption rate. Providers earn more revenue on a longer term basis with Cloud licensing coupled with the opportunity to provide additional services.  However, the transition can be difficult to manage from the notions of financial expectations, margin performance and guidance. That is indeed what has been happening for major ERP providers such as Oracle and SAP.  While Oracle’s new software license sales fell by nearly 11 percent, we continue to believe that Oracle is deploying a far broader Cloud computing and applications deployment strategy providing customers with a number of flexible options in direction setting.  Once more, Oracle’s supply chain and product lifecycle management applications offerings remain very competitive.

At last night’s earnings briefing, executives pointed to the 7th consecutive quarter of revenue growth with ERP related revenues growing 70 percent, quarter over quarter. During the recently completed quarter, executives pointed to wins for 776 new SaaS along with 2032 new PaaS customers. Most of this activity was described as net new customers adopting the Cloud model while the bulk of Oracle’s existing applications and database customers are just beginning to make the transition.

Since the closing of Oracle’s latest fiscal quarter, the company has also announced the planned $9.3 billion acquisition of Cloud based ERP provider NetSuite as well as the intent to acquire supply chain execution and WMS systems provider LogFire.

On Sunday, the company will kick off the company’s 2016 Oracle OpenWorld Conference in San Francisco. There are a lot of expectations as well as implications to this year’s event including new and prospective customers, partners and systems integrators

Once again as in the number of previous years, Supply Chain Matters, in the presence of this industry analyst, has been invited to attend this year’s OpenWorld. We will be publishing continuous commentaries regarding event briefings, interactions and customer presentations beginning early next week.

Stay tuned and connected.

Bob Ferrari

© Copyright 2016. The Ferrari Consulting and Research Group and the Supply Chain Matters® blog. All rights reserved.

Disclosure: Oracle is a current client of the Ferrari consulting and Research Group.


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