ACN attends Oracle Media Day for insights on the company's Cloud strategy

The day trip landed ACN at Oracle's HQ in Redwood City, California.

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ACN attends Oracle Media Day for insights on the company's Cloud strategy Hurd: "When I came to the company, our R&D spend was $3.7bn or so. Our R&D this year will be over $5bn dollars and we’ve spent that R&D for several years."
By  Alexander Sophoclis Pieri Published  June 16, 2017

This year’s Oracle Media Day, hosted at Oracle’s headquarters in Redwood City on the 4 May, 2017, brought together journalists from across the globe, to hear the latest on the enterprise technology provider’s journey to the Cloud.

In addition to enjoying a handful of Star Wars paraphernalia, gifted in celebration of the unofficial fan holiday, journalists were brought up to speed on Oracle’s developments across its Infrastructure-as-a-Service (IaaS), Software-as-a-Service (SaaS), Database-as-a-Service (DaaS), and Platform-as-a-Service (PaaS) offerings.

There were several presentations and panels throughout the day, which included an end-user panel discussion with representatives from Twitter, Trek Bicycle, and General Assembly.

Mark Hurd, CEO, Oracle, was also present in two separate sessions, the first being his welcome address, and the second, a live taping of a Recode podcast with famed technology journalist, Kara Swisher.

In his opening speech, Oracle’s CEO delved into the company’s journey to the Cloud, the current Cloud strategy, as well as sharing details on third quarter performance of Oracle’s Cloud business.

“We’ve have spent the last several years making sure that we can bring that capability, not just on premise, but also to the Cloud … we’ve invested in our R&D significantly,” said Mark Hurd, CEO, Oracle.

“When I came to the company, our R&D spend was $3.7bn or so. Our R&D this year will be over $5bn dollars and we’ve spent that R&D for several years. That has allowed us to be in a position now to execute across every layer of the Cloud.”

In terms of third quarter performance, Oracle reported that Cloud bookings ARR was up by 73%, while Cloud revenue currently stood at a $5bn annualised revenue run rate and was growing at 72%. Revenues within the SaaS-PaaS segment were reported to be up 86%, on top of 60% growth, while billings for the segment grew by 11% in USD.

In terms of customer metrics, Oracle’s SaaS business reported 125 new customers, as well 908 expansions, while Oracle’s PaaS business reported 2,380 new customers. Another 2,586 customers were reported buying standalone infrastructure services.

“So we’ve had this strategy to lead this decade long transition to the cloud. Second, to be best in breed in each of our application segments. Doesn’t matter whether that’s ERP, HR, sales, marketing, service. Each application individually has to be the best. And then they have to work together as a suite,” commented Hurd.

Several announcements were also made during Oracle Media Day, the most prolific being the signing of a strategic agreement between Oracle and US-based telecommunications conglomerate, AT&T.

Building upon an existing and long-standing relationship between the two companies, AT&T will move thousands of its large scale internal databases to both Oracle’s Cloud IaaS and PaaS.

“This is an opportunity for us to move their databases and application workloads to the Oracle Cloud. We’ll give them access to our cloud portfolio at the infrastructure platform, DaaS layer, and at the application layer,” explained Hurd.

“This is a company with a lot of data … they have over an Exabyte of data. A lot of that data sits in Oracle databases and a lot of those databases are big, accounting for a large percent of their total data. The opportunity for us now is to leverage all the innovation in our cloud, to be able to run those databases on our Cloud technology.

“We also highlighted in the announcement, one specific application for AT&T, which is Field Service Cloud (OFSC). AT&T has roughly 70,000 field technicians — they will be automated in our field service application.”

AT&T will reportedly utilise OFSC to optimise the scheduling and deployment of its field technicians. Additionally, the telecommunications provider will be able to combine its existing machine learning and Big Data capabilities with Oracle’s technology.

This in turn will greatly benefit AT&T’s field technicians by improving job duration accuracy and on-time arrival, as well as overall productivity.

As part of the initial announcement, AT&T shared its own objectives for the project, the primary goal focused on achieving 75% virtualisation of its core network functions by 2020. The company aims to reach the 55% mark by the end of 2017.

In addition to the AT&T announcement, the team at Oracle also revealed plans for EU region expansion in Germany. The enterprise technology company shared that it would be adding modern IaaS architecture, as well as PaaS cloud services.

A German-based modern IaaS will allow local organisations to create and transfer mission-critical workloads to the Cloud, at what is expected to be a significant price performance advantage over existing setups.

Expected to be delivered in the second half of 2017, the expanded infrastructure footprint follows a substantial increase in customer demand with non-GAAP cloud revenue, which increased by 71% in the third quarter of fiscal year 2017 to $1.3bn.

Commenting as part of a release on the announcement, Thomas Kurian, president of product development, Oracle, shared: “Our customers and partners in the EU and in Germany have trusted their businesses and mission-critical workloads to the Oracle Cloud for years.

“The expansion of the Oracle Cloud EU Region in Germany will deliver the best cloud services, not only our leading SaaS offerings, but also our new PaaS and IaaS offerings.

“Oracle will be providing EU-based cloud customers with unmatched performance, availability, and governance, and support of the broadest range of enterprise applications from any cloud platform.”

During the Recode podcast, Hurd shared his viewpoint on the current state of the global adoption of Cloud. He began by pointing out that despite the industry being “a couple of trillions of spend”, Hurd was adamant that not even $50bn of it was yet in the Cloud.

As a small percentage of total enterprise spend, the Cloud business is still
relatively small.

Oracle’s CEO was quick to add however, that despite this, cloud revenue while small compared to enterprise revenue, was growing rapidly at roughly 50% per annum. It continues to expand while on premise is on the decline.

“I think it has moved relatively quickly. If you think about the Cloud business, it went from being zero — several years ago — to a $50bn industry now,” explained Hurd.

“It is growing quite quickly and maturely, faster than anything in the enterprise business, because the rest of the enterprise business is in decline.”

Oracle’s CEO went on to explain the various ‘roadblocks’ hindering the adoption of Cloud, discussing briefly the challenges of security and privacy, regulatory issues, and the issue of data sovereignty in certain countries that restrict the flow of data beyond their borders.

When pressed on what type of advice he would share with CEOs considering the move to Cloud, Hurd explained that there are three core things needed.

“You need IP, you can’t move without IP. Second, you need to have capital. You have be able to invest in the infrastructure, to be able to deliver that IP into the cloud. Finally, you need to have the patience to stick it out,” asserts Hurd.

“We spent three years on it with basically flat earnings per share. This is not the formula for being admired by the investment community … I will say that once you get to the other side of that, it is a bit like the hotel business. The problem with the cloud is that you have to build a hotel. It has to be finished before you can rent any rooms. And while the hotel is going up, there is no revenue.”

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