Oracle's Mark Hurd: Cloud Resistance Is Futile
BOSTON -- Oracle CEO Mark Hurd walked a tightrope in front of customers today -- metaphorically speaking -- telling them that migration to the cloud is inevitable but also assuring them that Oracle will continue to support on-premises applications.
The Oracle CEO came to the company's two shows here -- HCM World and Modern Finance Experience -- to hammer home the message that it's all about the cloud these days, and there's no turning back. But Hurd reassured customers still using Oracle's vast array of on-premises applications that the company could and will support them. (See Oracle CEO Mark Hurd: Eventually, We'll Get Them All.)
"This comes up: 'Are you abandoning your on-premise applications?'" Hurd told analysts and press at the show. "I push on the cloud message hard and then the question comes up, 'Oh you are doing that and am I potentially being left behind?' And it's very important to understand from our point of view that we believe all of those customers will migrate to the cloud. But we think they do it on their time, and on their schedule, not ours."
Hurd used the example of the release of PeopleSoft 9.2, which is part of the company's Human Capital Management (HCM) offerings and installed on-premises for customers. Hurd said the response to the release of that version of PeopleSoft was positive and that in turn pulled customers into looking at, and then investing, in the company's cloud products.
Hurd called it a modular approach that balances cloud and on-premises needs for customers.
Still, the cloud was the message, especially with software-as-a-service (SaaS), enterprise resource planning (ERP) and HCM. Hurd pointed to Oracle's recent financial third quarter, where total cloud revenue increased 71% for a non-GAAP total $1.3 billion. In addition, total cloud business reached the $5 billion annual run rate mark. (See Oracle's Cloud Transition Pays Off.)
At one point, Hurd mentioned that Oracle's cloud was already big and getting bigger, citing that it now handles about 55 billion transactions per day.
"If you went back five years ago, our cloud revenue was… zero and it scaled to this," said Hurd.
That has certainly helped Oracle when it comes to ERP cloud services, according to a recent study from Synergy Research Group. However, Oracle still lags in SaaS and other cloud services, the report found. (See Microsoft, Salesforce Dominating SaaS Market, Report Finds.)
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When asked about the shift to cloud, Hurd stuck with his prediction from 2016 that in ten years, all applications would move to the cloud. He said the tipping point for the simple majority of apps to move to the cloud would be about five years.
Pushing this trend are companies looking to be more nimble, more productive and to move the cost of IT from maintaining infrastructure to more innovative areas. He cited the example of Lyft, the ride-sharing Uber rival, that uses Oracle's HCM cloud but doesn't have its own data center or a dedicated IT staff.
Hurd was also pressed about the company's investment in its own cloud infrastructure, especially as it compares to Amazon Web Services, Microsoft Azure and Google Cloud Platform. A recent Wall Street Journal report found that those three companies spent about $31 billion on capital expenditures in 2016.
In responding, Hurd said it was an interesting point, but that focus on capex missed the mark.
"I can go on and on about how technology drives this and if it simply becomes an issue of who has the most real estate to put the most servers in -- it's an interesting debate to me because it doesn't play into what the core of this is," said Hurd.
He added: "Our core advantage comes back to the same one we have said all along. It is about the IP. It's about the software. It's not about he who has the most real estate."