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I wrote last week we would likely hear more detail around application modules and customers and subsidiaries to explain Larry Ellison’s claim during his earnings call about Oracle snatching customers from SAP. Bob Evans has interviews with executives from each on Cloud Wars.
SAP’s DJ Paoni’s responded “Of the 100 or so customer names cited by Oracle, 80% are planning to make “significant investments” with SAP in 2021”
Steve Miranda of Oracle is more specific. But in some ways they both raise even more questions.
Steve primarily talks about HCM, SCM and EPM applications, three of the most fragmented enterprise application categories. HCM is still heavily outsourced, particularly in the payroll and benefits area. So is SCM to 3PLs and increasingly by merchants to fulfillment by Amazon or Shopify. The whole analytics space was turned upside down last year as I wrote here with many new data streams and many new players like Snowflake, C3 and Palantir, each of which had successful listings.
I realize Steve did not have hours with Bob but when you are talking “ERP replacements” I would think you would talk major chunks like core financials, manufacturing etc. And if not manufacturing, vertical applications like retail banking, utility billing etc.
Similarly with customer scope. He mentions Marriott, a company I know pretty well as a consumer, having spent over 4 years (yes!) of my life sleeping in their rooms. Many of their properties are run by franchisees who often have their own systems. They have a number of brands like Springhill Suites and Courtyard which have unique processes. Besides, a global company like Marriott has “one of each”. Steve had them on a panel in 2014 (see here), Salesforce profiled them even more fully at their event in 2018. If anything, it makes Paoni’s point that customers continue to buy from SAP AND Oracle AND many others.
So, after reading the earnings call transcript, my question was which modules and at which customer subsidiaries did Oracle replace SAP? Now I need to narrow that expectation much further – which features and how few users did they manage to move?
The good news is most customers realize Magic Quadrants and vendor marketing are the equivalent of a satellite snapshot when you are shopping for real estate. You use them to narrow the neighborhoods you should be looking at. The hard work comes later – lots of house tours, inspections, paperwork etc.
I was even more puzzled by Steve’s point about speed at which the enterprise market is moving as he tries to explain how they stole customers from SAP
He says “But in the past few years, that has changed dramatically, and I think the big reason behind that change is the speed of innovation the cloud offers.” “But now, with the cloud, it happens every 90 days. That’s an enormous difference.”
I think Steve is conflating the pace at which SaaS vendors deliver multiple releases a year – bite-sized collections of fixes and features – with complete modules. The pace at which application vendors have delivered modular functionality in the cloud is actually disappointingly slow. Salesforce and NetSuite were some of the earliest SaaS vendors in the late 90s. In the 20 years since, if you chart a grid of available SaaS functionality by industry and country, we are not even at 20%. Try finding many insurance claims processing or fintech applications in SaaS mode. Try finding many which support regulations in Indonesia, Russia and Nigeria.
Over the same period look at what Amazon has done to shake up so many sectors. Watch my interview last week with Robin Gaster, author of a new book, Behemoth, Amazon Rising.
The problem is while both SAP and Oracle have brilliant enterprise architects at the top, they just don’t have process or industry visionaries like Amazon does to completely reshape sectors. They are much more comfortable talking nuances of databases.
If anything, 2020 completely changed the definition of “speed” in every industry. We have all seen the amazing speed at which COVID vaccines have been developed, approved and distributed. Watch Jack Barrett, CEO of a community bank describe how they processed more PPP loans in a little over a month what usually takes them years Watch Lou Von Thaer, CEO of Battelle describe how quickly their vaporized hydrogen peroxide-based Critical Care Decontamination System scaled when N95 masks were in critically short supply in March. In 4 months, they had disinfected and extended lives of over 2 million masks. I had plenty more such sessions last year.
So many new applications came to life in 2020 as I wrote last week.
“Telemedicine in health care, distance learning in higher education, mobile banking, PPP loan processing. vaccine management, HR diversity analytics, virtual real estate tours, remote field service, digital mortgages, eCommerce, warehouse automation, last mile delivery and so much more in every industry.”
I would love to hear both Oracle and SAP talk about those applications. It’s been a year since the pandemic started. That to me would be a better showing of speed.
Even better, Oracle and SAP should quit looking at each other. In the last decade, it wasn’t just Amazon which grew much faster. Google, Facebook and agencies ran away with the digital marketing spend. Contract manufacturers like Foxconn and design firms dominated the product innovation space. GE, Siemens and others are leading the industrial IOT game.
Time for both to dramatically expand their TAM. Their market share of corporate technology wallets has been dropping for a long time. Sniping at each other only highlights they are living in the past.
(Cross-posted @ Deal Architect)
