What can Customers Expect from Oracle in Q4 2016?

Oracle’s 2016 fiscal year end is fast approaching at the end of May and it is never too early to start preparing for Oracle’s year-end sales push. The fourth quarter typically represents Oracle’s largest revenue quarter and is accompanied by the pressure of exceeding annual sales goals for Oracle representatives across the spectrum of revenue sources. So what can customers expect from Oracle to better prepare for successfully navigating an Oracle sales cycle?

All Revenue is Good Revenue

As we have reported in our Oracle Q2 Supplier Scouting Report, Oracle had flat total revenue in Q2 with meaningful declines in new on-premise software licenses and hardware product and support revenues. Both of these areas accounted for 31% of Oracle’s total Q2 revenue, while the big growth area of Cloud only accounted for 7%.

Top line revenue growth in any form is important for Oracle to demonstrate the value of its solutions and market adoption. Additionally, sales teams will be pressured to exceed year-end performance goals and capitalize on sales incentives and compensation plan bonuses. Oracle’s executive and senior management teams are highly focused on demonstrating continued momentum and growth by closing any deals available. Therefore, Oracle executives may be willing to approve non-standard terms to customers willing to pull forward future demand.

But Cloud Deals are Paramount

In Oracle’s Q2 earnings call, Oracle made it crystal clear that they are focused on their cloud offerings. Cloud offerings are being touted as more profitable longer-term for Oracle while in the short-term cloud revenue is expected to at least replace revenue declines in new on-premise software and hardware sales. Oracle boasted about the completeness of its cloud ERP stack as a competitive differentiator, its high sales closure rate, and the billions of dollars in its sales pipeline. Oracle also projected continued robust cloud sales growth by as much as 55%-60% in Q4 alone.

We have seen Oracle in past quarters offer its sales teams increased incentives for closing deals that include at least some cloud component in the overall sales package. Customers that understand Oracle’s cloud motivation can start working internally to identify any potential upcoming demand and determine if meeting that demand with a cloud offering is a viable option. With a sound negotiation strategy and approach, this can create significant leverage in negotiations with Oracle on not only the cloud component, but on a more robust deal that may include on-premise software, hardware, and even services and training components.

But whether or not customers have any upcoming demand or desire for deploying a cloud solution, expect Oracle to come calling in Q4 to identify any potential demand and then utilizing high-pressure sales tactics to meet such demand with a cloud solution.

We would love to receive your feedback and thoughts, so please do not hesitate to post a comment. You may also contact me directly at  jlazarto@upperedge.com if you would prefer a more discrete discussion regarding your specific circumstances.