Overwhelming Winner? Why Oracle Claims Cloud ERP Superiority

Oracle has gone on record multiple times stating that Cloud ERP Applications and Autonomous Database are the two key product areas that will determine Oracle’s success moving forward, as these will enable the success of their other applications and infrastructure products.  In Oracle’s recent quarterly earnings call, Larry Ellison made some bold claims regarding both product categories.  In this blog, I will discuss Oracle’s perspective of the Cloud ERP market and why they are claiming that they will eventually be the overwhelming winner in this generation of Cloud ERP.  In a separate blog, I will discuss Oracle’s database claims.

The Only Complete Cloud ERP Offering in the Market

Oracle has long claimed that they are the only company that can offer a complete Cloud ERP application suite as of today.  While elaborating on this point, Mr. Ellison took a few very targeted shots at rivals SAP and Workday.

With respect to Workday, they currently do not have a full cloud application suite, but they started with core HCM and have been steadily building out a more robust solution set through in-house development and targeted acquisitions.  Workday customers that we have spoken with have been very impressed with its features and capabilities in the applications they currently offer, but as of today they really are more of a best-of-breed provider, especially with large enterprises.

SAP is where Oracle really focused their attention in providing rationale as to why they will overwhelmingly win the Cloud ERP market.  Oracle believes SAP’s customer base is up for grabs for two reasons.

• First, SAP never re-wrote their ERP code for the cloud. The company does have cloud offerings with the cloud companies they have acquired – SuccessFactors, Concur, Ariba, etc.  But with core ERP, SAP really has more of a hosted offering which is not the same as a true digital approach.   Oracle claims that they are pushing 100 new features every quarter, which SAP is not doing, therefore, SAP customers are unable to get the true benefits of continuous innovation on a regular basis.
• Second, the costly HANA migration lacks business benefits for some customers, illustrated by customer resistance to SAP’s forced HANA migration by 2025. Oracle claims the only change offered by HANA is taking an existing SAP system and replacing Oracle’s database with HANA as a hosted solution.  If this is accurate, then Oracle has a very good point, as the HANA migration is essentially a very costly and time-consuming re-implementation of the same applications on HANA technology.  If the only real benefit is a technology upgrade that allows for some faster processing, that can be a very tough business case to sell.  Of course, SAP has a different perspective. Ultimately, it is up to each SAP customer to make this determination.

SAP Customer Demand Percolating and Ready to Explode

According to Oracle, some of SAP’s largest global customers, including German companies in SAP’s backyard, have been discussing plans to migrate to Oracle’s Cloud (Fusion) ERP.  Oracle claims the hold-up is related to one large customer migration that Oracle is currently working on and expects to complete in March of 2021.  Having this proof point of being able to migrate large enterprise customers safely, securely, and without putting the business at risk is what stands in the way of SAP’s large customers migrating to Fusion ERP.  Oracle stated that some of these large customers are already migrating divisions to Fusion ERP to persuade themselves that Oracle can do this successfully.

Who Will Prevail?

Mr. Ellison presents a very compelling case in explaining the market dynamics and how Oracle is perfectly positioned to be the overwhelming Cloud ERP winner.  But why would anyone expect anything different coming from Oracle?  We believe the truth lies somewhere in between the various ERP provider claims.

We have previously written about some of Oracle’s shortcomings heard from Oracle’s customers, which I do think are very credible.  What is also interesting is that in Oracle’s lawsuit with the Department of Defense over the JEDI cloud initiative, Oracle vehemently stated that it is poor business practice to go with only one cloud provider – the JEDI contract was ultimately solely awarded to Microsoft.

This suggests companies should take a best-of-breed approach to have a balance within their organization. To this point, we have worked with SAP customers who are displacing SuccessFactors with Workday’s HCM applications. We have also worked with clients who have selected Workday to replace portions of their legacy ERP systems and Workday customers who have expanded their Workday footprint over time.

As it relates specifically to SAP, we have worked with many SAP customers who have started HANA migration initiatives and have been successful and pleased with the results.  Additionally, we have worked with clients who have selected SAP HANA to replace their legacy ERP systems.  Alternatively, we have talked with many SAP customers who do not want to migrate to HANA and who believe the 2025 cutover date will be extended due to customer demand.

We expect these cloud wars to continue over the coming years and most likely over the next decade. However, if Oracle’s claims about SAP’s large enterprise customers are accurate, then the competition between the two could get very heated, which should be beneficial to customers still considering a cloud ERP provider.

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