Stagnant economic growth in most of the business world, and the rapid pace of disruption across industries, is putting more pressure on CEOs to produce greater customer value (and shareholder returns) at lower cost.
That combination of factors is driving companies to the cloud, which can free up resources for investment in customer-facing innovation, at an ever-increasing pace, Oracle CEO Mark Hurd said during his keynote Monday at Oracle OpenWorld. “The movement to cloud is an inevitable destination,” said Hurd. “This is how computing will evolve over the next several years.”
In an example of how this is trending, companies are moving their application development and testing activities to the cloud at a rate of 20% per year, according to a survey by Dimensional Research. And the number of corporate-owned data centers declined by more than 15% during the past year, according to IDC Research.
Hurd noted that corporate IT budgets continue to be flat in many companies. With more than 80% of those budgets typically allocated to things like patching, upgrading systems, and maintenance, that leaves little funding for investing in the kinds of modern applications and customer touchpoints expected by consumers and business customers alike. Security concerns, moreover, drain even more from potential investments in innovation as data theft has become a board-level concern.
The paradox of not enough investment in innovation on one hand and a more difficult economic landscape on the other is leading more companies to shift more of their IT workloads to cloud service providers like Oracle, which has an R&D budget of more than $5 billion.
Business managers are saying, “I want to move this risk. I want to move this complexity. I want to move this cost,” Hurd said. “I want to move it from here to there; i.e., from you to me.”
Security in the Cloud Stack
Oracle has introduced more than 3,500 cloud-based applications and more than 125 cloud platform services during the past five years, Hurd said. Because Oracle has a single version of its cloud stack, it is also easier for Oracle to secure its cloud than it is for customers to do the same for their data centers, he added.
This trend has been borne out by Oracle customers, who are moving to the cloud in large numbers. For some, like Caesar’s Entertainment, moving financial accounting software to Oracle Cloud allowed the company to save “millions and millions of dollars,” according to Caesar’s CEO Mark Frissora, who appeared in a video broadcast during the keynote.
For Bloom Energy, a provider of green fuel cell technology, Oracle’s cloud-based financial and planning software has been instrumental in helping the company scale as it grows. The eight-year-old company now has one-quarter of the Fortune 100 as customers, according to CFO Randy Furr. The Oracle Cloud application suite has helped the company make use of more timely and accurate data “that has helped us keep up with that growth,” said Furr, who joined Hurd on the Oracle OpenWorld keynote stage.
For Gap, Inc., which has some 1,300 company-owned stores in more than 90 countries, Oracle Retail Cloud is helping provide a unified customer experience across stores and a single ecommerce shopping experience across its brands, which include Banana Republic, Gap, Old Navy, and Intermix.
“We’re using that as our strategic weapon,” said Gap EVP and CIO Paul Chapman, in a conversation with Hurd.
Chapman quipped that he wanted Gap to patch sport coats instead of its computer systems. “We have to get out of that business,” he said.
That sentiment is animating an increasing number of customers, and for good reason. Oracle’s R&D budget is going not only towards more reliable and secure cloud systems, but to innovations such as artificial intelligence that customers can use to further leverage Oracle’s technology spending on behalf of their own businesses.
“In the end, what you’re really going to see is AI built directly into each of these work cases, each of these use cases,” said Hurd. “It’s infrastructure, platform, applications that are scaled and optimized, built on standards, cost less, [enable] more innovation, [and are] more secure with all sorts of new features and capabilities that are going to get integrated directly into the capabilities” of Oracle Cloud.
Michael Hickins is a director of strategic communications at Oracle.
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The preceding is intended to outline our general product direction. It is intended for information purposes only, and may not be incorporated into any contract. It is not a commitment to deliver any material, code, or functionality, and should not be relied upon in making purchasing decisions. The development, release, timing and price of any features or functionality described for Oracle’s products may change and remains at the sole discretion of Oracle Corporation. Fees apply for new Database product offerings. Statements in this article relating to Oracle’s future plans, expectations, beliefs, and intentions are “forward-looking statements” and are subject to material risks and uncertainties. Such statements are based on Oracle’s current expectations and assumptions, some of which are beyond Oracle’s control. All information in this article is current as of October 2, 2017 and Oracle undertakes no duty to update any statement in light of new information or future events.