20 Mar

Oracle is starting to compete with cloud application specialists

WRITTEN BY Puneet Sikka

Oracle is a small player in the cloud services market

In the previous article of this series, we mentioned that one of the main reasons for Oracle’s (ORCL) range-bound stock performance over the last few years has been its slow growth in the overall cloud services market. According to IDC, worldwide spending on public IT cloud services will increase from $47.4 billion in 2013 to $107 billion by 2017—a compounded annual growth rate of 23.5%. In the last quarter, revenues from cloud applications for Oracle were around $300 million, which means it has a minuscule share in the overall cloud services market.

Oracle is starting to compete with cloud application specialists

Oracle is showing signs of acceleration in the cloud services market

Oracle has a number of cloud application suites for its “Fusion” series, which include Fusion Enterprise Resource Planning, Fusion Human Capital Management, and Fusion Customer Experience. During the company’s conference call to announce its fiscal Q3 earnings, management mentioned that the sales of Oracle’s cloud applications accelerated sharply in the quarter, with bookings growth of over 60%. Management also discussed competitors such as Salesforce.com (CRM), Workday (WDAY), and SAP (SAP), although NetSuite (N) is another notable competitor that the company chose to not talk about.

Larry Ellison, Oracle’s chief executive officer, said, “Eight years ago, we started to rewrite all of our applications for the cloud. Now those Fusion, ERP, HCM and CRM cloud applications are competing effectively with SaaS product specialist like Salesforce and Workday. SAP has not yet begun to rewrite their ERP, HCM and CRM applications for the cloud. This gives the opportunity to become the leader in cloud applications and replace SAP as the leader in the overall applications in the market place.”

Mark Hurd, Oracle’s president, added, “We are seeing good product from a product cloud offering and Fusion cloud growth was even better with HCM, sales force automation and ERP, all up triple digits. In HCM, we added 250 customers or roughly four to five times the number reported by Workday. We are seeing excellent growth across all solutions, Core HR, Payroll and Talent Cloud, double-digit growth in Taleo and triple-digit growth in Fusion HCM. In ERP, triple-digit growth for the bigger customer base than Workday and we’re growing faster period.”

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