Oracle Grows, and Oracle ERP Cloud is Gartner Leader

Posted by Dan Maude on Jun 23, 2017 2:31:08 PM

Oracle Financial Results Impressive

Twelve months ago Oracle changed its compensation plans for North American Sales and Marketing folks, eliminating commissions for licenses of on-premises software. EBS, PeopleSoft, JDE and other "on-prem" software are still available through Oracle Digital, but the field sales and marketing teams became all cloud, all the time. Nothing else counts.

Initial grumblings - customers, partners and within Oracle - died away pretty quickly, while the wisdom of a total focus on SaaS application sales was sometimes questioned: Is Oracle leaving a viable arrow out of its quiver? But the marching orders were clear.

The announcement of Oracle 2017 FY results earlier this week would seem to validate the Cloud strategy (and the acquisition of NetSuite didn't hurt). Q4 SaaS (Software as a Service) cloud revenues were up 67% to $964 million, and total cloud revenues were up 58% to $1.4 billion. More surprising (to me, at least) was Cloud plus on-premise software revenues were up 5% to $8.9 billion for the quarter, and up 4% for the year.  As Oracle still gets about 70% of its total revenue from on-premises sources, a few minutes with a pencil and paper shows that non-cloud revenue was nearly flat, perhaps down 1%. 

SaaS revenues are growing fast, and on-premises revenue is stable, despite the nearly complete shift of sales and marketing resources to SaaS. This is a sweet spot for Oracle overall, as they are gaining cloud market share and maintaining on-premises market share. 

HCM Cloud Market Growing

The HCM Cloud marketplace is growing with no clear and generally accepted leader in the HCM space.  In fact, Cloud adoption statistics are, at best, inconsistent across sources and ill-defined in terms of definition (i.e. what are the components of “core HR”?).  The following table represents the three major top-tier vendors, depicting number of units sold and implies a growing commitment in the marketplace to HCM Cloud applications. 


Number of Core HR Customers in the Cloud




Oracle HCM Cloud Analyst Event, February 2017



SAP SuccessFactors Analyst Briefing, March 2017



4QFY17 Earnings Call, February 2017

The above market penetration represents units/organization sold HCM, with approximately 75% currently in production.   


Cloud ERP Market Emerging: Gartner Releases Magic Quadrant for Cloud "Core Financials"

Also this week, Gartner released its latest "Magic Quadrant" for Cloud ERP vendors. Nearly every vendor on the chart issued a press release on this report, but Oracle ERP Cloud is positioned as the leader in the market. And while all the usual caveats apply to analyst reports, Beacon knows Mr. Van Decker well; he was our primary Meta Group analyst many, many years ago. (Hi, John). This is a comprehensive discussion report and worth the read.

Magic Quadrant 

Figure 1. Magic Quadrant for Cloud Core Financial Management Suites for Midsize, Large and Global Enterprises

Research image courtesy of Gartner, Inc.

 (Source; Gartner, June 2017)

ERP is a larger, and more complex market than HCM. Most success stories to-date are in small and medium companies, and geography and (especially) industry and company size are very important considerations. Beacon, for example, provides most of its services in financial services; to banks, insurance companies and other capital institutions. Regulatory requirements are heavy, and most of our consulting customers are also very large - by definition, there are no small insurance companies. Beacon has been an Oracle ERP Cloud customer for some years, (NetSuite, too). For Beacon's customer market - large financial services companies  - size, cost and reality still play an important roles in our customers implementation strategy, although most all planning is now made with a cloud-eventually presumption . Cloud ERP software has matured over the last few years, and is beginning to gain traction, especially in the mid-market. 




Topics: Oracle, Cloud ERP, Oracle ERP Cloud