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OpenWorld Preview

By Denis Pombriant
Oct 17, 2018 10:51 AM PT
oracle likely will show off its progress making cloud inroads at its upcoming openworld event

As of this writing, I haven't been prebriefed on what Oracle will be announcing at OpenWorld regarding CRM -- or as it refers to it, "CX" -- so this is a good time to express my own opinions.

Oracle's direction in the last few years increasingly has been toward cloud computing and the autonomous database, and each has several flavors or divisions. The company has three levels of cloud -- infrastructure, platform and apps. Also, it has been automating most aspects of database operation and security, using analytics and machine learning. The same goes for security and apps in general.

With CX, HCM, SCM, PLM, ERP and other apps, Oracle is too big for one person to cover, except when there are overlaps. For instance, you must know something about databases, security, and the cloud approach just to get in the metaphorical door to write about customer experience, or CX. It's quite a task and requires a good deal of experience for analysts and reporters, which explains all the gray hair in our ranks.

Oracle has been taking heat from investors over what's perceived as the slow transition of the customer base to the cloud, so that's another factor. No matter how many times the company says the conversion is a process that will take a decade or more, financial analysts declare the sky is falling because revenues are not keeping up with expectations. Ahhh, the joys of being a public company!

CX and Other Apps

Customer experience is the primary driver of this piece, but you can't ignore the back office and all that enterprise resource planning and financials stuff. I'm looking for a theme of embedding more artificial intelligence and machine learning in both front and back offices.

Virtually any business process can be enhanced by new intelligent apps, and I expect there will be talk about both in sales, marketing and service. There will be more to say about bots and specific use cases in industries too.

Also, I look for an announcement regarding blockchain -- especially in the back office. After the year that cryptocurrency has had, it's obvious that blockchain needs a new place to play. In my opinion, it's the technology that will survive long after crypto investors are all broke.

Blockchain has a lot to offer any process that has a hint of supply chain in it, which goes from manufacturing to sales and service, and probably the Internet of Things.

Oracle currently has analogous apps for both on-premises and in the cloud, and it will be seeking ways to differentiate its cloud products and highlight their desirability. That won't be hard, because cloud apps are supported by a newer platform and offer better configurability.

For customers that already own and operate an on-premises solutions, however, the cost benefit analysis will loom large. For them, Oracle's Bring Your Own License (BYOL) program continues to have a lot of appeal.

It's also a revenue generator. That said, it possibly could retard migration, which the finance department will examine carefully. BYOL has made a lot of progress since its introduction more than a year ago, and I look for more streamlining in the program.

BYOL simply means porting your existing license to the Oracle Infrastructure Cloud. The program may have been hampered by Oracle's need to build out cloud data centers, though. The company has been building feverishly and will have several new cloud data centers to report on. With that capacity, it will do everything it can to encourage customers to move their apps or convert to newer cloud apps.

The company also has been making waves in vertical apps. Historically, this has meant investments in verticals like manufacturing, finance and banking, government and healthcare. Look for some announcements around road maps for verticals, because there's always more to do there.

Autonomous DB

The drive to deliver the autonomous database has several components, including embedding AI and machine learning in database operations to make them automatic, as well as to reduce labor and costs. Currently, the new database can deliver all its benefits only if it's running on Oracle hardware, which puts virtually all of the database in memory to make it lightning fast.

While insisting on Oracle gear is understandable from a performance perspective, some customers have taken issue with the vertical integration. You can't get the same performance on other clouds, like Amazon Web Services (AWS) for instance, and that's a key marketing differentiator for Oracle.

Oracle also has been playing catch-up to other infrastructure vendors, so this aspect has a downside: Customers may elect to run some workloads elsewhere. The issue reportedly has been a bone of contention between senior Oracle management and Thomas Kurian, who likely will sit out this OpenWorld. However, we could see some softening of the Oracle line there. Stay tuned.

Security in the Mix

When Larry Ellison introduced the autonomous DB last year, he said that the AI and machine learning aspects also would benefit Oracle security, to help identify and isolate intrusions. He also said that the self-patching nature of the DB would be a boon to security, as that would make it possible to apply patches as they became available to customers, rather than having them wait -- in many cases for months -- before finding time to implement them.

It's possible there will be refinements to these ideas now that the customer base has had a year to begin adopting the product. They might still require some Oracle hardware, but the enterprise customers these products are targeting are also the ones adopting the hardware.

It's the middle market and small enterprise customers we need to think about. For them, Oracle has mounted a strong campaign to get them to the Oracle DB Cloud, where all of the gear already exists and they can access it for a monthly payment. All of this brings us back to questions of migration and upgrade. In that regard, OpenWorld will be like solving Rubik's Cube.

My Two Bits

This is just scratching the surface. Oracle also has a day devoted to NetSuite, which many analysts will cover. NetSuite's existence shows how important the middle market is to Oracle as it tries to sink deep roots into the cloud industry.

There is no doubt that Oracle is still behind in some aspects of the cloud, given its late start. Equally apparent are the company's strengths in areas like the DB, which is a de facto standard in much of the cloud industry.

Oracle always has been aggressive, and I think the upcoming OpenWorld likely will show that the company is fully activated to take a leading position in the cloud. The only things missing at this point might be products and new customers, and that's why Oracle holds the conference in the first place.


Denis Pombriant is a well-known CRM industry analyst, strategist, writer and speaker. His new book, You Can't Buy Customer Loyalty, But You Can Earn It, is now available on Amazon. His 2015 book, Solve for the Customer, is also available there. Email Denis.


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