Oracle Will Keep Posting Growth in the SaaS Space



Oracle’s strategic acquisitions in ERP space

As we discussed earlier in this series, Microsoft (MSFT) emerged as the leader of overall enterprise SaaS (software-as-a-service) space, and Salesforce (CRM) continues to rule the CRM (customer relationship management) space. It was the Oracle’s dominance in ERP (enterprise resource planning), the segment that grew the most in the SaaS space, that led it to register the highest growth in the SaaS space in 2Q16.

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To further strengthen its position in the SaaS space, Oracle (ORCL) announced the acquisition of LogFire. Oracle aims to integrate LogFire’s WMS (warehouse management applications) solutions into its SCM (supply chain management) cloud. SCM is an integral part of the enterprise software space that also encompasses ERP, embedded software, and CRM. ERP and CRM are rapidly growing sub-segments of SaaS.

In late July, Oracle announced the acquisition of NetSuite for $9.3 billion, which is company’s largest acquisition after the PeopleSoft acquisition for $10.3 billion in 2004. Apart from strengthening its foothold in overall cloud space, Netsuite would provide Oracle access to SMB (small and mid-size companies) and mid-market for its ERP offering, thereby expanding its reach.

Cloud adoption to drive growth

Oracle’s focus on the ERP space is opportune because the space is expected to witness significant growth by the advent and arrival of the SMAC (social, mobile, analytics, and cloud) revolution that has led companies to shift from on-premise ERP to cloud-enabled ERP.

According to Allied Market Research, the global ERP software space is expected to grow at a compound annual growth rate of 7.2% to reach ~$41.7 billion per year during the 2014–2020 period.


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