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Oracle SaaS Business Reaching Critical Mass

The crowding of the cloud platform and services market reflects the fact that cloud deployment is moving to the front burner for most organizations. Ovum’s ICT Enterprise Insights research shows that roughly 40% of enterprises plan to increase their cloud spend in 2016.

Against that backdrop, Oracle’s cloud business has displayed important strength, especially with its software- and data-as-a-service (SaaS and DaaS) businesses that have grown in less than a couple of years from having a handful of clients to several thousand clients. More to the point, Oracle’s functional strengths in having a mix of SaaS, platform-as-a-service (PaaS), and DaaS businesses are distinguishing it from better known players like Amazon and Microsoft, and from rivals such as Salesforce.com and SAP, whose mix of cloud offerings is more similar.

Oracle Public Cloud’s Strengths

The strength of the Oracle Public Cloud is that the depth and breadth of its enterprise resource planning (ERP) and customer relationship management (CRM) applications are in the same league as SAP, but go beyond SAP with a PaaS offering built around its extensive middleware portfolio, and a recently introduced DaaS offering that provides personalized marketing data.

The combination of enterprise applications and middleware are what differentiate the Oracle Public Cloud from each of its rivals. That differentiation would be nothing more than curiosity if the offerings have scant market presence. That is where Oracle’s recent growth becomes relevant; from a standing start a couple years ago, the SaaS offerings have grown rapidly. Also, much of the business is from small-to-midsize enterprises that weren’t part of the traditional Oracle customer base; in other words, much of the business is greenfield.

Oracle Installed Base

Ironically, Oracle’s challenge may be the pace at which its current enterprise applications installed base is ready to migrate to cloud.

The key will be with application upgrades. Here, the advantages of the cloud are more than obvious: the vendor does it transparently and the upgrades are more frequent, which, if you eliminate the headaches of upgrade, should be a good thing. The problem with upgrades is dealing with customizations; with Oracle’s cloud applications, it is taking the classic design pattern of modular architecture to modern practice by abstracting changes through application platform interfaces (APIs), which is now termed  as “personalization.”

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Tony Baer is principal analyst for information management at Ovum. Read more Ovum blogs here.

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