Ladies and gentlemen, please take your seats as the show is about to begin.
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Ladies and gentlemen, please welcome to the stage Vice President of Oracle Investor Relations, Ken Bond.
I heard a woo, where's Maynard? Rick's doing it. All right, great. Yes. Welcome.
So happy to have you here today. Just out of curiosity, how many of you went to the Appreciation event last night? Anybody? Good, good show of hands. It was a great show apparently.
My wife loved it so much. She felt compelled to come in and tell me at 1 in the morning and she brought her sister in to see it as well. They stayed till 2 and that's when I went through the whole routine, I love you, but leave. So thank you all very much for being here. So let's do some housekeeping real quick.
First, if you haven't already got some food, please get some food. Feel free to do that. The bathrooms are right out the door over here. The Wi Fi, hopefully you're all connected and wired in. Oracle 2014 is the Wi Fi password.
You should have power readily available to your seats. So you're all powered up. One thing we always ask is as you're kind of moving in and out, be careful not to trip and kill yourselves, not really looking for any of that. And so here comes always my favorite, favorite, favorite part of the day. I get to read this line by line, so bear with me.
I'm going to do this once as we go through the remainder of the day. Not everybody else will. They'll make reference back to what Ken said earlier. This is what they're going to be talking about. So with that, let me read that for you.
As a reminder, today's discussion will include forward looking statements, including predictions, expectations, estimates or other information that might be considered forward looking. And while these forward looking statements represent our current judgment on when the future holds, these statements are subject to risks and uncertainties that may cause actual results to differ materially from statements being made today. Throughout today's discussion, we'll attempt to present some important factors relating to our business, which may potentially affect these forward looking statements. And as a result, we caution you against placing undue reliance on these forward looking statements as they reflect our opinions only as of today. As a reminder, we're not obligating ourselves to revise or publicly release the results of any revision of these forward looking statements of light of new information or future results.
And of course, we always encourage you to review our most recent reports on Forms 10 ks and 10 Q and any applicable amendments for a complete discussion of these factors and other risks that may affect the future price of our results or the market price of our stock. You'll also see this slide. This is basically a slide just to let you know that the conversation that we're having today for informational purposes. And then lastly, whether it be SAPRA, myself or Mark, we may be making use of non GAAP information in the presentation. And you can always find those reconciliations on our website from GAAP to non GAAP.
So thank you for your indulgence on that part of it. And as a reminder, as the speakers are coming through, you will see them making reference back to what Ken said. This is the part they're actually talking about. So with that, let's go ahead and get into what is the agenda for the day. Welcome.
And what we're going to do is basically start. First, Mark is going to come up here and he's going to talk about Oracle Cloud. What we're doing, why we're winning, how we're differentiated and how we see the cloud playing out for Oracle as well as the traditional on premise part of the business. Bob Wyler will then take the stage. Bob will talk about our vertical businesses, including the recent Micros transaction and some of the exciting That's going to take us to a break.
That should be somewhere around 1:15 in the afternoon. And then we'll come back from break. As we get into the break, we'll get into some definitely some technical content. Thomas Kurian will take the stage. He'll spend some time focusing on Oracle 12c, middleware, big data analytics, and that will include a panel discussion.
And Thomas will then continue with a deeper discussion as he starts the cloud conversation. He'll focus on infrastructure, platform as well as ERP SaaS, also including a customer panel discussion. Steve Miranda will then come up. He'll continue the cloud conversation, first focusing on HCM Cloud and he'll do a customer panel and then Steve will then finish up his part of the day with a segment on the customer experience, CX or some of you would call it CRM And he'll also finish with a customer panel. So there'll be 4 customer panels today.
Clearly, the voice of the customer is here. For any of you that were attending Open World, you should have heard the voice of the customer throughout the event. Best thing that we can do is have you hear what our customers say about Oracle and the successes that they're having. So for those of you that have attended meetings in the past, you will know this is not your normal Analyst Day and that we absolutely bring you through a lot of the technology. We bring you through this technology because it turns out it matters that marketing pitches are all wonderful.
What is underneath the hood turns out to be a very important thing. We want you to understand why we're differentiated. Mark will talk about that. Thomas will talk about that. Steve will talk about that.
All of them will be talking about why we're differentiated from a technology standpoint and why that actually matters. So look for that. We'll go to a break. We'll get to that one somewhere around $345,000,000 And then following that, I'll come back up. I'll spend a few minutes with you talking about some of the financial highlights, some things we want you to take away in terms of there's a big business model, there's a lot of technology, but how do we distill the business model down to a few takeaways for you to kind of walk away with and think about.
After that, we'll then finish out the day. Saffra will come up. She'll do a Q and A and then we'll have Larry come up and take a Q and A as well. The day should wrap up somewhere around 5:30. And with that, I am going to turn it over to CEO, Mark Hurd.
Any woohoo's Can we do the first chart? All right. What Ken said. Let's do the second chart. What Ken said.
3rd chart. What Ken said. Okay. We're good. Now we're going to go to really talk about something for next chart.
All right. This is a recap of what we did at OpenWorld. And you probably heard this. I guess I should ask how many people were actually at Open World? How many people went to any events?
So most of you. Okay. We announced a lot of products. So the 200 product number is a number that we really announced during the year. So if you looked at 12 months, which is 200 plus SaaS products.
So just for context, we announced almost 130 of them this week. 100 of them were, if you will, horizontal SaaS products, 30 of them 32 of them actually were vertical products that come out of our GBUs that Bob Wylor runs. And you can see quite the diversity or the number of different areas that we've covered. So we now have a large portfolio of capability in terms of the depth and breadth of our SaaS product line. Next chart.
By the way, I'll take questions at the end if you have any. My hope would be I'm so perfectly clear with all this information. It's self explanatory and there's no questions. But total last 12 months, and let me try to again give you context for this. We've gained almost 2,200 net new SaaS customers, broken out into 1100 customer experience.
That for us would include marketing, sales, configure price quote that breadth of customer experience service cloud would fall in that category as well. Almost 1,000 HCM new customers. And for those of you that follow sort of the HCM market, we've surpassed our core SaaS competitor and a number of new customers that show up a quarterly basis. 263 in an area that we've just started talking about, which is ERP. These are ERP cloud customers, SaaS customers.
When you include EPM, we've now moved ourselves to nearly 500 ERP EPM cloud customers, okay? And we had 500 roughly net new cloud customers in Q1 alone. So our sequential if you start following our Q4 is materially bigger than our Q1. So the strength of Q1 net new logos was quite strong. Next chart.
This is what we told you I'll come down a little bit. This is what we told you in Q1. This is just a recap. SaaS Pass bookings grew 54%. So just in context that's 3 times higher rate than last year off a bigger base, 3 times higher rate, bigger base.
Revenue 32% twice last year again against a bigger base. Less non organic, mostly organic growth in Q1. I mentioned the 500 customers. This is the breakdown of our customer base, 100 of them ERP, EPM customers. And we don't really have a competitor.
So when we get into the market for ERP and EPM, we're the 1st mover. So this is a very exciting space for us in EPM and ERP SaaS. Fusion, triple digit revenue and bookings growth. Fusion products, I think we'll probably stop talking about this soon because fusion is becoming so mainstream. Fusion is really at the core of many of our wins now.
It was an important metric I think probably a year ago. But now that we've gone mainstream, our Fusion success is significant. In addition, our on premise I'm going to take you through a little bit of the on premise step just so you get context as well for how we think of the on premise business, but 5% overall growth. So just in case you think that all of our growth comes at the expense of our on premise business, we grew 5% last quarter to more than $6,000,000,000 Next chart. We talked about this all week, but I think it bears describing one more time.
Differentiators for Oracle. We're at all three layers of the cloud, SaaS, PaaS and infrastructure. You're going to hear a lot about this during the day. How many of you saw Larry's demo Tuesday? So many didn't.
All right. Let me try to tell you what he did, because what he did was pretty amazing. He took an HCM app, okay? Took an HCM app and he went on to platform as a service and built fundamentally an app that wasn't in HCM. He built an employee of the month module in Java, took it from platform as a service and extended our core HCM app with it.
Same look and feel, did it on the fly. By the way, as he mentioned in the speech, since he's no longer CEO and he's Chief Technology Officer, he had no handlers, had to do it all by himself. The company Safran and I have removed his sign on capabilities. So he had to sign on with a new name and he pulled it off. No systems integrator, no help.
So let me just understand the power of what he just demonstrated. We do 3 code releases a year to HCM. Each one Steve will when Steve Miranda is here, I'll give you more precise and they don't love it when I give you these numbers. But think of 200, 2 50 features per release. Imagine you bought an HCM application, you're going to get 7.50 features a year.
You can pick and choose which ones you want to add not. And if there's a module you don't have, you can build it in PaaS, put it into the app and not customize and change the core app. In 5 years, you're going to get 3,500 features with 3 releases a year. And now an ability to differentiate that app from pets and nobody else can do this. I have not checked.
I've not gone to Workday's So
this
So this is a big difference that we can operate at SaaS and PaaS. We expect to be very different in SaaS by being best of breed by app and also to be the only one with a suite of apps. Now let me be clear, because we have a suite doesn't mean we're different because every app is a bad app, but we happen to have a suite of bad apps. So it's a differentiator. We want each app to be the best at what it does and then be different based on being a suite.
In PaaS, we have 2 differentiators, Java and Oracle. In the end, we have one real competitor that's got PaaS capabilities and they've got dot net, they've got Windows, they've got Microsoft SQL. We have Java, Linux and Oracle. Feel like we have a pretty good hand. But the more important thing is we also have both.
And our view of infrastructure as a service is if you bypass from us, you'll buy infrastructure from us. If you buy SaaS from us, you'll buy infrastructure from us. Highly differentiated apps, suite of capability, differentiated, highly differentiated at PaaS, highly differentiated at SaaS. Our IAS will be priced we say here competitively, but fundamentally right on top of Amazon. Again, I don't think we're saying that we think people just say call us up just for infrastructure.
But if you're in that Oracle ecosystem, you're going to buy infrastructure from Oracle. We also have deployment flexibility. Meaning if you're on premise and you want to go cloud in a region, you can do that. You can mix and match, which you can't with anybody else who you would think of as a SaaS vendor. And that is a strength.
Next chart. We're growing. 88% 4 year compounded growth rate. You can see if you look at our SaaS PaaS revenue very little PaaS right now.
There are
people telling me the most exciting thing we've announced in the cloud is what we've announced in platform. SaaS first wave was CRM. The second wave was HCM. The third wave will be ERP and EPM. And you can see here, we are just in the very early innings.
It's hard to find much red in there. And we're just starting. We're already approaching a $2,000,000,000 revenue run rate and we have ERP and PAS yet to come. And just to be clear, we're not through growing in the customer experience side or the HCM side. Next chart.
Cloud is growing at 43% 4 year compounded annual growth rate. You can see the infrastructure side at 12% growth. We also believe that's about to grow. Now while I said, I don't believe that to be that core differentiator. We will see growth in the infrastructure layer for the reasons I described.
Next chart. Software revenue overall is growing 9%. This includes what I just told you about cloud at 43%. Now let me just give you just an anecdote, because I want to make sure we give clarity on many questions that we get time to time. Inside this number is our support revenue as well as our license revenue.
So for example, if you were to ask me what's happened to Siebel support revenue, 2,009 to 2014. I'll start the Q and A. I'll do the Q and I'll do the A. What's happened to Siebel support revenue from 2,009 to 2014 because I know salesforce.com has been beating on this CRM thing for 15 years. And the answer is the revenue has grown.
Just want to make sure I look at Sabra just to make sure countenance don't think it's just me talking and I just made this up. Revenues grow. 15 years of the guy that's perceived to be the leading guy in the industry going after that market and over that time frame support revenue is up. Okay. Next chart.
Database revenue is growing 10% for your compounded growth rate. You can see 9% compounded growth rate in license. We are gaining market share in database. We have quarters that every now and then say quarter here, quarter there. And I'm always intrigued by the questions I get about database.
There's always something happening where we're losing share in database according to the questioner. And if I go back to the numbers, it just doesn't bear itself out. We are gaining share, full stop. 12C is only now beginning to move through our base. In memory, probably the most talked about option that we've had rippling through our base.
Obviously, you have to get to 12C to get to in memory. In memory and multi tenant will be big businesses for us. Just to give you an expectation, we expect them to be bigger than rack. By the way just to add middleware at the same time has grown as well as has applications. By the way, if I ask me the same question about because if you think I was trying to dock an HCM on premise support question, I'm going to make my second cue of the day.
What's happened to HCM on premise support revenue during that same time frame that you just gave me the metric for Siebel? It has grown. Next chart. Can we get to the next chart? All right.
Let me try to tell you a few things also that I haven't mentioned. On premise software is growing. Cloud is growing rapidly.
We have a very
I was trying to figure out how to say this, because Safran and I talked about this a long time. And I decided not to give you a pipeline number, because I didn't want to have start a process of having Friday afternoon conference calls with investors to talk through our pipeline every week. So I was trying to figure out a way to say that if you looked at our Q2, Q3, Q4 SaaS pipeline measured in ARR. So let me just go through that one more time. Pipeline measured in ARR for just Qs 2, 3 and 4.
It's a really big number. And it's not $1,000,000,000 bigger than that. It's not 2,000,000,000 it's bigger than that.
And I'm not going to say
anymore, because I'm going to get called off to have a private conversation. So it's big. So our SaaS pipeline, let me try to make sure I give you connect these dots. If you took our sales performance in Q1, I'm going to give you good news and I'm going to give you better news. Our productivity in Q1 was the highest we've had in many, many periods.
It doesn't all show up in the top line because much of the productivity was ARR. When you combine the ARR performance with the license performance, you get over double digit growth, normalized for a license model. I think if you were in conversations with Safran and I in a room and you asked another question, I'm going to get to my 3rd Q for the day. How long have you guys really been in the SaaS business? Let me sort of define this by how long have you really known what you're doing?
How long have sort of the mechanisms been working? People focus, getting the right salespeople, getting the training right, the product releases coming into play. We've been in the business 3 to 4 quarters. This time last year, we started to move. And I may be it may be 3 quarters.
And it will take us a full 3 years toward through the cycle to get to that normalization of the Sasol. But our productivity is way up. I have better news as I said. We're still not as productive as we can be with the capacity that we have. So we have expanded our capacity.
We are more productive and we are not as productive as we will be. Our products will get better. We now have Release 9. Starting with Release 6 to Release 7, our products got exponentially better in terms of UI and feature stringing, demo ability, now that we have references. And that now that you see the sort of user suite, the user numbers that we've got and references that we have, we will get exponentially better.
The tenure if you measured our sales force not just on capacity, but you measure it on average tenure, we now have both lines going to the right. And by the way, average tenure is measured not on tenure in the industry, but tenure at Oracle. It's not just good enough to have been in the industry. You have to bid in the industry and at Oracle. We now have an increase in tenure, average tenure.
So you have to take the new people with the new or with the people that have been here a while get the average and for a while our average went down. Important just to get that average up as we get our capacity up as well. I've already mentioned the PaaS extensions. On premise database is gaining share and we expect to gain more share. We have as exciting a new database product as we've had.
Very little of that has shown up in current period performance.
And I've given you a
few points about support that Frank, I haven't given before, which is when you look at application support. Let me give you one other idea, because I'll make it my next question for the day and then I'll actually take yours, which is what would happen if your support base flipped to SaaS? What happens? I get all kinds of people wanting me to ask me business model questions and so forth. First of all, we make money in SaaS.
By the way, I encourage you to ask Safra in Q and A. You can ask me in Q and A. We make money in SaaS full stop. 2nd, I think SaaS was real clear on that in the call. I just want to say it again, so it sinks in.
2nd, if our support base of $1 move to SaaS, we probably wind up with close to $3 Let me go through that again. The support base was $1 and we just said all you guys are on support, we're moving you to SaaS. Our revenue would be $2.50 $3 $3.10 dollars So just so you have context, we make money in SaaS. We're now $2,000,000,000 into this. By the way, just so we're clear, this is not like statistically irrelevant.
We have scale. We know how the model works. We know how the bill of material works. We've opened enough data centers. We know how they work.
We've got our sales force. It doesn't mean there isn't room for expansion to some degrees, but we've got the capacity that we started out wanting to have when we began this journey. And again, I won't say you won't see expansion, but we've got the bulk of the capacity we need. And our support business is right. And by the way, just I know you all know this, but just at the risk that somebody's new.
When we if our licenses were flat, just flat, all that metric meant is that you got the same number of new subscribers this year that you got last year. That's all it means. And the support business grows. Next Q. If licenses decline 10% would the support business grow?
Yes. If the support business declined 13% with the support license would it still with the support business to grow? Yes, yes, as we grow SaaS. I'm here to tell you SaaS will be additive. And if it is replacement, it will be an additive at an exponent if it replaces support.
Okay. Any questions for me? Or was it just like this is just so clear? Could have no questions. I guess not.
Okay.
Hi.
I cannot hear a word you're saying.
Hello? Yes. Now I can hear you.
Hi, Mark. Hi. It's Brent Thill with UBS.
Hi, Brent.
Just as it relates to the sales force transformation and how you're balancing incentives with on prem and cloud, can you just help us understand how that's going? How you're equally incenting? I think that's the approach that you've had with the sales force. And I think just to follow on the RAC question. You mentioned in memory could be bigger than rack.
Yes. It took 10 years for rack to really kind of take off. Do you think in memory could the attach rate could actually take off a little bit faster than RAC originally did?
Okay. On the incentives, we incent pretty heavily on cloud. So we're probably a little more cloud in our incentives than we are on premise. And it depends a little bit Brent on which area we're talking about. But our incentives are at a minimum even.
But probably if you actually got and did the math, our sales force is more incented to go cloud now than anything else. On rack, in memory is materially less complex to move through the database or to move through the user base than rack. And I was only trying to give you not a speed projection, but trying to give you a scale projection in the context of what I think 12C will do in terms of just so we measure and I know you know this is, we actually look at each option and we measure its penetration into the entire base. And so the point I was trying to make and I'll try to be clear on it is the penetration of 12c into the user base multi tenant and in memory will be higher than the penetration of rack into the user base. Thanks.
And in memory thing, what I love about it is, it's such a it's one of those things our salespeople can really resonate around because when you say would you like your database to run faster or not? And it's a pretty interesting question. We generally get people who say yes. Where do you want me to go? Hi.
Hey, Raimo Lenschow from Barclays. Quick one on the reference customers. You talked a lot about What
the reference customers? Reference customers. So if
I go to the events, there was a lot on HCM guys that talked about their experience, but it's still early days. Where are you in terms of reference customers for ERP that you can show and also by regions maybe?
Thank you. Great question. A lot of our penetration early is mid market. We have a fair number live now. So the way the process works with reference ability is, first you got to sell them, then you have to provision them, then they have to have enough run time that they can say, describe the experience of going live etcetera.
And we're just at that phase now where we have some pretty solid references most of those mid market, but our pipeline is full. I should emphasize because since we're in the Q and A part, this EPM thing is really exciting. And the EPM cloud opportunity isn't just in mid market to start, it's big companies. We have several big companies that are starting to move their budget and planning to the cloud. And this is I'd be remiss if I didn't separate the 2 a bit.
The EPM space is really exciting for us.
Okay. Yes. Cold cash
look good.
Thank you. So do you. Thank you very much. Not as good as you, but the ARR plus license growth rate double digit in Q1. Was that a Q1?
That's a very interesting piece of disclosure, very positive. My comment would be that or maybe a question, would you plan on disclosing that on a consistent basis going forward because there's a lot of concern that looking at your reported number doesn't truly give you the picture? Yes.
Right. Yes. I think you should ask Sat for that. I will be glad. I will always tell her and then she will decide.
I have gotten clearance to disclose that to you today. I really the reason I hesitate doing it is I can over metricize you. And I don't want to get you off on the wrong metrics, because I can give you a blizzard of metrics. And the only point I wanted to make sure you knew today was that our sequential productivity continues to incline. And yet it doesn't reflect itself in the income statement to the degree that will as you ripple through the normalization of cloud across the base.
And that's going to take a period of time. But when you just look at a salesperson and you normalize for the TCV because we measure in ARR. What we report to you in bookings is annual recurring revenue. What they're really selling is a total contract value, which is a multiple of the ARR. And if you normalize the TCV and then put that back on top of the license Q1 would have been double digits.
Got it. With respect to the database business,
I think on Q1 you talked about how EMEA was up double digit, APAC was up very nicely, but you have certain things to iron out in terms of wrinkles in North America. When could we expect the fruits of whatever action you've taken be change in sales leadership whatnot to have that beneficial effect? Thank you.
I hope so by the way, just to clear, I hope several weeks ago in North America. And the core problem in North America is we just didn't sell enough. And we need to sell more is my conclusion. And I think part of the issue you have just as I'll say this again in North America in Q1, we had superb performance in apps. They had double digit license growth in applications in the United States, while they had sort of off the charts growth in ARR.
So not off the charts, it was just very strong, very strong new customer acquisition, very strong ARR growth and they delivered double digit growth while they did it. Bob who's going to come up and present to you in a couple of minutes had very strong growth in Q1 a lot of Bob's businesses in North America. Our Europe organization had a fantastic database quarter. So geographically, we were pretty strong. Product wise, we were pretty strong in other regions.
We need to execute North America.
Hi. Thanks.
You really want that microphone how are you going to see if you want to have it?
That's fine. Hey, Mark. Michael Turits from Raymond James. I feel like I'm on some weird show here.
It's a security issue. Those microphones are
So as you think about data overall and you think about the relative dollar contribution into growth over the next number of years, where do you think the biggest pieces come from? Say ranking relational database itself, options, newer products like NoSQL etcetera? What really contributes to the biggest dollar amounts to growth over that?
Well, look, I mean all
of our customers have big growth in data, okay? So if you went to the average customer on our big so we have a couple of big advisory boards. Think of them the biggest companies in the world. And we do one in Europe. We do one in the U.
S, we do one in Asia. So I guess actually it's a couple, we have 3. And I would say the average data growth measured just in data is roughly 40% that these customers are struggling with. I mean the issue becomes how do I deal with this data growth without turning 40% data growth into 40% budget growth. I can't afford to store this data.
I can't afford to process all this data. And so this is why things like if I'm going to keep the data, I got to find a cheap way to store it. This is where compression as an option is such a big issue. It's sort of like what I said about in memory. Do you want to have more data or less data?
If you keep the same data at an index basis of 1, would you like to turn 1 into 0.3, which is basically a compression option? Or would you like to go to Exadata and turn it into 0.1 and maybe compress it 10x? So these options are very attractive for our customers that want to keep big data. They want to get it into some structured format. They also have a lot of unstructured data that they want to bring together and merge capabilities with things like Hadoop with our database, so they can get a view of unstructured data and structured data and integrate them together.
And then how do I have enough processing power to get all that to the right place at the right time to hopefully make some better decision on the sales side of the supply chain to make a difference. So I think this is when you talk about in memory, which is getting just raw performance, when you talk about compression that gives you the opportunity now to actually shrink the data, but not sacrifice the data while you do it. These are very powerful options. And you know the value of multi tenant as it relates to to the application from a cloud architecture perspective. So there's a lot of opportunity out there.
Last question. That's it.
Okay. Mark, it's John DiFucci from Jefferies.
You can't get the microphone either. No. It's okay.
I got it.
It's okay. Got it.
So listen, we appreciate the disclosure of some of the support information, which is something I think a lot of us suspected, but it's good to hear you say that. So in the vein of giving us a little more disclosure, to follow-up to Brent's question, what is the penetration roughly even for RAC? It gives us a better idea of what the opportunity is for end memory and multi tenancy. And then I guess the other follow-up to Raimo just
and I think I know
the answer, but you mentioned the midpoint
You're going to make
this a 2 part question. Actually, if
I keep going and Yes, I know.
I know it's one question with 8 parts. No, no, no. I deal
with those on the conference calls, John.
I have one question limit.
I'm in contest with cash. But
the sorry cash.
Just to follow-up to Rainbow 2, just please define for us what the mid market is to Oracle because it's very different than let's say sales force. That's all. Okay.
Let me take the first one because I'm probably going to disappoint I'm going to take the second one because I'm going to disappoint you on the first one. On the second one, we look at enterprise. Let's take U. S. For example.
We would define it as really the Fortune 500. We would define it as really the Fortune 500 plus the Private 100 and then what you would think of as the core of public sector federal government. That collection of things that I just described is roughly enterprise. John, there are a few nuances in it and that it's a time stamped base because we want continuity of territory. There's always some accounts that float out of the Fortune 500 and some that float in.
And just because they did that, we won't necessarily say, Mark and Saf are going to swap territories because of some change like that. So it's what I told you is just roughly right. It's not exactly right for the reason I described. And I would just say, Rack's got good penetration in the user base. I won't give you a number because again I don't want to give these blizzard of metrics that I got to get asked about every day.
It's got good penetration in the user base. It's not 5%, it's not 10%, it's not 15%. It's bigger than that. And all I said was it can have higher penetration as we go. So let me end up by just saying first thanks for coming.
I'm going to introduce Bob. Before I do, I would say that I think when you put all this stuff together, we feel good about where we sit at Ork. We feel great from a product perspective. We talk a lot about the $5,000,000,000
we spend in
R and D. But one of the things that I'll say before you start seeing a lot of people from development come up is, it isn't what we spend in R and D. It's actually the yield we get for it. I mean the yield we've gotten over the past 2 or 3 years is really superb. And our sales organization if anything has more to digest than sometimes I wish.
Now I'm not trying to slow that down from an engineering perspective, but we had one of the most exciting releases this week of our mobile products in middleware that nobody's talking about, because it can't get through it almost sort of can't get through the enthusiasm that you've got from some of the stuff we're releasing. We're going to release a mobile framework. We're going to release that all SaaS, mobile security. It's going to be exciting. And yet there's so much coming out that it just doesn't get the play it deserves.
So I would say overall as a company, we're excited. Our sales org is maturing. We've got always work to do. But overall, we're in a good place. And with that, I'm going to we're going to have Bob's going to come up.
But before he does, there's a little video that's going to play. Okay? Thanks.
Ladies and gentlemen, please welcome to the stage Oracle Executive Vice President, Bob Wyler.
Good morning. Thank you for joining us at Oracle World. That video debate whether it showed or not, but it has a lot of facts there and a lot of stats. And the theme of it is, did you know? And the reason we go to did you know is that we believe it's one of the better kept secrets in all of Oracle.
We have a strategy that is built on a number of pillars, and I'm sure you've heard Marcus Safra speak of this strategy often, which is first, be the best of breed in every category of which we have a product, so that product can stand alone, be competitive and provide a great solution to our customers. The second is to provide an open integration of those products from all the way from the top of the industry applications all the way through to storage, so we can provide a complete integrated solution. The 3rd, which probably takes the most dominance in our current environment, and you heard Mark address it, cloud, cloud and cloud. And then the 4th pillar is our industry, our industry solutions. Our industry solutions are really kind of a secret because it is a difference in Oracle has always been built on building the backbone technology architecture that focused on the operations of the business from the back office up through the horizontal applications.
But in the last years, we've focused on actually building applications and acquiring applications that run the business that are mission critical. We've seen safe harbor. We've seen Mark address all of that earlier in Ken, so we'll kind of skip those. Let's go to the global business units and what we call the ISGs. Oracle does business in 22 different verticals.
And we go to market in a process in 2 ways. 1st, global business units, and I'll speak to that at depth in a moment. The second is through our ISG, or our Industry Solution Group. The global business units contain 17 distinct verticals. Our ISG group has an additional 17 verticals that we use to make our technology products and our application products function within a vertical.
Everything from a data model in a database, all the way up to features and functions in horizontal application, all the way to configurations for products between our industry groups, horizontal applications and the data all the way optimized through our hardware platform. And that represents 22 different verticals of which we conduct business. The global business units that we're going to focus on today is an organization structure within Oracle that is rather unique to our type of companies. In that, it is a separate unit. Within Oracle, all of the horizontal applications right down through the hardware, the development is managed by Thomas Kurian, hardware by John Fowler, And then all of the sales of those products are done throughout a region in the normal regional marketplace.
Our global business units, which are industry specific applications, is a group of dedicated 22,000 employees that report into a one of 7 verticals to a senior vice president, general manager of that vertical. So it's almost like a company within a company, and that manager has responsibility of not only global sales, their own sales force, not only their own support, consulting, services group, product marketing, but also development. And we take that organizational model together and collaborate with the rest of Oracle to sell complete combined solutions. So why do we do that? Why is that model why do we believe it's so effective?
Well, the reason is, if you look at where we have acquired this business, it's been over about 30 acquisitions since about 2,005, 2,006. And it's very interesting that companies that look to the products that run the business, core banking, clinical trials, diameter signal routing
for the
network, that those products have traditionally come from smaller companies rather than from the cross horizontal big platform companies. And the reason that is these companies were formed generally with tremendous deep domain expertise, with a passion of the product, have built themselves up into usually a leadership position. But at a certain point, these companies run out of steam, usually in 2 areas. The first, they're growing, but they don't have the ability to add enough research and development to continue to the growth or expand the footprint and become part of an integrated solution. And the second is they generally don't have the ability to invest in global distribution and global support.
And that's where Oracle can step in. Where we can provide a structure for those products and those companies to fit a footprint that we will invest in R and D and where we will invest in distribution, support and services. And we look at those companies and build out a footprint so that we can start filling out all the needs of those mission critical companies. Mark mentioned earlier that Oracle spends a little over $5,000,000,000 in R and D. In this chart here, you see that we spend about $650,000,000 in R and D.
But that is a very, very powerful 650,000,000. And the reason it's powerful is that, that 650,000,000 of R and D is focused on innovation of the product functionality or the solution required by our customers because we get the benefit of the $5,000,000,000 R and D. So when our teams develop a product and they're working on a new release, they get the benefit, for instance, of moving that to 12c. Now they get multi tenancy, they get security, they get all the capabilities of in memory database from our Oracle R and D group. If we need to look at security for our products, think about what better place to have a development organization to provide security to our products, which is probably one of the most important things we can do now for any application, never mind a mission critical application.
So instead of our development group trying to figure out, do security, we just reach over into the greater Oracle and pull Oracle Identity Management, the view of our entire company around the structural areas. So that $650,000,000 is focused on individual product, individual product innovation, not just trying to keep up with infrastructure. So it's very, very powerful. If we look at the unit portfolio, there are many different products that we have in each category as we fill it out, and I'm
going to talk about a few
of them. So when we talk about retail, we talk about merchandise management, commerce, store supply chain management and retail analytics. And we've always had a retail very, very strong retail business, and I'll talk in a moment about how that gets us to hospitality. In banking, we have 500 banks throughout the world using our core banking product. Now in addition to having the core banking products, we were able to add other products in our using analytics, money anti money laundering, all of the things that banks are focused on, we can now build on to that core customer database, database of customers.
If we also look now at communications, communications is probably one of the fastest moving, most dynamic areas in all of computing right now. We had an application group that did customer care and billing and normal capabilities. But then a little over a year ago, we acquired 2 companies in Acme Packet and Tecla that brought us over on the networking side. Why was that important? I can actually make a statement here that I think communications is going to turn into another new and horizontal product, not just a vertical.
And that's because of all the technology changes we're seeing. Everyone who has an iPhone 6 as an example, Why phone 6 has voice over IP? The gateway for voice over IP is a service that we already have in market so that the carriers now can start doing voice over IP. When we look at Amazon's product, their Mayday button, that is using our WebRTC product that we released a while ago that is a combination of our applications business, our Acme Packet business and our Tecla business put together in a product. We are now seeing the hyper interconnected company where you're going to have applications with embedded video and automatic chat.
All of that comes out of a lot of our products. If we look at the 4 of the 5 large LTE providers in the United States, they all use our diameter routing product. If you look at almost every actually every cable major, I'll qualify, major cable company in States. They use our policy management system. And the reason this is important is, as you heard maybe Mark's last comments walking off the stage, was about we didn't even get into all of our mobility that we're doing in our cross applications throughout all of Oracle.
So So not only do we just have front end mobile capabilities, we have back end mobile capabilities. So we have the best expertise, the most expertise and understanding of what's going on in this space. So when I want to hook up my health care products with a product that lets our life science companies integrate to the pharmacist who's going to talk to the doctor over video, that can come off from our applications, but not just as a layer, but from the core. So we actually participate in every component of delivering those type of applications across the marketplace. And we talk about clinical management.
Every one of these industries are going through a major transformation, transformation unlike, frankly I've ever seen in the industry and I've been around a long time. And the reason they're going through transformation is that for the first time, more technology is being bought the consumer than by the corporations. And because this technology is getting in the consumers' hands, for the first time, the corporations are not able to dictate their go to market model. The go to market model is being dictated by the consumer. And they have to transform or they will not succeed.
They have to transform or they don't succeed. And they have to transform in a way that changes their business model and they need applications and experience and domain expertise to lead them there. And that's what we're trying to provide. In addition, technology not at the consumer level is also affecting it in the area of life sciences. In the area of life sciences and clinical trials, the way trials have been done forever has been as a group of cohorts in a controlled study going through Phase 1 through Phase 4, and this process would take anywhere between 1 7 years to get a drug to market.
But now because of data, being able to process the data, genomics, proteomics, We had a customer I met with Tuesday who got a drug for 30 indications approved in 18 months, 18 months through the whole cycle. And why were they able to do that? They're able to use biomarkers, genomic data, analytic data, be able to do it fast and bring that all the way through from the health science side merged over to the life science side and combining that, which is dramatically reducing the costs, increasing the safety and the speed at which life science companies can bring it to market. And they're using our technologies and our core products to do that, a major transformation in the Life Science industry. And then when we look at Hospitality, we see that we just acquired Micros and the change is taking place there as well.
One point I'd like to make on that last slide is that the difference is that when we call on a company with these type of products, we are not calling on the IT manager. We're not calling on the Vice President of Human Resources. We're not calling on the Vice President of Customer Relational Management. We're generally talking to the CEO, the COO, the CIO because these products are the ones that are transforming their business. It's very difficult to ask a CEO of a very large bank.
You ask them what database they have and they say, well, probably Oracle, maybe a little DB2, maybe a little bit of this. They're not really sure. You ask them what software is running their bank or you ask the guy who owns a restaurant, what's running his restaurant. You ask the CEO of a hotel who is using property management, they know. And we call on them to help them shape their business with technology.
Because of that and what we've built up in a position, we are number 1 in every category of the industries that we participate And these are not static on premise businesses that we've acquired. Many of them have come to us already SaaS or have SaaS. We have 55 cloud offerings in our industry business. And in 2014, we had 74 new major product releases of our industry products and most of those have some bearing on bringing them to the cloud. I talked earlier about distribution, increasing distribution with these companies.
We've increased distribution by almost 70% since 2010. Generally, that's globally. Usually, we start entering markets that the previous companies haven't been able to drive into. And then as far as numbers go, the only number that Safra will let me talk about, and I'd really like to, but I cannot, is that we new software licenses are growing and I put in a nice superlative there, greater than, better than, quite a bit more than, you pick your own, than normal Oracle licenses. But I'd love to be able to tell you because we're extremely excited about the growth and once again the materiality that we're bringing to Oracle in the space.
Now I just talked about all those numbers. Everything I talked about, the 22,000 employees, the distribution, the growth that we have are for the industry product licenses and SaaS only, not the products that we bring along with us when we sell a solution. So when we sell a solution for an industry specific product, we generally bring anywhere between 1 and 4, so roughly about 3x value of other Oracle products with us. So as an example, we have a large customer who is using our health care data model. They bought our health care data model, but our health care data model ran on top of Oracle Analytics.
It ran on top of our database. And then when we optimize that data model, we optimize the data model for the analytics, we optimize the analytics for the database and because of this R and D methodology I told you about before, the database is already optimized for Exadata and in memory database. We sold the entire platform to this company. This company entire platform never had a piece of Oracle hardware in it. It never had an Oracle database in it.
It used our competitors' analytics. That company 2 years ago had never had an Oracle product. That company now is revamping their entire data center platform to Oracle products. That's going to show up in all my peers' numbers. But it started with the ability of having a solution.
And that story I just mentioned is happening over and over and over again. And this allows us to cross sell, up sell. And as I mentioned just a moment earlier, once we build the trust with that senior C level, we get the benefits of that through the rest of Oracle and drive a lot of other Oracle products, which we're very excited about. So let's talk last 5 minutes here or so on the Micros acquisition. So we have these 7 verticals.
Our goal is to continue and build out more multiple verticals in this same model so that we can accrue all the same benefits that we just mentioned. We want to build out more. And we want to build out more that also has adjacency. So we had a retail vertical, we still have a retail vertical, that does general merchandising, merchandising, supply chain, planning, analytics, retail science are our products that we sell in that group. But we knew that that kind of blurs over into Micros.
And Micros was broken up into essentially 3 business areas: retail, hotel and under hotel is cruise, casinos and then under food and beverage was restaurants, Stadiums and Concessions. So those businesses have a natural affinity to what we were doing. And if you look at Micros, it's a great company, growing nicely, nice profits. But why are we attracted to it? Because we believe that those industries are going through the great, great transformation.
And the transformation is going from premise to cloud to mobile. All of the things that are Oracle strengths and all of those things that I mentioned about companies before were obstacles that we're facing micros, distribution growth investment in R and D. And when we acquire a company, we have, as you know, a very, very powerful, positive, well proven acquisition model. And we focus on investing in R and D, we focus on distribution, and we focus on support and service. And we invest in those areas, allowing these companies to grow when they come into the overall footprint.
The really exciting thing about Micros is that we think that that industry is moving to the cloud and mobile probably faster than anyplace else. If you think about the environment that they are in, if you go into a restaurant and you walk to the back area, you see a fryer later, you see an oven, you see a coffee machine and down below you see a server, a server. And that server is running that restaurant. And that's like having a generator in your business. How great an opportunity to bring that to the cloud because they don't have an IT staff, they don't have somebody that knows how to even reboot it, maybe somebody, maybe went home in the morning, how better place to have that model move to the cloud.
And Micros has already started doing that with their product called Symphony 2, brand new, great UI that runs in the cloud. And therefore, think about even the cost, the cost of maintaining and supporting and servicing in that environment versus for a restauranteur to just have a nice cloud solution that we can provide. That is going to move. Restaurants are going to move to the cloud and we're well equipped and positioned to be able to do that. If we look at the customer experience of running a hospitality customer, what you're seeing on these charts is where it's red are products that Oracle already has and the gray are the products that Micros have.
So you can see how we can mesh the 2 together. So we can take advantage now of things like for attracting customers. I'm sure as Steve Mirandis comes up and speaks this afternoon, he's going to talk about the CX products that we have, the marketing products we have, Elko, Responsys and Bluekai and all those capabilities that we now can bring into a solution for the hospitality to help that hospitality market work around things like attracting. Everything from the glow of the Google search to booking through the customer experience all the way through the survey after they leave. And then knowing all the attributes to attract that customer back to the same environment.
That is so much of what's going on in that business right now and we're able to complement our products to be able to do that. In service, doing the customer experience, the property management, so when you show up at a hotel, they know your preferences, they know what you like for a room, they know what you buy, they know what you spend your money on, and we're able to drive that to improve the profitability of the Hospitalities Group.
And then we move to
the horizontal apps. Oracle already has a great presence in the hotel industry with our Siebel and CRM products. We're now able to go back in and cross sell more of the cloud supply chain management capabilities that we had along with inventory and property management. And then finally, we go to the back office a little more where we bring our human resource products and we complement that with fraud, loss prevention and once again, property management as well. So let's talk about is Micros and Olds kind of company been around a long time and are they adapting to the needs of the marketplace?
So Levi's Stadium, down Santa Clara for the San Francisco 49ers, the most advanced technology stadium that's essentially in the market right now. And by the way, we already have 18 of the 32 NFL stadiums as well as customers of ours. So what do they do in this technology area? Well, they have Wi Fi routers, I think something like every 250 or 300 seats, something in that area. But more importantly, when you come in as a customer 49, you download their app and your app from your ticket, a map to your seat, all those capabilities are on your application to create your customer experience.
But what is really great is that when you get to your seat and it's your BYOD device, iPhone, Android, you can then go to concessions. You hit a concession on your BYOD device. The system then takes it, it routes it by workload to the appropriate concession nearest to your location. So if you say I want 2 beers, 2 hot dogs and French fries, it rotates excuse me, locates the close concession area that can fulfill that order quickly, gives you an option to say, do you want to go to the express line that's closest to your area or do you want it delivered to your seat? And you want it delivered to your seat.
And then if you do that, when do you want it? Do you want it right now? Do you want it a
little bit later? Do you
want it in between the 3rd 4th quarters? And it will do all that for you. You want to buy along a T shirt or 49ish shirt, you can add that to it. And that's your buying experience. From a technology standpoint, yes, it's pretty impressive that you can do it on a BYOD device.
But I think what's even more impressive is that we processed $2,100,000 worth of receipts in the first game. We processed just nearly 6,000 transactions every 15 minutes. And we did it over the cloud to our data center in Virginia. Mobility, cloud, back end enterprise, analytics, tremendous solution for our customers. So our industries are trying and working on building out footprints to combine with an Oracle stack, an industry solution.
That industry solution is going to meet the mission critical needs of our customers, and we're going to continue to expand that and expand our footprint in our industry solutions. So I hope you learn a little bit about the fact that we do know a lot about Oracle database, you know a lot about our sun, you know now awful lot about cloud and mobile. And now I think there's something you need to think about as we are the leader in industry solutions to the entire market. So thank you very much.
Ladies and gentlemen, please welcome to the stage Oracle's Senior Vice President,
Juan Luiza. Okay. So I'm Juan Luiza. I've spoken last couple of years here. And today I'm talking about engineered systems.
Now one thing you should know about me is I'm a software guy. So I've been working on database software at Oracle now for 26 years, but I'm here talking about engineered systems. Why? Because it's kind of a software that matters. So I'm going to lead you through some of the things that we've been working on, some of the things that we've just released and a little peek into something Larry talked about on Sunday, which is really the next really big thing in this area.
Okay. I'll let you speed read this. More. Okay. All right.
So we have introduced quite a number of engineered systems. We started 6 years ago, almost exactly 6 years ago, we released our first engineered system, which was our database machine, exadata database machine. We've added engineered systems for most of our major products in Oracle, including middleware applications and we're introducing a number of new ones now. And so I'm going to cover a little bit of this in my talk. I'm going to start with Exadata because that's our kind of first engineered system that we use for our database platform, which is of course a very successful platform.
This was introduced in 2006. We've achieved our goals with this. We wanted it to be adopted widely in the industry for both OLTP, warehousing, mixed workloads, financial, analytics, everything. And that was our goal. That's what we set out to be.
A lot of people said, no, you need specialized systems for every little workload. You have to have a separate analytics system, separate OTP system, separate this system, that separate that system. We said no we can do it all with 1 system. And in fact it's better because we can combine it all together. And that's what we've done.
We're running now everything from petabyte warehouses, big business applications SAP, E Business Suite, PeopleSoft, Siebel, Financial Trading, e commerce site, software as a service. We run all our Fusion applications on our Exadata systems. So we have hundreds of Exadata systems in our cloud that run our SaaS business applications. We have many big other applications like SaaS Salesforce, one of our biggest customers for Exadata. So it's been very successful.
We've really fulfilled our initial goals for this product. We've done everything we set out to do. And so originally we set out to be data warehousing OLTP. Our focus these days are on our major database focus. So 2 of our most important database focuses are database as a service and database and memory.
So those are 2 things we've worked on a lot in the database group. We've introduced a number of software solutions. So we have our multi tenant database that we introduced last year in June. We've also in July just introduced database and memory that was also done in my team, our database and memory product, which has really 2 big goals. 1 is the super fast in memory processing and the other part of it was to be dead simple to adopt.
So when we talk about database and memory, one thing to keep in mind is that second goal is just as important as the first goal. So when we set out to design this product, we said it has to be 100% compatible with everything we already have. So by 100%, I don't mean 51% rounded up to 100% or 90% rounded up to 100%, but 100.0000% compatible with everything we have, because we want to make this dead simple for our customers to adopt. So you can run today we're running E Business Suite, PeopleSoft, Siebel, extremely complex applications all on this. We have third parties like SaaS, MicroStrategy, they all adopted it, no changes to their applications.
We're running current versions of applications, not future re architected rewritten versions, but current version that's extremely important. And so we're also focusing on these areas on our engineered systems side also. That's 2 of our biggest pushes in engineered systems is in database as a service and database and memory. And I'll talk a little bit about that. So
I'm not going
to go through a lot of technical details. But again, the key thing about our engineered systems is the combination of software and hardware. So we have very advanced hardware. But what really distinguishes our engineered systems is the special software and the integration that's in there. And we integrate from the top down.
So we start at the database and integrate down in ways that aren't possible unless we own the whole stack. And there's a few examples in here. For example, we're able to push database processing, our Oracle database processing in the storage. We moved our core database data processing algorithms into the storage in our engineered system, which is something that we can only do because we own the whole layer. We own the database.
We own the servers. We own the network. We own the storage. We own the protocols. Same thing in things like Flash.
We've moved our we put database intelligent caching in Flash. We're actually reformatting the data as it moves through tiers. So that's something you hear a lot about caching in Flash and all that kind of stuff, caching in memory with database and memory. We don't just move the data, we reformat the data because we own the data. So there's a lot of very different things that we can do.
Same thing messaging. Our database directly speaks to our switches and tells it which messages are important and need to be prioritized. And again, that's because we own the database, we own the switches, we're able to do many unique implement many unique capabilities in this product. And that's what makes this product extremely fast, extremely high available. And what we're really focusing a lot nowadays is multi tenant and database as a service.
So you can combine many applications together. So integrating all that together and it makes it a very powerful platform. This July, we introduced our latest exadata database machine called X4-eight. Big focus there was in memory. So in this particular product, we're using the latest and fastest Intel processors, the Intel Xeon Processors.
And specifically, we put a lot of memory in this. So we have up to 12 terabytes of memory in that Exadata machine. So it combines all the super fast networking and storage, InfiniBand, PCI Flash, all that stuff we had before with super fast in memory processing also. So we're optimizing our engineered systems around our in memory processing. We also have the biggest in memory database machine in the world, M6 that Larry talked about a little bit last year.
This one holds up to 32 terabytes of memory. That's a lot of memory in a single machine, 100 of cores, extremely fast interconnect, very, very good platform for in memory database. So we have the in memory database software that we've introduced and we're also introducing very optimized systems for running in memory database, far beyond what other people are able to do. Okay. Supercluster is our is another one of our engineered systems.
It combines database and middleware in a single platform using our Spark processors and has very efficient virtualization. And one of the again, the key thing to understand is, everybody benefits from hardware improvements. But every year, we're adding more and more software improvements. And so all the stuff that I talked about, we're building on it and building on it and building on it. So over time, we're actually separating from everyone else.
So the differentiation between our engineered system and taking a system and running generic software on it grows every year. It gets bigger and bigger and bigger and bigger. So the value prop every year gets more and more and more compelling. And that's going to keep going on for many years. So I mentioned we're optimizing in memory.
And I'll talk a little bit at the end about some of the new things that we're doing that Larry mentioned. At this open world, we started shipping a new machine called the 0 Data Last Recovery Appliance. So in addition of focusing on things like in memory, we're also doing the opposite. The opposite end of the spectrum things like data protection backup, a very specialized machine for protecting mission critical database data. And the key things we focused on here was solving the issues that our customers have.
So backup has been around for a lot of years. It's kind of been the same thing for 60 years. And it was invented in 1960s. And what do you do every night? You take a copy of your data and you push it off to some backup location.
If you have a problem, you just restore it. Well, the problem with that paradigm that's been going on for 50 years is when you restore it, you lost everything that happened that day. And that goes on today. So the only thing that's really changed in the last 50 years is instead of pushing at the tape a lot of time people are pushing at the disc, but the paradigm is the same. And so this has been a big problem for everybody in the industry.
And so we set out to solve that with this new 0 data loss recovery appliance and that it's in the name. We wanted to make it 0 data loss how? By integrating with our database tightly to solve this problem. So our database generates something called redo. We're able to ship the redo in real time to basically back it up in real time to our 0 data loss recovery appliance, so we can essentially eliminate data loss.
Data loss is a bad word in customers. So at my kids' school they say we have 0 tolerance for drugs. Well, CIOs nowadays tell us they have 0 tolerance for data loss. It's just not acceptable anymore. Also it's very highly optimized.
We can run backups much faster because we only do we only ship change data. So the big problem as databases keep getting bigger, if you're backing up the whole database, you're having to read it all from disk, ship it all across the network, it's getting more and more to bog down. So we optimize it, so we only ship changes. A lot of other optimizations in here. I'm not going to get time.
It's a very scalable system. It's based on that same Exadata technology. We have a lot of interest in our customer base in this technology, a lot of interest in this. So it's just started shipping this week. Okay.
Exelogic is our in memory analytics engine. There's a lot of optimizations in that also. Notably this year, just now we started shipping with our new Oracle database and memory Insight Xylenics. So that's a major improvement to the product, a major enhancement to the product that just shipped now. I think I was talking exalytics when it was an exalytic slide.
Okay. This is the exalytic slide. Okay. So let's talk about Hadoop and big data. I'm just going to talk briefly about this.
So we just introduced a new capability called Big Data SQL. And what it does is it combines Oracle database data with Hadoop data. Now what does that mean? We combine the data out of it. What does that mean?
So I'll give you a concrete example. So typically things like customer data, account data is kept in an Oracle database. A lot of people want to keep web log data in Hadoop. Web log data is like what did you click on? I clicked on this.
I clicked on that thing. I clicked on that thing. That's web log data. So that's over in Hadoop. User data, customer data, account data is in Oracle.
So that's all fun until you actually want an answer. So you say, you want to so let's say you have a simple question like, how many 20 year old women clicked in this area of the website? How many executives at the VP and above level use this part of the website? How many people in this income bracket? How is their trending of their web data going?
You have a problem because the user data is in Oracle, that click data is in Hadoop. And so if you ask a question like that, the answer is, hey, let me get back to you in a couple of weeks. I'll try to figure it out by hand and put this stuff together. So the idea of this big data SQL is we can now combine this data seamlessly. So we can run a query that combines for example that customer data that's running inside an Oracle database with that click data, that web log data that's in Hadoop.
And so you can say answer exactly that question. How many 20 year old women are looking at this area? How many senior executives are on our website? How is that trending? What are they looking at?
It's very important data. That's what you really want to know. You don't really care that a bunch of people I mean, you might care that a bunch of people clicked in this area of the website. That's fine. But you kind of want to drill down.
And to do that, you have to combine that data with the existing relational data. And that's exactly what we've done. And we've made it extremely efficient, extremely simple to use with our big data clients in this new product called Big Data SQL. You run the exact same SQL as if you're running it all against an Oracle database and the Oracle database coordinates, accesses the Hadoop data. We've used some of our same technology.
We've used an Exadata to offload operations in the storage to offload operations into Hadoop. So it's all extremely fast. And again, it's very, very simple to do. Now if somebody asks a question, you can give them the answer immediately. Also all the analytics stuff that works on the Oracle database, all the tools that have been built up, the 3rd party tools for decades, it all just works on top of this.
So you instantly get those tools available. Okay. So that was just introduced, I think a couple of weeks ago. And we have a lot of customers now using our engineered systems, very popular across our engineered systems. I'm not going to read all these, but we do have basically most of the major corporations around the world, a bunch of really good corporations here, they get really big benefits, performance benefits, cost benefits, things that they were never able to do before that they can now do, reduce costs which is a big deal.
So across the board, we're getting very good adoption of our engineering system, because we're providing high value to businesses. That's why they care. That's why they want to adopt this technology. All right. So that's and then I'm going to cover one last thing today.
So let me just say, if you're reading e mail, listen for the next 2 minutes. This part is important, okay? This is really a big deal. So Larry talked briefly about this on Sunday. This is our
next big step.
This is a really, really, really big deal. We set out Oracle bought Sun a number of years ago. Sun has a chip team. We've been working with them very closely to engineer our engineered systems. We've engineered the architecture.
We've engineered the software. We've put it all together. We've also had an effort going for the last 4 years. So our team, the software team, the database team has been working with the chip design team for the last 4 years to do something nobody's ever done before, which is to move database processing on chip, particularly for in memory applications. So that's really the area that we targeted.
And Larry talked about this on Sunday. There's 3 different areas that we've targeted. It's not just about performance. So there's 3 big things. One thing is performance.
Performance of course is very important. So our in memory database engine uses is a very highly optimized engine. It uses something called vector processing that's on chips today. So that's been those are very high speed instructions that were put on chip for graphics processing, for scientific processing. They exist on Intel chips, Spark chips every chip in the industry.
And we're all taking we're taking advantage of that technology to make our database and memory run very fast today. But that technology wasn't really designed for database. I mentioned it was designed for graphics. It was designed for scientific computing. So about 4 years ago, we started a project.
We said, let's put exactly what the database wants on chip and make it run extraordinarily fast and do something that's far beyond what you can do today with generic hardware. So we've been working on optimizing chips for many years. So my team has worked with has worked with all the major chip vendors. So we have about 20 Intel people in our team that work on optimizing Intel chips for the Oracle database. We optimize Spark chips for the Oracle database.
We've optimized everything over the years. But the new database and memory has different optimization. It's a different architecture. It works differently than the way we used to work before. Just kind of it's kind of like a whole brand new area that's opened up.
And it's actually much more amenable to optimization than what we had before. And so this is a big deal. Larry talked about actually had some very detailed slides on this on Sunday. It's more detailed than the slides I use actually, which is interesting. So that's the first big deal.
We're putting these database engines directly on chip. And think of it like a few years ago, the chip vendors put encryptiondecryption on chip. Encryptiondecryption actually ran really slow if you run it in conventional processors, but they put specialized encrypt decrypt engines on chip. Now it runs really, really fast. You can keep up basically you don't notice anymore.
You can basically get encrypt decrypt for free now. Same kind of stuff. We put specialized software engines on the new Spark chip to make in memory database processing run really fast. So that's one thing. 2nd thing is capacity.
So the other problem with in memory is you lose capacity. Memory is a lot smaller than flash, which is a lot smaller than disk. So as you're moving data into memory, you lose capacity. So the answer to that is you have to start to compress more. And there's various levels of compression.
There's some levels of compression you can kind of get for free. And there is but the deepest levels of compression are very CPU intensive. They can't be run-in real time. They don't run anywhere near the speed of memory. So they can keep up with disk throughput, but memory throughput is about 1,000 times, 10000 times faster.
The chip technology just can't keep up with encrypt decrypt at those rates. So again, we developed special encrypt decrypt algorithms that were very amenable to put on chip and we baked those in on chip. What that means is we'll be able to run 2 to 3 times more memory more data in memory than if we didn't have the specialized processing. So it increases the capacity of our in memory database beyond what anybody else can do. And it runs in real time.
So I don't have numbers on here. I know all these numbers. Most people don't understand these numbers. But a single socket will run at 120 gigabytes per second. So like I said, most people don't understand these numbers.
If you understand these numbers, you would say, wow, that's unbelievable. It's amazing 120 gigabytes per second. We can do like 1 now. And it burns up the whole chip, uses all the resources on the chip. So it's very, very fast.
And then the last thing is reliability and security. So we're moving terabytes of data into memory. And there's a big problem. There's another big problem there, which is data in memory is much more vulnerable than data on disk. It's very easy to overwrite data in memory.
You can do malicious attacks on data and memory. There's things called buffer overflows. If you follow security, one of the main exploits that people use against to attack systems is buffer overflows and that's by corrupting memory. So as we move more and more terabytes of user data, this is financial data, customer data, very critical data in the memory, it becomes more vulnerable than it is today on flash and on disk. It's much easier to access the data in memory.
So on the reliability security side, we've built a number of special capabilities onto the chip to protect this data at a very fine level. And again today I don't have time to go into this. It's actually not that complicated conceptually. But the conceptual idea is I can every little bit of memory that's given out. For example, if you want 50 bytes for this purpose, the chip will lock that memory so only you can access it.
Nobody else can access that memory. Somebody else wants 30 bytes for some other purpose, it's locked for that. So if some sort of either mistake we make mistakes in our software that kind of overwrites memory, which can corrupt memory or a malicious attack comes in, they can't access that memory. So like every little piece of memory that we allocate is protected against access by someone else. And this by the way that one I would say is a computer science advance.
It's not just a special feature in our product. It's a computer science advance. Nobody has really done anything for to improve reliability and security in hardware in 50 years. So 50 years ago, paging was implemented and that's what we all use today. And it's very, very coarse grain data protection.
It's also kind of expensive. This runs in real time. It very fine levels. We're going to use this to protect all our database and memory data from both attacks from the outside and from our own mistakes, so it doesn't get corrupted. It is and because of the way it's implemented on chip in the memory subsystem through all the caches, through all the memory buses everything else, it's free.
That's a big deal. It basically runs with no performance overhead. So those are 3 big areas that we focused on. And you're going to be hearing a lot more about this next year. So we have these systems working in our lab today.
We're going to be shipping them next year. Larry talked about them at the end of his talk on Saturday. But again, this is this stuff every single one of these things is a really, really big deal. And it's possible because we're building our software on the chips. We're optimizing that in ways that nobody's ever done before.
And so I'll just leave you with that and that's it. Thank you.
Ladies and gentlemen, we'll now take a short break with the show resuming at 120. Ladies and gentlemen, please welcome
Everybody come on back in. Please take a seat. All right, who was that? Zelnick. Make a note.
No Zelnick next year. Make a note. Come on back in those of you outside. All right. We're a third of the way there.
We're now going to basically turning into the technology port of the presentation. We'll have 2 of our senior executives, Thomas Curran, who's our Executive Vice President responsible for software development and then Steve Miranda, also Executive Vice President who works on applications will both be coming up. Thomas will take 2 parts of this. He'll be focusing on technology and when I mean technology, I don't mean the word the broader sense of technology. They'll be focusing in on products like our database, our middleware, big data analytics.
He'll also then spend some time on cloud, infrastructure, platform as a service and then ERPEPM. So without further ado Thomas Kurian.
Thank you. Thank you, Ken. So I'm going to start with an overview of what we've done with our software portfolio as a whole this year. So our strategy is quite simple. We've had the same strategy for 3 to 4 years now.
First one is deliver engineered systems, combining our hardware and software together for breakthrough innovations and performance and reliability. I think Juan Loaiza covered that earlier today. Then to deliver a complete open and market leading suite of database, middleware and applications, I'm going to drill down on that now. To add to that, a complete and unified infrastructure as a service, platform as a service, software as a service and data as a service through the Oracle public cloud. And you've seen a lot of announcements from us this week on that, so we'll cover some of that.
And then to use our scale and installed base, our product breadth to offer customers integrated solutions. So I'm going to focus on so this last year, if you look at all the magic quadrants from Gartner or the various analyst firms, from a leadership point of view, we continue to lead the largest number of categories of an enterprise software vendor, and we've added a number this year. I'm going to focus on 3 primary businesses: database, middleware, analytics in this session. So, our database, a lot of our focus in core database is around 6 or 7 key areas: storage management, which is optimizing how our database stores data on disk so that we can compress data to save space on disk and cost for customers as well as improved performance. Grid or cluster computing has the ability to run large scale systems and to add nodes into the system to improve both performance and reliability.
Historically, you've seen us do transaction processing, data warehousing. Maximum availability is an area where we've added a lot of new capabilities, and I'll talk about some of them. And then we've added over many, many years, we focused on the ability to have the Oracle database manage all your data. We've added a number of new data types to the Oracle database, The ability to run, for example, JSON, which is a very popular format now, the ability to persist JSON directly in the Oracle database, so that you can query on JSON data without having to have a separate system for it. We've got new products in the area around database security as well as around management.
I'm going to focus on 3 important new database options we've introduced. But before I do that, I want to reiterate, we are number 1 in database. We have nearly half the market in the database market, and we're also number 1 in data warehousing. And if you go back and look at the analyst firms and their market share results, we have taken market share steadily over the last 3 years. So not only are we large, but we are growing faster than everyone else.
Now the 3 new options, the first one, in memory database. So what's unique about Oracle's in memory database, it's the only database in the industry that supports both transaction processing applications and analytic applications on the same database in memory. Number 2, it allows you to get great performance by adding columnar capability to your applications, but it does not require you to change your applications, which means that any customer running Oracle simply has to upgrade to 12, no matter which one what their applications are, and they can get improvements in performance, which means this option has enormous market potential. And it both runs analytics and OLTP substantially faster. And to a database user, it looks like a regular database upgrade.
So you don't have to retrain your database administrators and a brand new set of tools or products. The proof of it is the following: Oracle E Business Suite, JD Edwards, PeopleSoft, Siebel, Fusion, Hyperion, these are all certified and now generally available supporting Oracle Database 12c and Oracle In Memory Database. So it has the ability now for us to take these products into the installed base of our applications customers, which is obviously, as you know, very large. And secondly, you can see some of the data and performance results. Oracle E Business Suite cost management goes 1,003 times faster.
So something that took you 1,000 hours to compute can now be done in an hour. PeopleSoft Time and Labor goes 1354 times faster. JD Edwards sales order analysis goes 1700 times faster. Our transportation management product, which is the market leader in transportation management goes 10 30x faster and so on. So not only have we delivered the in memory database, not only have we certified all of our applications on it, but also the results speak for themselves.
Number 2 is the Oracle multi tenant database, 12c. What this allows you to do is if you've got many, many different applications accessing separate physical instance of the Oracle database, it gives you the densest way to consolidate database environments. So you can take one physical database, put many instances of Oracle, you can collapse them as what we call multi tenant database instances inside that physical database. You get the ability to patch, upgrade and maintain one physical database. And inside of it, each database instance, what we call pluggable database, is completely isolated from a memory, CPU, security and resource point of view.
So lots of our big Oracle database shops that have many, many departmental databases or smaller transaction processing databases, etcetera, as well as a number of SaaS vendors are looking at this solution to consolidate databases and both save on operating expense because you have to have fewer people to maintain stuff and capital expense because it gives you the densest footprint from a consolidation point of view. And third is a new offering that's getting a lot of attention from our customers is what we call private cloud database as a service. This is the ability for a customer to use 3 products from Oracle: Oracle Enterprise Manager's Cloud Management Pack, which is another option to the database plus Oracle Exadata and Oracle multi tenant database, which I just covered to create databases so that you can have all your databases look identical from a configuration point of view and also set up what we call a database farm or database cloud so that you can share workload much more efficiently and then you can also consolidate how you manage your database requirements. So many, many customers who want a private cloud, which runs behind their firewall use this technology to do so.
And these 3 are brand new options with 12 that are getting a lot of attention. 2nd area is Fusion Middleware. So Middleware at Oracle is a broad suite. It consists of a number of pieces. I won't go through every piece, but think of it as consisting of the major pieces of infrastructure that you need to run applications.
So application servers, integration tools, business process management, analytics, collaboration, identity management, user engagement and tools. Now in middleware, we are also the market leader in middleware. We are number 1 in middleware. We have the largest market share and you can look at the competitors as well in this market and look at the market share results from Gartner IDC, and we have taken market share faster than anyone in the market in this segment as well. Now here, we have introduced Oracle Fusion Middleware 12c, a brand new major release of the entire Middleware suite.
It went out in April. And within Fusion Middleware 12C, there are a number of new options. I'm going to just highlight 3 of them to give you a flavor of some of the new capabilities. The first one is the ability in our cloud application foundation. This is part of WebLogic server.
WebLogic is our the number one application server in the market. Historically, people have wanted the ability to have an application tier run on a primary data center. And because of regulatory requirements now, they have to have a secondary data center within a metro area, 50 to 100 kilometers. And now you can run those application servers active, active. And we are the only ones in the industry that lets you do that.
So a lot of financial service institutions and so on that have regulatory requirements to run active active now have expressed interest in these products. Similarly, we have a capability called Federated Caching. So Federated Caching is interesting to a lot of customers who have a central data center, but application access from multiple locations around the world. So they want to distribute data from that centralized data center to remote data centers. And so we have got a capability to support what we call global data distribution for very fast changing data.
Again, we are the only product in the industry that does that. And so that's been very exciting to people in telecommunications, financial services and any organization that is concerned about Patriot Act because now you have to distribute data to multiple data centers. The second offering that we've introduced is something called Oracle Mobile. This is a brand new offering. It consists of 3 parts, the ability to take an application framework and with one code base, build applications that span iOS and Android phones, iOS and Android small tablets, iOS and Android large tablets and web apps.
So most enterprise customers are now struggling, whereas people bring their own devices, they have to support the same apps running on 8 or 9 different platforms and writing it 8 or 9 different times is not pragmatic. We give you a solution to build an application that spans devices and operating systems. Associated with that, we also give you a security solution called mobile security and a back end as a service, what's in the industry called mobile back end as a service. The ability to take all your legacy systems, all your packaged apps and expose them up to mobile devices. We have used this to build mobile applications for all of our packaged apps, PeopleSoft, Hyperion, E Business Suite, Fusion, JD Edwards, etcetera.
And so most of our apps customers, as they get a mobile requirement, not only use our packaged solution, but when they want to extend or customize these applications, use the mobile solution from us to extend it. And so that's a brand new offering. The third one, similar to database as a service for the private cloud, we offer middleware as a service for the private cloud. This is the ability to create, manage, patch, upgrade a large number of Oracle Fusion Middleware instances in 100 consistent way, similar to the database offering, which consists of on the database side, I said it consists of Exadata, multi tenant database and Enterprise Manager. The equivalent one from middleware is Oracle Middleware, Exologic and Enterprise Manager.
And so this gives you the ability to create environments and manage them with our middleware very quickly and easily, and there's a lot of interest from the customer base for these new capabilities. 3rd one, the area of business intelligence. So in business intelligence, we have introduced at OpenWorld a number of new products. I wanted to just talk about them. But before I do that, traditionally, there have been 2 segments of business intelligence, one called Enterprise Performance Management, the other one called Business Analytics.
We are the leader and number 1 in both segments. Just like in database and middleware, we're the leader in both segments. Now what are some of the new capabilities we've introduced this year? The first one is called Big Data SQL. So what this allows you to do is organizations today have data in Hadoop.
They have data in a NoSQL system, they have web logs and various other things in Hadoop and they want to compare data they're collecting from their web logs with data from the operational system, which tells you which customers are the most profitable. So prior to this, you could not access data in Hadoop using SQL, which meant that you wrote MapReduce, you pull the data out of the MapReduce program into some middle tier, you fetched data from Oracle into the middle tier and then try to join your data in the middle tier, which clearly was not very efficient and also didn't scale very well. So big data SQL allows you to use standard Oracle SQL to query across NoSQL, Hadoop and Oracle sources. So it opens up data in Hadoop to all people who know Oracle SQL, which is a huge community of people, And it also makes you have the ability to join data very efficiently between these sources. And lastly, similar to the technology we have in Exadata to offload scanning down to the storage tier, which makes Queries performance very well, very good.
We've done the same thing with the big data appliance to offload scanning for Hadoop data down to the storage tier, which obviously means that analysis goes much faster. So the first thing is that now Oracle customers can use Hadoop alongside the Oracle investments, and we've got a competitive advantage against other suppliers of Hadoop as an infrastructure for big data. The second thing we introduced to complement that was a new analytic tool called Oracle Big Data Discovery. So when business users want to sit in front of Hadoop and analyze data in Hadoop as well as in relational system, today they don't have any technology to do that. So they have to call this guy called a data scientist who then goes and writes a statistical program in MapReduce, generate some data and comes back to them with, here's what I found.
But business users want to explore the data in Hadoop themselves. They don't want to have to wait for some scientists to do that. So we introduced the first visual graphical user interface tool to Hadoop. So a business user can literally that's a snapshot of the screen. A business user can sit in front of it.
He can browse the data. He can annotate the data. He can build models with the data and then share it with other people. So it brings interactive query and analysis to Hadoop. And finally, we've also introduced a number of new application modules on top of this technology to allow you to do packaged analytics out of both on premise sources like E Business Suite, PeopleSoft, JD Edwards, but also out of cloud sources, our SaaS applications.
And we have more than 2,000,000 users now using these prepackaged analytics from CRM, HR, ERP in the cloud. So you don't have to go build all your ETLs or anything like that. You can do it right on the cloud. We give you package analytics to do that. So 3 important areas, database, middleware, analytics, they're big market segments.
We're the leader in all three. We have a huge installed base in all three, and we introduced a number of new interesting products in these categories. But I thought it would be best if you heard from some of our customers about these products. So we've got 3 very important customers with us, Mr. Sudhi Vijayakumar from Yahoo!
He's the principal DBA at Yahoo! He's going to talk about what they're doing Sudhi, please come up With our Oracle in memory database, Doctor. Markus Pratsas from Deutsche Bank. He's the Head of Technical Architecture at Deutsche Bank. He's going to talk about what he's done with our big data clients and Mr.
Facundo Roa. He is the Chief Digital Officer and the Head of IT at TUI, a major travel company in Europe. So welcome. Thank you for coming.
Thank you so much.
Nice to see you all. Please stay. So Sudhir, can you tell them what your experience you started with Andy Menoz's team trying the Oracle in memory database?
Yes, we did. What were
you guys trying to do at Yahoo! And what did you find?
So let me give a little bit of context as to where exactly we saw In Memory fit We I'm part of a team which takes care of ads and big data. So pretty much entire data flows through our department. And we have quite a lot of important data masks which address internal e staff users as well as our external advertisers. We were looking at providing them data as near real time as possible. And we've tried with so many options.
And we got a word that there's some secret project going on with Oracle. And then we hooked on to it and then we were blown away by the speed of it. So what we see is we put in memory and we make a lot of our customers very, very happy, get them the data as fast as possible.
That's great. How long did it take you to do that? Was it a very complex upgrade or anything at the time?
That's with the initial fear of our entire management team. But it was very surprising when we went to the data program, we didn't have to change any line of code. All our customer applications that built in, they're all extremely happy because they don't have to write a single they don't have to make any changes to their application. And then and it's a flip of a switch, we get really fast responses.
That's good.
So it is completely transparent to the applications.
That's wonderful. Thank you, Soudi. And so we made you a hero.
Yes. That's what I would like to later look at it that way though.
Okay. Doctor. Pratze, thank you for joining us. Can you tell the audience what you do what's the application you guys are doing with big data?
Yes. Maybe as well to give some context first. So we've been using Exadata Systems for now 5 years about. And initially, we thought about Exadata in order to increase performance, which we saw over the course of the years. We as well saw over the course of the years increased reliability and deterministic.
So we're very satisfied with that. And then there are other use cases as well that either have been there in the past already or are new emerging. And for these use cases, big data, we think, is the appropriate solution. And coming from the experience with the Exadata system, the performance, the outflow to the storage, that's something where we're looking for to see and we run the initial tests as well and solve this on the big data appliance. So our main reason for that is new use cases, data analytics, pattern matching exercises, that sort of thing with the appropriate performance.
And what did you find?
As with the Exadata system, we see very satisfying performance. We see that we now look through what are applications, what are use cases that we haven't addressed so far, which are appropriate for that kind of technology. We as well looking forward, I think you mentioned this probably here as well the integration between the big data world and the relational world, Oracle.
That's great. And Sudeep's ROI was he could deliver something that his users wanted for a very long time, which is virtually real time analytics. What kinds of things are you looking for to deliver to your users? New insights. New
insights. That's basically what we are looking for because there is things that we couldn't discuss. It's mostly a discovery tool.
That's what
we want to use it for. Unfortunately, I'm not a hero yet, so
Only a matter of time. That's great. Thank you. Facundo, you're an Oracle Middleware customer. Can you tell people, first of all, what you guys do at Chewy?
And then So everybody wants
to go on holidays, right? So that's what we do. We try to provide to our customers' experiences. So everybody wants to go on holidays, right? So that's what we do.
We try to provide them experiences that they're not going to ever forget. Operate in more or less more 180 countries and we serve we provide services to 30,000,000 consumers around the world. So it's pretty intense. In terms of what we use our middleware, which was your second question, we decided to go with the stack of WebLogic Cloud C and Coherence 1212. We strongly believe that the demands from people in terms of their holidays is increasing.
So everybody wants to have better holidays, cheaper holidays and quicker holidays to purchase. So those three things combined we realized we need to be fast. So we basically started to look at different solutions And we realized that those two things together were going to provide us with what we needed. So we achieved a lot of stuff in terms of technology and non technology, which we didn't realize we were going to be able to have it. In terms of technology wise, boy, we scaled massively, I have to say.
And we are providing services within the blink of an eye. So that's around 100 milliseconds. In terms of the non technology, we were able to standardize our product and that helped us to have our team in this digital transformation to quickly get on hold and hands on with what we need to develop.
So your travel system essentially uses our middleware as an integration middleware. You're using SOAR suite to tie a number of system together, and you've been looking you were trying to get something that gives you great latency, which is very low latency because people want when they try to book a travel trip, they don't want to wait around to get a response. Are you guys happy with the product?
Well, I have to say I'm happy. I'm very demanding as well and I'm very aggressive to technology. So putting things into play to make them work, it's beautiful. Simple is beautiful. So actually you really helped us in that perspective.
I have to thank you on that.
And how many transactions go through the system today?
We have reaching you said a day. We are reaching around the 2,000,000,000 transactions a day more or less.
That's a very large system.
Availability. So that's pretty amazing to be honest.
That's great. So three examples of different capability that we've introduced. You guys are in 12 C of middleware. You're using the big data plans, Sudi, or you guys are trying the memory database. Are you happy with the new innovations we're introducing?
Of course, yes.
Yes. What kinds of things do you guys see as the next step? At Yahoo! For example, what kind of business value do you guys plan to get? If you can provide your users with instantaneous response time for analytics, what kinds of things will they do with it?
As an advertiser, if
I start off a campaign, I want to really see how fast how what was my reach to the marketing campaign. So these kind of analytics would take time because data gets invested in so many different places. They all finally funnel to an Oracle database for us. And then we make it available to them as soon as possible so that they can, as Marcus mentioned, do all kinds of insights, find out whether it is successful, they make some modifications, they get instant responses or feedback of how their campaign performed. And that helps them have better campaigns and in turn makes our advertisers very happy.
That's great. So in a way, the fact that you can find these patterns allows you to come up with new economic models, new pricing mechanisms and other things to grow Yahoo! Stock line someday. Okay. Yes?
Doctor. Pratas, what when you one of the things that we see a lot of our customers using Hadoop for is what we call a data lake. Put all your data in there, and then they really want a mechanism to be able to search the data. And you've heard about Oracle Big Data SQL. How is that interesting to you?
Yes. The interesting part on that one is because currently we have tested sort of in isolation. So the big data appliance of the data and we already gained some insights and we can run pattern matching over it and get all the data that we have. But at the moment, I guess many companies are mostly relational data pools that are available. So we want to bring these two things together.
So therefore, the big data sequel, That's the interesting part, I think, where we don't need to move data from here to there in order to match it, in order to join it up. But we can basically integrate our data pools.
And so you can open it up to all the people who know SQL and Oracle,
which
I assume at Deutsche Bank is many, many people. Yes. Yes. I think great. Absolutely.
Great. And then where are you guys going next with our middleware, Vikander? What kinds of things are you looking at? You've seen 12C. I know based on the sessions you've seen here at OpenWorld, there's a lot of new stuff.
What do you find interesting next?
Well one of the things I have to say that my team already back at Palma have implemented 1213 already. So they have it in test. We are kind of entrepreneurs in technology and we like to test things first. I'm really interested in one of the things you mentioned on one of your sessions, which is the cloud perspective, cloud services. We are mainly integrating clients and suppliers all the time.
So one of our main challenges today is to make that pretty easy to disrupt the market in terms of the integrations perspective. So I'm really looking forward to get my hands dirty on that perspective.
So you've heard about the costs and these guys showed you the integration cloud service or ESB in the cloud, which allows you to add people very quickly because you don't have to attach them to your enterprise system and then we've got messaging from there down to your enterprise system and I assume that's interesting to your guys?
Correct. And that basically is going to allow us to create a pace to make our business grow faster to be honest.
Great. So example of a customer who uses on premise software because it's the same technology that they're comfortable with now running the cloud here interested in trying out our cloud service. Okay. Okay. Thank you so much all of you for joining us and for telling the audience what you like about the software, how you're planning to apply it.
I think it will it opens their eyes up to the fact that when we say the technology is very easy to use and adopt, one of the big things we're excited about Release 12 is of database and of middleware and analytics is that the new options are very easy to pick up. In a big data appliance and you do Oracle big data SQL, you simply connect your Exadata and big data machines together and you can run SQL. In memory database, you simply pick up your application, upgrade Oracle database from 11 to 12 and you're off and running. And you guys have gone live on 1213 faster than I mean, we just shipped 1213 in May for middleware. So you're already live on such a large system.
It's in the process to be live. We think it's going to be live by the end of the year.
Okay. Great. So thank you again for joining us and thank you for being here. Thank you. So that gives you a flavor of our technology business, our database, our middleware analytics.
We talked about a lot of new offerings. There are a number of them. I touched on just 3 or 4 of them, the new options, and we had the customers more importantly than me telling you why they like it and how they plan to use it. So I thought I'd go next to a quick update on Oracle Cloud. I'm going to talk about 3 areas: infrastructure, platform and ERP Cloud.
And then Steve Miranda is going to talk about HR and CRM. And we're going to have some customers talk about their experience with our platform and why they like the platform and ERP cloud before we go to Steve, okay? So the what are we trying to do with the cloud? 4 years ago, we said we're going to enter the cloud and we're going to build these 4 layers: infrastructure as a service, platform as a service, software as a service and data as a service. And essentially, we've delivered those pieces.
So I'll talk about each one and just give you a flavor of some of the services so you have an idea of what we're doing. So infrastructure as a service, at the core of it, the services we're delivering are elastic block storage, elastic object storage, elastic compute, secure identity and then messaging. So secure identity says when you sign into the Oracle Cloud, you have one place where we manage all of your identity and you're using passwords, And that gives people comfort that if somebody leaves their company, they can delete the customer in their on premise system and they're automatically revoked from the cloud. So that's one of the differences in our implementation because it's one architecture we have central place to manage identity. Now I'll talk about storage and compute briefly just to give you an example of some of the things we do.
So let's start with object storage. Object storage is meant for archiving data or documents. It can also be used for backup. There are 3 or 4 interesting capabilities that we've introduced with our object storage. The first one is this integration with Oracle RMAN or Recovery Manager.
It's the tool that's used to back up and restore our database. You can now configure RMAN to point to the object storage service in the cloud and it automatically backs up your database and puts the backup in the cloud. That's number 1, and it's about simplification. Similarly, we have introduced a storage gateway that allows you to take files from any network attached storage device or blocks from any SANs storage area network device and archive it in the cloud. So that allows you to ingest non Oracle database content.
That's number 2. Number 3, our storage service has 2 important capabilities that I want to highlight. 1 is this notion of a single global name So why that's important is, so we have a triple mirror storage solution. It's triple mirrored across 3 different data centers. So even if one data center goes down, you don't lose data.
But when you configure your backup, for example, to point to the cloud, you simply point to a central namespace. And behind that, we replicate your data transparently to these other locations. Now that's different than other cloud storage vendors who require you explicitly to tell them which data center you're backing up to. And that means that if you decide, for example, that you want to change a policy to say my weekly backup, I want it put in triple mirror and my nightly backup, I only want a double mirror, you have to change every time you run the backup where you put stuff to versus for us you have one global namespace and how much redundancy you configure is strictly by policy. So all of these are significant differences between what we do with storage and similarly there are differences with what we do with compute than other cloud providers and it largely comes from our experience with enterprise customers.
Okay. Now the second area built on top of this infrastructure as a service, 100% of our platform as a service runs on top of the infrastructure as a service. On top of the infrastructure as a service, there is a broad suite of platform services. These are all technology that we've built organically based on our expertise in database, middleware and analytics. It's targeting 3 different audiences.
It's targeting enterprise IT, it's targeting application developers and it's targeting line of business users. So some of these services apply to many different audiences, but I'm going to give you a flavor of them. So let's start with application developers. For application developers, we give you a database as a service where you can load your data, Java as a service, where you can build applications in Java, a developer service, which allows you to store all your stuff in source control up in the cloud and then allows you to build the source and deploy it to our cloud And then mobile, which if you're building mobile applications allows you to get a set of tools to very quickly and easily build applications for iOS and Android devices. So that's part 1.
Part 2 is if you're a departmental user, we give you 4 services. The first one is document management, which is if you've got corporate documents that you want to synchronize with your own desktop devices, your PC, your iPhone, your Android devices to synchronize those documents securely. And then secondly, to collaborate with others using a workspace. The second piece is Oracle Social Network, which gives you a social networking tool and then we have 2 different analytics solutions, 1 for people who want to do Hadoop and 1 for people who want a traditional query analysis environment and both of them have a graphical user interface backed either by Hadoop or Oracle as a database. And then finally, for enterprise IT, we have a variety of solutions, 1 for identity management, 1 as an integration service, integrates our cloud with your on premise systems and the third one is a business process management solution.
So we have got a range of platform as a service solutions appealing to a variety of different people. Now I'll touch on them and just highlight some of the key capabilities that differentiate our cloud services and why we're getting interest. So I'm going to start with Oracle Database in the cloud. So Oracle database in the cloud, you can go to our cloud and request either 11 or 12. You can request either a single instance or a clustered instance.
And then you can configure various things. So we automatically in the software do a bunch of work that if you were to use either someone else's cloud or your on premise system, you're doing manually. So when you configure the database, we do it for you in software. If you want a standby environment set up, we do it automatically for you in the software. You simply check on a menu what you want and it's configured for you automatically.
If you want to encrypt the data in the database, we encrypt the data automatically for you. If you want to patch the database, you tell us which weekend and what window of time you want and we patch it for you. If you want to upgrade the database, we upgrade it for you automatically. So we're taking a lot of the work that in an on premise environment or with someone else's cloud, you have to do manually. You have to patch.
You have to upgrade. You have to set up a standby. You have to fail over, you have to add encryption. And through software, we've automated 100% of it. So you literally simply check off what you want in a GUI, in a graphical user interface and it's all done, lights out for you.
And by doing it, we allow you both to get reduce your cost, improves the value of the service and also allows us to appeal to people who may not be professional DBAs. Now for development, important thing is we bring we essentially have a GitHub in the cloud, a Git repository. We've got a tool called Maven that allows you to do dependency management. There's something called Jira. And if you're a developer, if you're an engineer, you love all these terms because that's what every engineer who's doing open source development uses.
And we give you all of that in the cloud. So if you want one stop shopping, I want to develop in the cloud, I want to deploy in the cloud, I need a database in the cloud, you have it. And we've certified all the popular tools that people use to work. So you don't have to pick and choose. We don't constrain you from the choice of which IDE or development environment.
If you want to build mobile apps, we give you a full mobile solution. So if you want to take Oracle E Business Suite and access it from a mobile device, you can do it without any middleware on your premise. You can do it with a cloud back end, a cloud development framework and security through the cloud. And that's obviously of interest to a lot of our customers. Collaboration and social networking.
So if you have documents from ERP, HR, CRM, we have a big on premise content and document management business and you want something that integrates with your corporate security infrastructure, your corporate network, your corporate directory, meaning active directory or LDAP, your corporate security systems, so that there's no leakage of these documents out to a separate Dropbox, if you will. We give you a secure file sync and share and a team workspace and collaboration environment. And similarly, we give you a social network. This is like a Facebook like tool that allows users to collaborate with one another across different lines of business and also allows you to post information to it from applications. Additionally, if you have applications in our cloud or someone else's cloud you want to integrate it with your on premise system, you can use our integration platform as a service.
Think of it as an enterprise service bus, that's the technical term that runs in the cloud that allows you to connect different systems together, route data between them, map data between them. And similarly, if you've got departments that want workflow, workflow is I need a bunch of screens, I want to build an application like absence reporting and I want to do that with a set of screens and a workflow engine behind it, our process cloud service gives you that. And then lastly, we've got 2 analytics systems, both designed either for enterprise IT or for departmental users. So one is a traditional analytic tool called Oracle Business Intelligence. So if you've got if you're an HR person and you want to do some spreadsheet analysis, you can take the spreadsheet, load it through this thing called a self-service data loader.
We understand the spreadsheets format, we create a database schema and then you can build dashboards, do analysis and publish it out to Excel as well as to mobile client. If you want to load data into Hadoop, meaning you've got a huge amount of data and you want to put it somewhere, you can load that into our storage service in the cloud and then use Hadoop from our cloud. And to analyze that, you can either run SQL on Hadoop, as I said, big data SQL, or you can run our big data discovery, the brand new visual tool to explore data for your business users. So there's a full range of analytics. And as I said, we have packaged analytics from our applications.
We've also introduced a new product called Social Graph Analytics, which which allows you to figure out which people are communicating to which people and for sales people. This allows you to bring contact contacts. Okay, so it's a full fledged platform as a service, broad suite, all the pieces are integrated together. They were all written on the ground up on one architecture and they're written all to run on the infrastructure as a service and here are some customers who use us for platform as a service. Now key differentiators.
First of all, we appeal to a number of different audiences for developers, for analytics, for departmental users and enterprise IT. For each audience, we have differentiators. So for developers, we're the only solution that gives you a developer collaboration environment, source control and 2 different market leading solutions, a database that leads the market for deployment of your data and your middle tier, the application server market leader to deploy your application code to. So the important thing here is we appeal to different audiences and for each audience, we have a complete solution and highly differentiated. We also use this platform as a service to extend our SaaS applications.
So if you're using our sales cloud or service cloud, you can extend those or our HR cloud or ERP, you can extend those out using our platform. And a number of other cloud vendors who are in SaaS do not have a path to go with it. And so this gives us an advantage over those guys. And also you extend it using standard Java, of which there are close to 9,000,000 developers in the world. So you don't have to learn a proprietary programming language to extend our SaaS.
And lastly, we also have integration from the on premise world to the cloud because our PaaS is also the same software that runs on premise. Mr. Ellison showed you how easy it is to move a database from on premise to the cloud. It's the same tools that DBAs use to move databases from one database to another on premise use the same tools to move up to the cloud. And opportunity wise, obviously, platform as a service is a huge market opportunity.
If you thought in the enterprise IT world, technology is this big and applications are that big, in the cloud they would have a similar ratio. And obviously, the technology offering that we have, the platform as a service, there's nobody's big in that market. So it's a brand new market. We offer the broadest breadth and we offer multiple market segments. Enterprise IT, we can sell to departmental users, independent software vendors who run on Oracle who want to move to the cloud, they can simply move their apps on our cloud, system integrators, developers.
So there's enormous number of segments in which they can apply. And then the differentiators, portability of workload, As I said, it's easy to move applications up to our cloud and back down. And so this allows you to use our cloud for many, many different scenarios. You want to do it as a backup environment, you want to do it for test development, you want to do consolidation, you can do it very easily. The second thing is our platform can be sold to our SaaS customer base to extend the SaaS And that's both a competitive advantage against other SaaS vendors, but it also gives us the ability to push our PaaS into a very big customer base.
And the third thing is because we offer all these pieces of SaaS to go PaaS together on one platform As a company, meaning as a customer, contractually, you get a single service level agreement, you get a single way you need to audit security, you get a single data center where all your stuff is running. If you want to do contractual reviews, it's one place to do it. So that also has enormous advantages for our customers. Now let's look at software as a service. So software as a service, we have continued to broaden out the portfolio.
Enterprise Resource Planning or ERP, Enterprise Performance Management or Hyperion, financial planning, budgeting, financial reporting, financial consolidation, a full HR suite, human capital management, recruiting, talent management, payroll, time and labor, absences all integrated together and then a full CRM suite, marketing, sales, commerce, configure price quote, order capture, customer service, field service, etcetera. Ms. Ellison went through a very long list of new SaaS modules we've introduced this year. And then finally, supply chain, all built on a common platform as a service and also on integrating our social relationship management suite. So I'll focus a little bit on ERP.
So it's a full ERP suite, financial management, financial planning, financial budgeting, financial reporting, financial analytics, plus cash and treasury management, travel and expense management, revenue management, stock total reporting, all written ground up on 1 architecture as one integrated suite. To that, we added project and portfolio management. This is the ability to project planning, project execution, project billing, resource management, task management, etcetera. So if you're a company like Oracle or a consulting company like Accenture, not only do you have financials, but a big part of your costs are in projects because you build them to customers. And so if you don't have this capability, projects and portfolio management, you really can't operate your ERP properly because most of your costs are associated with projects and you need a way to map people and cost to projects and manage them.
There's a full procurement suite, sourcing, contract management, Internet procurement, supplier management, supplier contracts, logistics and order management. And then finally, a supply chain. So we offer a full supply chain for non manufacturing companies. And we have introduced with Release 9, the first phases of supply chain for manufacturing companies. So for non manufacturing companies, we can manage your inventory and your costs.
We can give you a product master. We can configure price and coat it. We've got order management. Then we can manage your logistics and we've introduced transportation management now as a software as a service offering. So you can do 100% of all of this in the cloud.
Now here are some examples of things you can do with our platform to extend SaaS. So if you've got our SaaS apps and you happen to have E Business Suite or PeopleSoft on your premise and you want to mix and match analytics between the cloud and on premise, you can do it with our Business Intelligence Cloud. If you want to integrate your cloud with your on premise e business suite, you can do that with our cloud. If you want to build a workflow or a business process that spans the cloud and on premise, you can do it with our platform. So there's a number of things that we allow you to do, because we have one common platform that extends our SaaS offering as well and lots of customers are interested in that.
So people often ask me who's running your ERP cloud? Here are customers who run ERP in the cloud. You can see some of the very biggest companies on earth run ERP in the Oracle Cloud. Who's running your financial planning and budgeting module in the cloud? Here are some customers who run our financial planning and budgeting modules in the cloud.
So enterprise performance management in the cloud and frankly, we are the first one in the market with a enterprise performance management solution in the cloud. No other cloud ERP vendor offers EPM. Other questions I get are how many give us examples of customers who use multiple products from you in the cloud. So here are examples of customers who buy multiple products from us in the cloud. And here are customers who buy multiple portfolio from us.
So these are companies who have put ERP, HR, CRM all in the cloud with Oracle or ERP and CRM or HR and CRM. And so these are not small agencies or institutions. These are some of the largest companies running it, and they have taken multiple pieces of their on premise infrastructure and moved up to the cloud. Competitive differentiators in ERP. We are the leading financial planning and budgeting cloud.
That's easy because we're the only ones with an enterprise financial planning and budgeting cloud. None of the other so called cloud ERP vendors have that. 2nd, we have a highly scalable core financial management system. Our financial management system can run-in the general ledger 100,000,000 general ledger transactions an hour, Our competitors talk about being able to run 100,000,000 general ledger transactions a year. So it's a very different scale on which you can run financials in our cloud.
We give you integrated financial reporting. So can you generate your 10 ks, your 10 Q, your disclosures? In our cloud, you can't. In other people's cloud, you cannot. Project management, billing, so for professional services and project oriented organizations, we offer a full fledged project management, project planning.
You can do your Gantt chart for the project all the way over to you can execute the project, because we've integrated some of our primavera capability with our ERP systems. So there are significant differences between what we do with ERP in the cloud and that is why we have a lot of customers and I'll give you some of the statistics in just a second. So how big is this? ERP has traditionally been the largest segment of the enterprise software market And SaaS ERP for upper mid market and large enterprise, there are very, very few players in it. And so we have a best in class offering for upper mid market and large enterprise ERP.
And to be frank with you, as ERP transitions, ERP in the cloud will be proportionately larger to HCM or CRM in the cloud. And traditionally, it's been driven not by HCM. It's been driven by what the finance people in the company want, and it's largely driven by how good are your financials. So Oracle has a best in class offering, breadth of product, depth and scalability, industry functionality, which is very important, ERP and our user count is growing faster than anyone else. And the implication for our customer base is not only will it lead us to strengthen ERP, but then ERP in turn drags a lot of other pieces with it.
ERP drags HR, etcetera. Now we've introduced this year a number of new certifications to allow us to broaden our SaaS portfolio into government agencies, Department of Defense. We just announced at OpenWorld a specialized offer for financial institutions, which handle their regulatory requirements for security and auditing separately. And we have seen very fast growth. Just the past 12 months, if you look at the last day of OpenWorld last year to today, we added 2,181 total new SaaS customers, split between customer experience, human capital and enterprise resource planning.
If you look at our ERP number of 263, it's more than 2.5 times the other vendor who just published their number last week of 100. And these are not just customers that have come from the acquired products, these are also customers that have come from the organically built Fusion SaaS products. So if you look just between last OpenWorld and this OpenWorld, we've added new Fusion SaaS customer experience, human capital and ERP. All of the ERP customers by the way are Fusion customers because that's the only ERP offering we have. We didn't acquire anything in ERP.
And we have 5,400,000 new Fusion SaaS users. This is 5,400,000 new users added between last OpenWorld, the last day of last OpenWorld and today. So we are obviously growing very quickly. And if you look at how efficient we are operationally, in Q1 of fiscal year 2015, which is the last 3 months, we added 7,500 virtual servers, 45 additional petabytes of data, 6,700 new environments and 655,000 additional weekly users and we only added 40 people. So as we get scale, because our operations are so highly automated, I think you'll see that things look better and better.
So we wanted similarly to invite 3 customers up to come and talk about their experience with our cloud, Paul Cardell, Vice President, Corporate Operations of CTDI. Paul, please come up Patrick Benson, Chief Information Officer of Ovation Brands and Aaron De Los Reyes from Cognizant. Please come up. Nice to see you.
Hi, Sam.
How are you? Nice to see you. Aaron, please come up. Please have a seat. Thank you for coming.
So it's lovely to have you. So Paul, can you tell people what CTDI does briefly and then how you use our EPM cloud service?
Okay. CTDI is a telecommunications service company. We do engineering test, repair and logistics services for the phone companies, cable companies and the equipment manufacturers that make the products deployed in those networks. What we plan to use the EPM Hyperion Cloud solution for is to support what has historically been one of CTDI's primary business management practices. We've been in business for about 4 years and started with a single operation.
And the founder of our company had a philosophy that he wanted to know how the business performed every day. So from the early stages of CTI starting, every day they forecasted the P and L results of the operations. Over the last 40 years that's grown from one operation to 70 operations around the world. But the business management practice of forecasting our P and L, both revenue and expenses at the general ledger level every day hasn't changed. We've been doing that over the last 40 years through an increasingly complex network of linked spreadsheets with a lot of manual data entry.
And across our operations around the world, we have about 150 people that spend a good portion of their day, first extracting data from our back office systems and then inputting that data manually into those spreadsheets. It all rolls up and then we report how the corporation did previous day. Our plan is to use the Hyperion cloud service solution to replace that manual process with one that's integrated that is directly linked into our back office system so the data can be automatically uploaded as opposed to manually entered. And then it will speed the both the time required to do the process each day as well as the accuracy of the data because it will be a direct link between our financial systems and the forecast that we use to monitor our business on a daily basis. So we're looking for this to save us a lot of time and also improve our results as well as give us the time to use the data, analyze the data as opposed to just report the data.
Thank you. Thank you, Paul. Patrick, can you tell people about Ovation Brands and what you use in our cloud? Sure.
Absolutely. Ovation Brands is the U. S. Largest buffet restaurant chain. We have about 3 50 locations across the United States.
Started about 30 years ago and had explosive growth up until 2,006 when things imploded, couldn't sustain sales. The company filed for bankruptcy not once but twice. I'm part of a new leadership team that was brought in, in 2012 by our owners to really reinvent that business. What I inherited and what we are using the cloud for is to replace our outdated complete infrastructure that we have both from an applications as well as from a hardware standpoint. None of it was supported, very much outdated.
We are looking from the bottom up at all of our processes and really we're looking for something that was built on leading practices that we could take advantage of to help inform our business and be able to follow that and use that as the guide star as we deliver a new system and a new suite of solutions for the business. We're currently implementing ERP Cloud and HCM Cloud in rapid succession from a July I'm sorry, from a June 4 kickoff. 6 weeks later, we were already active and up and running in our conference room pilot 1 and we're in the middle of conference room pilot 2 headed for a Valentine's Day implementation for both ERP and HCM.
Thank you, Patrick. So you found the value not just that you could use a system without having to run it yourself, but also that you could then focus on some of the business transformation, new business processes, etcetera, similar to what Paul was talking about with what they're doing with financial management?
Absolutely. It lets us focus our internal energies and internal IT towards being business partners and actually delivering and understanding and advising and helping our business and really partnering with Oracle to really become the technical heavyweights to actually use technology to transform and reinvent our business.
Thank you, Patrick. Aaron, you lead the Oracle practice for Cognizant, one of the fastest growing system integrators and solution providers in the world. Can you tell people what got you interested in the Oracle Cloud Platform as a Service?
Great. Thank you very much. Cognizant has a very diverse set of clients. We operate in over 100 geographies and our Oracle practice has been growing compounded about 50% a year for the last dozen years. And we have a very diverse set of requirements on the PaaS side and on the infrastructure side and also in the traditional ERP spaces.
And we saw clients who struggled with bringing up instances, environments to do everything from sandbox all the way through Doctor. So we looked at these platforms holistically and said, well, if we can We can turn those time frames of provisioning down and running and packaging those together that normally take maybe weeks, months, sometimes never and turn it into hours and days. And so what we have internally, I have basically a Tiger team that every time Oracle comes out with either a partner release or a market release that will go live within 7 days internally and then look to trigger that as an offering to the market to our downstream clients, whether internally or externally.
Interesting. And so you're looking at the Oracle Cloud Platform not just for internal use at Cognizant, but also to offer that to customers
as part of your solution portfolio? Absolutely. And what we've done is really seen the development of a service management model as really Cognizant is just another big customer of our own Oracle practice. And we just provide the same Tier 1 services and we just use and launch the service capabilities internally first and then spin them out to the marketplace. And what we're trying to do is really package not just the platforms but and the services, but a whole SLA driven tiered level service that you might have whereas a large company in North America had once Tier 1.
When they expand maybe into another geography, they only want a Tier 2 service. We blend that together and get it out the door in days or maybe a few weeks, which obviously in go to markets now that's revenue.
And when we spoke as part of your decision making process, you were looking at a variety of different cloud providers. One of the things that got there were 2 things that seemed to get your attention. 1 is that the breadth of the platform that we offer, which means you have essentially one stop shopping. And then second is this portability between cloud and your on premise skills with Exadata and other systems. Can you tell them a little bit what you found there?
Absolutely. So we're a very large client of Exadata and Exalogic internally, running all our PeopleSoft, all our systems. So we came up with, in essence, a hybrid hosted cloud offering where we coexist engineered systems across the whole Oracle stack and all the Oracle Cloud products simultaneously. And we're able to create a tiered service catalog, So you can dynamically move up and down based on demand, price, priority, geos, contracting business, expanding business. And it allows us to really take a portfolio approach with clients both internally and externally.
And we see that as really going forward the dominant approach because you can scale up your business and you get a utility like flavor, but you also have Tier 1 capability when your business truly expands.
Thank you, Aaron. Patrick, one of the questions that's been common that we see a lot of people asking us is, in the cloud, don't people put ERP in 1 cloud, HR in another cloud and CRM in a different cloud? You guys have chosen ERP, HR in one place. You're one of the customers, the many who have now started picking ERP, CRM, HR, multiple piece of the Oracle portfolio. What value do you guys find business process wise, data retention and other reasons why to do that?
Gosh, there are so many. Not the least of which is access to real time information across all of those systems for our entire enterprise, not just from a financial standpoint, but also from an HCM standpoint as well as we're also Micro Symphony customers. So we also now have that integration, a happy accident. We're 2 thirds of the way rolled out throughout all of our stores with MicroSymphony. So the native and organic integration all the way to our stores really extends the value of that entire information chain into the stores and lets our operations actually take
some point. So your HR system being integrated with your retail systems helps you as an example?
Yes, absolutely. It's seamless. It's speed. It also has really accelerated the adoption, I'll say, because everything behaves and acts very similarly. It has a very similar presentation that is quite familiar.
So the change management is really eased tremendously by having everything that is under one umbrella, if you will.
And then Paul, when we spoke, one of the things you told me which struck me given I'm an engineer is I'm not a technical guy. How did our guys we often get the question, how are your guys how is Oracle's sales team reaching out to business people? Because your CFO said, I don't know anything about technology. You said, I don't want to know about the technology. I just wanted to run.
How did our guys do?
Well, the Oracle team that we worked with really spent a lot of time listening to what we needed them for. As opposed to a lot of companies that are going to use the Hyperion products to do either quarterly or monthly or annual budgeting and forecasting, CTDI was going to use it for every day. So we really wanted to make sure that the solution was robust because as I said, that's one of our primary business practices. We can't have that system down for a day. We have to report on our financial results.
We've done it every day for 30, 39.5 years. So they really listened to what we needed and understood that it was an uptime requirement that every day we have to do the reporting. And then ultimately they convinced us because when I went to our CEO and our COO and our CEO is one of the founders and he was there when it was one location, told him that we were going to change what has been the practice for 40 years. They basically said Oracle has to show us how this is going to work. If we're going to make that kind of fundamental change in one of our business practices, they have to show us it will work.
And the team we worked with actually built a prototype using actual data from one of CTVI's operations from earlier this year, spent working with 1 of my financial analysts put that together and that's what we demonstrated to our executive suite, our divisional teams to show that it would work and that's what made the sale.
Thank you again all of you for coming and thank you for being customers. We really appreciate it. Thanks, guys. Thank you. Thank you.
So just to close, we've always said that one of the things about the cloud is it allows us to take our software and give it to all the people in the world who want to use our software, but not run our software. And there are many, many more people in the world who want to use Oracle software than have the skills to run Oracle software, whether they happen to be in lines of business of big companies, in countries where there's a demand for IT, but there's not skills in operating IT. And here you heard from 3 customers talking about their experience with it. Now next, I'd like to invite Steve Miranda from my development organization. Steve, come on up.
And Steve is going to go through human capital management and customer experience in the cloud. Steve? Thanks,
Alex. Okay. Thanks and good afternoon, everyone. So I'm going to cover 1st HCM, give you an idea of the product update, what we see as our key strengths in the product and then differentiators. Our customer panel for the HCM very similar to what Thomas has had to give you their experience in our HCM cloud business and then do the same for our customer experience set of products afterwards.
Okay. Again, to reiterate what Thomas said, for full context, the HCM suite of applications is part of our overall suite that includes HCM, ERP and CRM or customer experience set of applications, built on not only the same technology set, same platform, but sharing the same database, same data structure on the same platform as a service and infrastructure service capability, which affords customers ability to not only today be able to run multiple pillars together as was just described by Ovation running ERP and HCM and CRM together, but also the ability to start in HCM and expand at the time that they see fit. Within our HCM applications, we believe it's a full and most comprehensive suite of HCM applications on the market today, bar none. It concludes global human resources, which I'll drill down on what we mean by global very explicitly, because I think it's important differentiator distinction from any other competitor. Workforce reward, so this is talent management capability for performance reviews, appraisals, goals, etcetera.
Workforce management, that includes things like time and labor and absences. So it's critical if you get into unionized industries or if you get into European countries which have particular labor laws and rules for tracking time and regulation of how we have to take or not take or allocate vacations. Talent management which includes recruiting as well as learning management for both regulatory industries and in other corporate environments for learning. And then social and key here is it's social completely embedded into the applications, not just social collaborations as an add on. And probably the most explicit example where that becomes critical and in fact, I would argue today, it's already table stakes in HR with social integrated is in recruiting.
So it's a very simple example. If you have today in recruiting, pretty much any industry, any corporation, their number one leads for recruiting are internal referrals. With social and our social integration recruiting, when you post a job requisition or a job opening, any employee in the enterprise is allowed to share that automatically through their social streams of Twitter or Facebook or Google Plus to all of their constituents or their friends or followers there. And then we track the responses so that if you have things like employee incentives to do recruiting that is capability automatically built in and track for that reward. So that doesn't sound like anything that's out of the ordinary, something that's table stakes today.
If you look at anybody looking for a job today, they're looking at job boards, they're looking at Twitter, they're looking through their friends and any corporation that's their number one and most reliable source for external talent is employee referrals. But without the ability to embed social, not just chat into the HCM applications, you don't have that capability. So it's kind of table stakes to expand our recruiting suite of applications. Again, all built on a single set, all key on a universal employee master. So you'll notice Thomas talked about our uptake in terms of overall customers through acquisitions as well as Fusion applications.
So in the HCM space, we had our Fusion applications that we've prebuilt and we augmented that with Taleo recruiting an acquisition. But today we refer to it as a collection as a HCM cloud, a complete HCM cloud because we've taken that Taleo infusion components, we've done the integration, single sign on, single technology stack with a unified customer master. So our customers don't need to integrate the different cloud aspects. It's a unified complete cloud management system, which takes the best in class features that we had from Taleo and integrates that with the best in class features we've built into HR. So some key capabilities with HR.
First off, for context, we have thousands of customers and many of the opportunities that we have out there today in HCM. It's a rare case where somebody doesn't already have an HCM system going forward or to start with. So one key capability we offer is flexibility into deployment as far as how you get to the cloud. And generally speaking, we offer and recommend to our customers 3 different distinct paths. 1st is the capability to start and deploy talent management in the cloud and integrate back to a core HR system of record on premise.
So example of many of our customers will take recruiting or talent management compensation, move that to our cloud and with our prebuilt integration continue to maintain their core HR and payroll in PeopleSoft. 2nd step, which could be joined for some customers is they take talent management recruiting compensation as well as core HR, move that to the cloud and integrate back to an on premise payroll system or third party provider payroll system at other parts of the world. And then 3rd would be where you do the entire suite migration together, talent management, core HR and payroll to the cloud. And this flexibility is a core driver that we can go to all of our existing customers and new customers to give them the flexibility to move to the cloud when the time makes sense for them and where they get business value for each particular component and that meets with their timeframes. The next part is it's talent centric.
If you look at where the value is today, much of the value in core HR is not just in the records management. Of course, our core HR capability has things to have org charts and titles and their job codes, etcetera, etcetera. But key to it is managing your talent. It's everything from finding the right talent, again, through recruiting, including social recruiting, compliance on the recruiting. So if you have things in the United States, for example, you have to recruit and show that you put out certain interviews to different classes of employees or have recruit from different areas, etcetera.
But on through into once that employee is onboarded, having a seamless employee experience that set goals for that employee, track the attainment of those goals and then with business analytics and prediction feed that right back. So for example, some of our customers who are in retail, they have an annualized cycle for retail and recruiting, which basically means they ramp up staff for the busy Christmas season and then they ramp down staff subsequently. A big component of their HR system is how they do the interview process during that critical time right before Christmas to ramp up the staff. With integrated recruiting as well as talent management, when the staff comes on board for Christmas, they evaluate that staff going forward. Those who score well, who are good employees during that Christmas season, they also have the employee social handle.
They can then publish through social the subsequent year. And in a sense, the next year, instead of having to interview everyone all over again, they take the employees who did best. They send them feeds through their Twitter or Facebook approach for new employment the subsequent year and they substantially cut down on their interview cycle in the next Christmas season and they substantially increase the effectiveness in their employees because they're only publishing that to their most effective employees. So the tight integration between recruiting, talent management, core HR and social together with the business intelligence gives a closed loop heavy value add proposition to customers beyond what you might think of as classic HR record keeping, if you will. The next is modern user experience.
So hopefully some of you have a chance to see both our UI from last year and our UI from this year. So we feel very strongly that our user interface across HR is best in class, but probably more important than best in class today is the speed at which we are able to improve the user interface, not only in the browser, but in mobile capabilities. And I think one thing that's not very well understood is the importance in that speed of the technology platform and why we make such a big deal on building on standards today. Because when we built Fusion applications for V1 several years ago, we built with Java standards supporting HTML and HTML5. At the time we were building that just in the mobile device capability, for example, the primary mobile devices predominant market share was BlackBerry and iPhone.
Android did not exist as an operating system on the market today and tablets did not exist, much less the different tablets that are there to say that multiple flavors now for Windows, Surface, etcetera. We were able to improve our UIs not by rewriting UIs from one technology to the other, but because we picked standards to build the user interfaces, standard Java, standard HTML, we knew that those technologies would run on the most modern user interfaces. And so we were able to deploy a build once, deploy many methodology so that we very quickly had the same product running on iOS, Android and now as the Windows Surface starts to take hold Windows Surface. And as things continue to change beyond what's tablets to wearable devices or the watches, whatever the next device that may come, we feel extraordinarily confident based on history that by basing it on standards, the new devices will run those standards and we're going to be quickest to market in terms of best in class user interface today as well as whatever the market may bring for standards going forward. And then for some innovation, we've added to our core HR applications what we call work life applications, which are basically gamification type of apps in HR.
So allowing your HR department to do things to integrate with like the Fitbit devices, to do employee rewards for how many employees. We actually ran a contest at this session here at Open World in our HR track, where we gave out prizes and track the leaderboard using our own applications of who took the most steps in the conference and other health type related items, which is increasingly important for two reasons. 1, as a new millennial workforce enters the workplace and the corporate workplace, they're looking for a more complete experience in terms of not only work, but work life balance. And 2, for the employee, for the corporate kind of encouraging these type of things and work life balance as well as health is a substantial reduction as far as healthcare costs, again, something not commonly thought of as common within HR. Now differentiators, I talked about the complete suite.
I mentioned I was going to talk a little bit more about the broadest capabilities in terms of country support. I think what's important to understand in core HR, particularly when you talk to any other vendors in the cloud space is when we say we support the countries above, it's a couple of different dimensions. What most people talk about is what I would consider table stakes. We translate into a little bit over 2 dozen different languages. We support multiple different date formats.
So in Europe, they put the day before the month or vice versa. We of course have multi currency. So you can do raises and run payroll in multiple different currencies. We support global operations. So that means when if I'm in the United States, I can view your salary in U.
S. Dollars. But if I have an employee who happens to work in China, obviously, and a manager who works in China, they see the employee's currency in a dollar or in a currency amount that makes most sense to them visually. So those are kind of table stakes areas. But in HR, where we believe we're far and away the leader is in global compliance.
So these are rules and regulations that different countries set for HR. So in other words, in the United States, if you hire somebody, you are allowed to collect certain types of information, whether it's types of information about a marital status that you may need for benefits or health status for benefits. In Europe, you're allowed to collect different sets of information, in some cases mandated to collect different sets of information. Now the people who can see that information varies. As a benefits administrator, you may able to see lots about information about the employee beyond their work criteria.
However, as a manager of that employee, you're not allowed to see that type of information because you can't have that influence your management. So that has one complexity to it, which is, by the way, those regulations are constantly changing. And when you run-in a global environment, they're really constantly changing because every country has a different time period in which those rules and regulations change. So we have a dedicated staff from our history of development in this space that keeps up with those. Further complicating the issue, if you're a global organization like ourselves, where I'm a manager in the United States, but I have employees around the world, all of a sudden we have people in Europe who they are allowed to collect certain information that if they were an employee in the United States, we couldn't even collect.
And so we have to have the flexibility and the legal requirements there to comply with the fact that I can see certain parts of information, payroll needs to know other parts of information, the benefits administrator may see a third part of that information, all of which in a global nature. And in a global world that we live in, if that person happens to transfer from one country to the next, we have to make sure to comply with not only the data privacy issues, but all the regulations I just talked about before. So that is what we feel as beyond table stakes for global capabilities. And we support basically every country in the world with statutory requirements as well as the ability to extend those statutory requirements. I talked a little bit about the social network integration as well as predictive analytics when I went into my talent management example.
So in terms of momentum, a little bit of subset to what Thomas said, in terms of total customers in our cloud today, we have over 5,000 customers total, over 900 of them are new and by new we classify over the last year basically since last Open World today. To give you some context to that scale, we have over 4,000,000 job openings that are posted in our recruiting cloud today with over 450,000,000 candidate records. So these are people who have applied for jobs whose candidate record is in our cloud through job applications. And then for speed of innovation across our cloud platforms, we've had over 10 releases over the last year, bringing faster and faster innovation in all dimensions that I talked about to our customer base. And here is a subset of the customers that we have on our HCM Cloud.
You'll see and you'll notice in just a moment from the very largest to some of the smaller companies, global companies, as well as local companies in just about every country in the world. Okay. So with that, I'd like to invite the panelists to see where they were to join me on stage. So first, let me introduce Melissa Fuller. Melissa Fuller joins us from Master Instruments.
She's their HR IT Manager. Next is Adhir Mathieu. Adhir is the Vice President and CIO from PMC or PMC Sierra. And then we have Darryl Zebesta, best I can do Darryl, okay, who's the CIO and Group MD of BT or British Telecom. Thank you.
Thank you all for joining us. So let me start here with you, Melissa. So obviously the audience definitely knows about National Instruments and what you do. But I wonder, could you give some context into your role and kind of the HR perspective? So you talk about the HR cloud, how many employees, countries, kind of the profile for NASTAR Instruments, is that the context?
So as you mentioned, I'm the HR IT manager And I'm in charge of the technical side of managing the systems for our HR platform. And the landscape at NI, we're in 7,100 employees over 40 countries, 3 major manufacturing facilities globally. And we're headquartered in Austin, Texas, and we're growing. We're a $1,100,000,000 company and have double digit growth than we have for a very long time. So our landscape is changing and the challenges for HR just gets steeper and steeper every year.
So it's an interesting ratio to a number of employees, a number of countries. So a lot of broad compliance with maybe not a lot of ability to have HR support in all those countries. Yes. Okay. Adhir, can you have this similar with again PMCCR, I think most people everybody's familiar with the company, some background on the HR part of things.
Sure. So PMC, we are a fabulous semiconductor company. And I think everybody knows these days what big data is all about. So when you talk about big data, you stored big data in servers and storage and there are networks involved. You're transferring big data between data centers, so there's network involved.
All of us carry smartphones and tablets and these days, tablets. So all that data gets transferred over the mobile networks, so big data is involved. So what PMC does is basically we are innovating and transforming those networks by designing and manufacturing and supplying chips in those areas. So very, very exciting growth potential for PMC. Now in terms of our overall size, we are about 1500 employees globally.
We are close to 18 countries and that number keeps on changing depending on M and As and those kind of things. Now a very, very high some of our chips have like 350,000,000 gates on one single die. So obviously, from an HR perspective, what we wanted to do was ensure that we empower our HR business partners so that we can automate most of the manual transactions and processes and give them more time to focus on more strategic business objectives. So for some context for
the audience, but not here answers a few upcoming questions. When he talks about engineers, we are using our system and software. That's the category of people who often give us the most, let's say, feedback on what our software should do. So keep that in mind. We get that feedback.
For BT, again, well known global company, can you give us the size and the HR perspective from British Telecom?
Sure. Yes. We British Telecom, we operate in over 170 countries. We have roughly 90,000 employees and probably half as many, again, 3rd parties 3rd party partner workers, large number of engineers, actual field engineers as well. We serve all sectors with all types of service, so small businesses, consumers, right through to our competitors actually.
Within the U. K, we're highly regulated. We have Openreach, which is a last mile provider for the U. K. Essentially.
From an HR perspective, we are well, we're transforming as a business launching new services, multimedia services, etcetera and transforming away from traditional telco type products. And within HR, we're transforming the model from 1 which is a high torch HR business partner model to more of a shared service center self help kind of capability, so that everyone gets support. So we're going through that transition and transitioning platforms at the same time.
Yes. Well, 90,000 employees and how many partners and affiliates, you almost have to, right? You can't scale to anything but self serve. Yes, absolutely. Melissa, maybe you can talk about I think some people maybe think about HR as kind of the record keeping part.
But can you give us some of the business challenges or opportunities? And what was National Instruments really looking to do as you deployed the HCM Cloud from Oracle to business opportunities? What was the kind of business driver behind it?
Well, as I mentioned, we have we also have a lot of engineers. But we're really growing and we are getting increasing demand from the business to provide information and provide services that in our old platform, our big EBS shop and we had Oracle HR there. Even with our very, very limited team resource team, we couldn't do it. We couldn't we weren't agile enough. We couldn't navigate through our EBS platform to do it.
So it's our real opportunity to meet the needs of the business in a way that a very small team can deliver it up to them in a meaningful way that's mobile and with them and doesn't require a lot of technical coding, a lot of process to get it out there. So this is a big opportunity for us.
Could you
maybe give the audience some context on the timing of how things went moving from the on premise to the cloud type of application?
Yes, absolutely. So from RFP to go live was about 14 months, I think, about give or take. And our actual implementation was about 12 of that. So it was we had a lot of we're commissioned through HR systems and consolidating and transforming our data at the same time. So this is the biggest part of our challenge.
Consolidating 3 to 1, getting to an agile system, changing business practice, 12 month and then on premise cloud. Yes. Impressive. Here, how about from PMC, the business challenges, business drivers? And I think also you may have another be another customer who's looking for an expansion beyond HCM.
You want to talk about kind of your thought process as a CIO, a broader perspective, what was the business challenges and why consider Oracle Cloud?
Absolutely. So like I mentioned earlier, our company is seeing a lot of potential in growth because of all these big data and all these new technologies which are out there. So obviously, company
is growing and then they
look at IT and saying, okay, so what are you guys going to do as to help us scale? So I think from as far as scalability of systems and processes and those kind of things, these are these days par for the course. I mean, these you had to do. But and then obviously, I think as we all know, cloud technologies that help you get scalability, flexibility, quickness and implementations and TCUs and all these good things. So we do have a digital blueprint in terms of digital transformation.
And as part of that, we also sat down with our HR folks and we have HR transformation. I think that's the word these days in the air. So we got that figured out. And then what we said was, okay, as part of this deployment, what we want to do is we want to like I said earlier, we want to enable our HR business partners with actionable intelligence. I know that's a highly loaded word, but what that means is make your transactions automated, put workflows in place so that you're not spending your time on manual things, but giving insights into the business how it works so that we can like I said earlier, we have all of us have engineers.
We can retain top talent and we can basically help business grow. We can because a lot of times we have number of R and D projects going on. So quicker we can source engineers and put them on the projects so that actually helps the company. And then being in the semiconductor business as I think many of you know there's a lot of consolidations, M and As and those kind of things happening all the time. So one of the things for us was that whenever we acquire a company or whenever we develop a new product that is supposed to go in a new market, do that very, very quick.
And the last thing I want is IT to be a bottleneck to make that happen. So that was another thing that we wanted to ensure that we have cloud systems and particularly HCM that can enable us to do that. And obviously business continuity, security, compliance, we wanted to ensure that we got that.
Scale, global solutions, speed of business intelligence and then business continuity.
Exactly, exactly. And I know many companies have these distributed standalone systems. So what you wanted to also do was and that's very important have an end to end integrated system because that helps you get the analytics quickly.
Daryl implementing cloud or any HR system, a cloud HR system for 90,000 plus employees across the globe. Can you maybe give the audience, again, what were the business drivers behind that? And then I think importantly, how you start thinking about a project like that and the different steps along the way and moving that type of organization size and scale to the cloud?
Yes, absolutely. So as we transform as a business, we need to bring in new talent and develop the talent we've already got. Our model was very inconsistent, non standard processes across the world. And as a consequence, a heavily customized on premise solution, PeopleSoft actually. So we had something like 114,000 customized elements in that platform, which made it almost impossible to allow us to change.
The intent was to change our model our HR model to be more modern day in terms of the practices, but also standard across the world And without transforming to a cloud based solution that would have been impossible. The way we embarked on that and this is critical to success is having a very close relationship with our HR colleagues. It's not an IT program. It's a business program. It's a business transformation program.
And one of the key things in terms of moving to cloud is ensuring that it's obvious statementless, but ensuring the processes are rich enough and supported by the platform to so it's configuration rather than development. So and that's where we embarked really. It's around standardization of processes what we wanted the processes to look like. And to a large extent, we took the out of the box ones from confusion, applied those to the organization and from that point onwards derive the ability to configure. So that's fundamentally the approach we took.
And as a consequence, it's not just a good thing to do. It makes big financial sense for us. There is a lot of wastage within the HR community, people doing a large percentage of repetitive transactional tasks rather than adding value. So it's allowing us to transform the HR community to actually helping the people rather than just generating reports off spreadsheets frankly.
It was costing you more to actually go slower with the
solution? Yes. I mean,
yes absolutely. It's we worked out that probably in excess of 40 percent of people's time was just doing mundane transactional tasks. In order to create an end to end people report, given the complexity of our organization, it took 18 days of manual effort, which was immediately out of date. So it will be the press of a button going forward. And we're fully integrating it with a similar finance transformation.
So it will be end to end and consistent.
And did you say 100 PeopleSoft customizations or? 114,000. So we went from so just to give you a sense of the for the scale and the breadth. So we went from 114,000 PeopleSoft customizations at a 90,000 person plus company to the HCM Cloud. So that you can ignore everything I said about the depth and the breadth and just take that as the testimony to it.
We did a compliance of Fusion functionality against our bespoke system and there was a high 90% high 90% match in terms of functionality. So it's it was a no brainer in terms of the choice for us.
That's great. Maybe just in time, just a final question. You've been live. You had it running. What's the feedback?
How are you on your path to achieving the business objectives you had for making the transition to Oracle Cloud? And how has it been working with Oracle as opposed to working in the on premise world? You've been an EBS customer for a while. You work with
our development team. Maybe you
can describe some of the changes and results.
Sure. So as you mentioned, we've been live since Q1 of this year. And with our go live, we also implemented the shared service center. So we went from about 100 folks doing HR data entry globally, to down to 5. So in addition to scrubbing our data and getting it in there nice and pretty and clean, we also have team of people that's dedicated to keeping it that way for us.
And so as a result, we've been able to make really dramatic improvements to give the business, which is one of our big goals, to give the business the data they need when they need it. Before we started down this journey, we were 3 instances. As I mentioned, it would take 2 weeks to get a headcount report, which I learned is actually pretty fast for some companies. So but this was very slow for us. So we're less than 100 people globally in HR.
So it was a very long time to take 2 people down for 2 weeks. Post to go live, almost instantly, we took the headcount down to about a day and now we're down to hours, one person a couple hours to do it. So this is a big deal for us and our VP is extraordinarily happy about it. It's overall, we've been able to streamline our processes and really being people access the data, we can literally turn around and do it really quickly in a very meaningful way to not a lot of data transformations. And the second part of your question.
How's it been working with the development group in the cloud and it's different? It's been perfect. No.
I got lost in my revelry on recording. It's been really amazing. And I will say we struggled a lot of the promise was we are helping get through this, we help you get through this. And as an ABS customer, this is a really hard thing for us to recognize that we have really excellent partners to guide us through saying, when you're stuck, you have to ask us. This is the cloud.
You have to ask us. We appreciate you love doing the things yourself, but this is different now. And everyone every promise that in every place that we've been offered help, we've gotten it. And it's really enabled our success so far. It's been an amazing journey and we've had amazing partnership above and beyond that we ever thought we'd get.
Great. I want to thank you all for being our customers and partnership through this transformation you're all doing and thank you all for being here today. Appreciate it. Okay. I'm going to switch over to CX.
I think from that you kind of see why we had some customers come in and speak on our behalf. Some of it, I'm sure if I would have said those timeframes, you wouldn't have believed me. So I'm going to shift gears to CX or what we call customer experience to CRM. Once again, part of a complete portfolio of applications and our CX in the cloud or customer experience in the cloud is inclusive of marketing, sales, configure price quote, e commerce, service, social and a marketplace. Again, based on the same common foundation platform as a service, the same extensibility, same infrastructure service to extend the application.
Now, before I get into the details of not only a footprint, what we think are distinction, I think I want to make a point. So what is commonly covered in the CRM or customer experience space is of course the big transformation to the cloud. And from a software perspective, this is definitely the leading set of applications that have moved to the cloud. But what I think is underappreciated and why we believe that it's our strength is in the complete end to end suite, including social and data as a service is over the last several years fundamentally the way we buy, sell, service and market our goods and services has changed dramatically. And I'll give you all kind of a personal example, if you will, that I hope you don't face in the next couple of days, but unfortunately some of you likely will.
So you're at an airport and your flight gets delayed. What used to happen? Your flight gets delayed or flight gets canceled even worse. You used to have to call the airline. Inevitably that phone call would be longer than normal wait time.
So you're on hold for the wait time and then you try to surface through that interaction. More and more today, you're at that airport, I would actually encourage you or personal advice to not call your airline of choice, but instead to go to Twitter and to tweet them because you will get a much, much faster response because what airlines are especially sensitive to their customer service and perception. And while you may be on hold for 5 minutes, that's a pain that you feel and you alone feel on the phone. What they found is in the Twitter universe, not only when you put out delay on your Twitter, you get the bad experience, but anybody who happens to be following you, all of your friends or colleagues also get that bad experience. By contrast, when they respond quickly, they notice that they get better scores on customer experience going forward.
Now let's explore what happens behind the scenes. They respond to your Twitter question, they route you to their website, you rebook the flight. Okay. All goodness there. So what's happened behind the scenes?
First part is service. So customer service has changed from what used to be call centers only, then what became knowledge management center. So where you route them to your website and you'd search for flights, etcetera, to now what's called listening centers, because you didn't call them, you posted something, a complaint, an issue on a social network and it's listening centers and responding in the context of that listening center. That's the fundamental change in the 1. But once you've contacted that customer and if you went to their website, all of a sudden you'll probably start to notice something else.
If you went and looked and booked your flight on any kind of website or you're shopping for a computer, what you'll start to notice is within 24 hours on your Facebook page or on your Twitter stream or in your email, you will start getting advertisements. If you're flying back to New York, you'll get an advertisement for hotels in New York or car rentals available in New York or museums to go see in New York or plays that are available in New York. That is no accident and it's no coincidence. What happens is they have your Twitter handle, you've gone to the website, they have a cookie, They've tracked your activity, so they have information about you to know where you're going and they market to you. And this has changed from what used to be spray and pray marketing, basically segment employees or populations of people and they try to send out advertisements and buy television ads and try to measure hit rates to very targeted, very digital marketing interactions.
So now they send the same type of interaction, but they don't send it to a random set of people or somewhat random set of people. They send it to somebody they know who's traveling, they know where you're going. And oh, by the way, they know your credit information, they know what other interest you might have going forward. So they take that and they personalize the offer directly to you. So what's changed there?
And now if they have a direct sales force, so if you were a buyer for a business and a business to business case, not a business to consumer case, they can then take your response to those interactions. If you read the email, they can send you another email because you didn't click on it. You read it, but you didn't do anything. If you read the email and click on the offer, but went to their website and didn't go anything, they may actually have a direct salesperson call you because they know they got some interest. So you can fine tune and tailor offering along the way.
So our customer experience offering is not just sales force automation and contact management in the cloud. Of course, we have contact management in our Salesforce. It's not just an ability for salespeople to enter their quota or their forecast in the cloud or manage to report on it. It is a comprehensive integrated set of applications that ties together service to marketing to sales to feed that sales rep its precise point to contact you and it integrates not only data that the company has, but 3rd party data and tracks you digitally on a go forward basis. So it's our data as a service integrated with social, integrated with service, integrated with marketing, integrated with sales that fundamentally changes the way things do today.
And you can see this today in your personal life. Again, you want to experiment, go to any website, shop for a PC or a computer within the next 24 hours, if not less, nowadays probably less, you'll start to see those advertisements. That behind the scenes is very likely Oracle Data as a Service in the cloud, tracking you with cookies and Oracle Marketing as a Service in the cloud, sending you emails or allowing our customers post advertisements. And as you interact with those advertisements, you'll start to notice you get finer and finer, more granular, more precise marketing, which again is our cloud marketing system integrating with that going forward. If you are in the context of a business to business, you would see the same thing and then we'll follow-up with a direct salesperson in our sales cloud.
That's what we think of as customer experience. So what do we do with these are key capabilities? First of all, to have all that, you have to have a unified view of the customer, having marketing, sales, e commerce and service operate on the same definitions of the customer, including householding. So if you're in a family, we target the family as a whole unit, not as a distinct customer. Complete and multi channel business to business as well as business to consumer marketing by multichannel that's not only email, but that's display advertisements, that's advertisements on mobile if you have a mobile device going forward.
Role based Salesforce automation, that's not just quota management or forecast entry, but that allows direct and channel sales to be able to operate with data, which we give them better leads and have an engineered selling process to allow sales reps to be more effective. Because still today, the number one issue in sales force automation is getting the sales reps to actually use the system. Why? Because the systems up until now didn't help them sell. By integrating those better leads and better marketing and better engineered selling, it helps salespeople sell.
And if you help salespeople sell, they use the system better and you get better information going forward. We've now integrated that with our CPQ, which allows you to offer complex product bundles, including pardon me, pricing and contracts, best in class knowledge management. So in the case where you still have to go to the web for a service request and search for an FAQ, Again, you've all done this in personal experience. You're looking for something, you search on the web, you rate the answer, that answer gets scored better. Now it's called knowledge management integrated with our service capabilities.
And then we've taken all that customer experience and integrated it not only to the CRM components with each other, but tied it back to our ERP systems, both ERP in the cloud that Thomas Kurian spoke of earlier this afternoon, as well as our on premise system. So if you run our CRM in the cloud and still have our ERP on premise, you have that integration so that orders flow through to the integration. And then below it all, if you need to extend our customer experience applications, you extend that with a standard base platform as a service. That means you do not have to rewrite any extensions you've had in your CRM systems today. It's simply a redeployment of your existing database application or Java application or any third party application, just as Larry Ellison showed you on his keynote on Tuesday.
So some differentiators. Again, many of our competitors have a standalone CRM component, but haven't had the pre built integration between CRM and ERP. We think that's a critical piece. The whole goal with CRM is ultimately to get customers to actually place orders. Once that order is placed, you need that integration for ERP for fulfillment and billing and accounting, a critical component.
Powerful business analytics. So the example here I kind of gloss over. In our sales force automation system, we've introduced a concept of engineered selling and it works as follows. When you have the capability of having better, more targeted leads in the sales system as I just described, You can then give the sales reps individual steps that you recommend they follow because you have a very precise customer target you're going after. What we do with that is we measure the effectiveness of those individual steps and driven from those reports centrally, you can then remove steps, add steps, modify steps and learn from the selling process.
So as you have presentations or demonstrations or product discounts or product promotions, those that work in engineered selling process, you expand and those that don't work, you contract or eliminate. So by having the data, not only the better leads, but then be able to engineer the selling process, you can start to fine tune your sales process centrally through business analytics and offerings. We have the only cloud competitive market that offers both business to business as well as business to consumer capability, particularly in marketing. We have an integrated multi channel marketing, including sales intelligence tools across those. Again, I talked about the simplified UI and UI experience.
The same thing that I said for HCM holds true in CRM and CX. It's just magnified more because mobile is so much more of the default platform for sales. And then a highly differentiated cross channel customer service. So cross channel that again means we could take the phone call if you have a service request, we can route you to the website through knowledge management for a service request or we can do it through social listening in the different social platforms, the same request and deal and interact with the customer cross channel. Our CX momentum, this again over the last year, we have over 4,000 companies using our CX in the cloud.
We've added 1100 companies in CX over the last year. To give you an idea of the scale of some of our clouds within our service request cloud or our service cloud, so this is if you have problems or issues or questions for your vendor, We handle over the last year, we handle over 2,300,000,000 service sessions annually. So these are kind of ticket service requests across our service questions. I talk about our marketing cloud. So this is the ability to multi channel marketing and target very precise marketing to people.
In 2013, our marketing cloud sent over 89,000,000,000 emails for targeted marketing on behalf of our customers for market and that's precise targeted marketing, not kind of a random spray. And of course, we operate in just about every country in the world for CX. This is a list of the customers. And in this slide, we've broken it down a little bit because in the customer experience area, so much of what you do varies. I've mentioned B2B and B2C couple of times, but also varies across industry.
Some industries are obviously much more heavily service oriented. So you have a service component coming in. Other industries are much more where e commerce comes into play with a B2C type of thing and you route them to e commerce. Others have a direct sales force and you'll see we have strength in communications, financial services, manufacturing, automotive, high-tech, consumer goods. And again, once again, some of the biggest brand names in the world, some of those global companies in the world on down to relatively small customers as well.
Here are some more examples of customers on a customer slide. So with that, I think for my final section, I'm going to again invite a set of our customers up to talk to you about their customer experience using our Customer Experience Cloud. So please, if you can join us. So for this, from your left to right, we have Jim Faron. Jim is the Principal Customer Experience and Commerce Architect for Nintendo.
And Jim has used our Service Cloud both now and in a previous role to talk about. We have Hayden Mugford. Hayden is the Director and 1 to 1 Marketing Programs nurturing and retention for Dell, who's got some very interesting stories and use of a number of our marketing products. And then Ralph Van Dyke, Ralph comes to us from Atrides. Ralph is the Global Commercial Director, using both our sales force automation and the sales force and marketing going forward.
So thank you very much. Welcome. So in this panel, CX is a broad portfolio, broad portfolio of things that set context. We kind of split it up a little bit of service, a little bit of marketing, a little bit of sales. So Jim, you start with service.
And can you give us I think everybody knows what Nintendo does, I'm pretty sure. But your role, what does service mean at Nintendo, the type of service requests that come in and the kind of broader give us some context of size and the scale of the service problem
at Nintendo?
Sure. So most people are familiar with the Nintendo brands. We hope so. And Nintendo, from a service perspective, is actually undergoing tremendous change in the interactions that we have with our customers. Previously, and by previously I mean up until about 24 months ago, most of our interactions had to do with technical support, troubleshooting for a connectivity issue or troubleshooting for a hardware problem for their home console or their hands console, gaming console.
But about 24 months ago, that the nature of those contacts began to change and they changed really for two reasons. One is that the complexity of the interconnectedness of the device has changed dramatically. So it's gone from a simple troubleshooting process to a home network troubleshooting challenge. But secondly and probably more dramatically impactful to the team at Nintendo, the interactions with customers is that we are now the merchant of record for many of the customers' digital purchases. The customers are shopping from their devices, purchasing digital products.
And for the first time, they're swiping their card with Nintendo as merchant of record, which means the nature of the inquiries changes quite dramatically. The other thing about that change is that it goes from what I'll call a many to one to a one to one type of scenario for service solution. In product troubleshooting, one answer contained in a knowledge article satisfies the needs of many customers once we identify what their challenge is. But when you're talking about a service inquiry, the answer is now contained in a database record regarding that transaction. It's no longer served up easily by an article.
So that's kind of some of the changes that have really caused us to take a look at the technologies we have, the methodologies we employ to determine what kind of platforms we needed moving forward.
It's kind of interesting that the device, if you will, has almost turned into a is a computer and it's turned into kind of like the e commerce console for a number of things now for Nintendo, really broadened.
Yes. And a conduit for other things other than gaming as well, right? As video on demand grows in popularity, it's the entertainment device
of the living room. Right, exactly. Hayden, from your role as the one to one marketing program, maybe can you before describing the solutions, just give us a background size and scale. Again, Dell, I don't think you'll get any introduction, but size and scale of what Dell is doing with the customers and the challenges in the 1 to more marketing, the ultimate goal that you're trying to achieve?
Yes. So again, I think we're probably familiar with what Dell does as a brand. What we've really been focusing on is trying to become more of a solutions provider. And when you talk about moving from a transactional business, to 18 months? And how do you watch your customers, to 18 months?
And how do you watch your customers consider, demonstrate behavior on multiple topics? So we saw a variety of things. We can see behaviors where customers are researching storage, cloud, laptops, tablets, and they're doing that across a variety of areas all at the same time. We want to provide very targeted information back to them. And in terms of if we see behavior demonstrated online with cloud, how do we respond to that versus if we see it offline somewhere else, how do we respond to that?
And when you talk about millions of customers and millions of behaviors being seen on a daily basis across the globe, finding scale and how you treat one to one communications is really important.
Okay. So you gave a little tease and I just want to make sure to follow-up on that part now. So could you talk about following people both online activity, what they're interested in and also offline activity. Can you give a description of how that works and some of the components that you're using to do that?
Sure. So we leverage Eloqua for a lot of our triggered responses, leveraging both online and offline vehicles. So we have started not modifying, shifting the use of Eloqua to be a command and center to deploy all of our go to market vehicles, both online and offline. We're also a big user of Bluekai, which helps us with audience creation in the online space with anonymous programmatic media buying as well. So we're looking at behavior, capturing it in a variety of ways and then triggering out responses with dynamic content modules back out to those customers.
Okay. Yes, I had to change my example. I usually use actually the Dell example when I talk to customers how to do it. I say go to Dell's website, go shopping for something and you're going to see advertisements that target e mail precisely on what you target because of Eliqua's use of both Bluekai tracking the data as well as the other marketing commitments. So thanks for sharing that part.
Ralph, you're a little bit different, starting with sales and moving sales and marketing. Could you give folks the context of the size of the organization, what AtroDS does and what you're looking to do with the sales product first? And then we'll get to marketing.
Thanks. Good afternoon. Well, we started as a business in trade invoice collections already 90 years ago. And in 2007, we started as a separate business unit in the Atrevious Group. Atrevious is a global trade credit insurance company.
And I work as a Global Commercial Director for the unit collections. And we are the leader in trade invoice collections globally offices in more than 24 countries. And we handle about €1,000,000,000 of trade receivables to collect on and recover it. Internationally, so most of our transactions are international debt collection services and trading voice services. We're in the B2B obviously.
And we have been in these 24 locations, we manage about 14,500 clients across the globe and it's growing. And that brings us immediately of course to how do you service these clients on an international basis? How do you deal with attracting new clients, retaining new clients and but also developing your new clients. And so we decided then 2 years ago in 2012 to implement a global solution where we could actually give our clients what we call the customer experience that they need. We have a lot of clients that have offices across the globe.
And if we want to make sure that all these clients are treated in the same way, yes, we need to have the platform that enables us to do that.
Okay. Great. So Jim, you talked about a little bit of the challenges. And can you maybe give the group the thought process in going to the cloud for service? How is the service cloud been?
And I know you've actually been a longtime customer of the Oracle Cloud, both at Nintendo and previously. Give some background on not only how is it working so far, thought process and results for that as particularly as Nintendo is going through this change?
Sure. So really two decisions that we need to make, right? 1 was premise versus cloud and the second was if cloud then which provider. And so we made those decisions at the same time, but through a collective process. I think the decision to select Oracle service, cloud service for primary reason that knowledge was central and core to the platform and that we were able to curate a single set of knowledge that we were going to be able to leverage both from a self-service perspective and as the core of that agent desktop experience, while also using that same core of knowledge in chat interactions and in e mail interactions.
So that was one of the really the primary impetuses. The question of cloud or not cloud was a really challenging one for Nintendo. And prior to Nintendo, I'm a serial serial customer of Oracle Service Cloud. But prior, both with Expedia and previous to that Sony, the decision was hard but for the same reasons. And that is we have interaction data about our customers and we were going to be storing that outside of the enterprise.
And that's a challenging thing for any organization. But I would say it was even more so for Nintendo. And the reason that it was more so for Nintendo is that we have a large number of miners, right, that contact us. And so there's a lot of risk profile associated with that data and the PII associated with that. And so the reason I mentioned that only is that we really had to put it through excruciating process to determine that we were satisfied with the security model that was in place in order to
combination of the availability and
the ability to take the combination of the availability and the ability to take advantage of the migration and evolution of the product without having to burden our IT team, which at that time was very busy with an Oracle EBS implementation. And so we would have either waited 2 or 3 years to do something premise or we were able to make a move and turn something on within 3 months that was cloud based. So we were able to achieve some of our business objectives in a much better timescale with that cloud based solution once we pass the logical hurdles of why organizations sometimes have a barrier to go in cloud.
So it sounds like causing the hurdles of availability and security, the benefits of speed, speed to implement without IT and then as far as the product kind of the multi channel capabilities on top of the basic service capabilities to deal with. You.
I think that's right. I think the other thing that we did analyze is recognizing that many of our contacts and our agents are outsourced providers in different locations. Having a premise based application within our WAN wasn't as important as being able to serve the front end to those contact centers
in an efficient way. Hayden, so you gave a little bit of background on the first answer on the scale and what you're trying to do and the products. Can you give any kind of metrics on how the implementations have gone? What's any kind of before and after? And maybe not even apples to apples because the way you dealt with customers may not have been in the same way.
How it's really affected the business moving to the Marketing Cloud and Bluekai?
Sure. I would when we look at some of the before and after metrics, we look at things like speech market or efficiency gains that we or productivity gains that we've seen. So a year ago, 2 years ago, before we were using Eloqua for our lead operations, we would probably take anywhere from 2 to 3 weeks to get qualified leads over to sales. We're down to 2 to 4 hours at this point, and that's in our top 20 countries. And that obviously sees a lot of efficiency and it's much better customer experience for people who are ready to engage with their account teams.
In terms of performance, when we think about creating a variety of communications out to customers that are very targeted and one to one, so each of you would receive your own specific email based off the behavior you demonstrated. And if I have to accommodate that in 22 different languages, being able to have the flexibility to produce those emails in a dynamic and modular way real time and adjust any content I need to every 30 seconds if that's how quickly you're demonstrating behavior that gives us some productivity gain as opposed to asking an agency to build static HTML files every day. I would say those are probably 2 of our biggest findings.
Yes. Well, I think, yes, it's
a huge difference between a couple of weeks to a lead and a couple of hours, especially time to buy. Ralph, you similar because we started on sales, but I think you have been plans to expand sales to marketing. So can you talk about both we talked about yesterday just the importance of getting the sales reps to use the system and how you plan on doing that? And then why is it that you believe it's so important to expand the sales and
marketing component?
Well, I think to start with your last question, I mean the most important challenge that we had as a company was to link sales and marketing together. I mean too many times you see in companies that sales and marketing are 2 different entities and not functioning together. And we are very much in the approach that sales and marketing should be in our strategy aligned. Although we started with the sales cloud solution to because that was our highest need at that time, especially on managing the contact side and all the information that we have on our client base in the right way and have that capability available to do cross fertilization within the customer portfolio, cross sell and deep sell, but also service our clients better. We started with the sales cloud solution.
And we implemented that solution in 11 weeks. We went plain vanilla. So we don't didn't make any customization whatsoever on the system. We took it off the shelf and put it up in the cloud and use it. And it works perfectly fine for us.
What we do is that we on the way work with Oracle to further enhance our requirements that we would like to see back in the system as our service is pretty particular and specific in the market. You don't well, probably a lot of lawyers or debt collection agencies that are across the globe. But to manage it on a global basis, specifically in our business, yes, that is key to further develop it. And then we decided very quickly after that, that it would be important to also acquire the Eloqua solution, because one
of our challenges is like
I said not only retaining and servicing our existing customer base, but we have a major challenge, of course, to acquire new clients. And if you want to do that in the right way in more than 24 countries where every country has a different buying behavior, you need
to be capable of actually
subtracting data from different sources and have a tool available to start communicating with that suspect and prospect base. And now we're aligned.
The systems are integrated and we're extremely satisfied with that. That's great. So again 11 weeks kind of start to finish live with sales around the 20 plus countries and then adding marketing after this. So that's great. Jim, Hayden, Ralph, I can't thank you enough.
Thanks for being customers. Thanks for joining me today. Appreciate it. So hopefully all of you get a sense from we covered a lot of topics in the cloud everywhere from IAS platform as a service. We covered 3 broad categories from ERP, HCM and CRM customer experience.
And we've given you hopefully a broad spectrum of our customer base from some of the largest brands in the world doing business globally to smaller companies who have the same really business challenges as business transform, not only to go and move into the cloud technology wise, but moving to the cloud for a change of business process to really facilitate and solve business challenges they have today. So with that, I'll hand it back to Ken. Thank you. Thank you very much.
Thank you, Steve. Okay. Thank you, Steve. You got to love the way Steve is always able to distill it down to really understandable points. So I spend a lot more money to have it come slower and that's the customer problem.
And we can help with that. We're going to take a very short break. We're calling a little bit of an audible here, a little bit of change in the schedule. We're going to take a very short break. We're going to come back have a very quick little video.
If you want to know why I was in the video you can look for me in the video. It was very tired. I'm exhausted. I'm sorry. We're not going to do the financial highlight presentation.
What we're going to do is when we come back from break, we're going to go straight to Safra. We'll do some Q and A. Then we'll do Larry for Q and A. And then following that, anybody wants to stick around, I'll do the financial highlights. So it's let me see about 35 after now.
Let's get back in here in about 5 to 8 minutes. Thank you.
Ladies and gentlemen, please welcome Oracle Chief Executive Officer, Safra
Katz.
Just watching this a minute ago, I'm overwhelmed really by the massive amount of technology we have at Oracle, whether it is Java, it is software in the silicon, whether it's the database, it's applications, it's cloud services, it's vertical applications, All of these things really from beginning to end, we have here hardware optimized for our software services, storage, everything engineered to work together. And even though we have all these pieces of technology, we have the broadest, broadest technology framework in the world. We also have the deepest. And you know what? In many ways, that's actually not what Oracle Open World is about.
What Oracle Open World has been about this week, and I sure hope you went over, and I sure hope you also not only sat in keynote, but walked around randomly meeting customers because you saw a few customers today, but simply there aren't enough days, there aren't enough weeks, there aren't enough years, frankly, for you to meet everyone because and for me either, to be honest, and I ran into them and met with them and saw them and just overheard them sometimes talking about why they're here, why they decide to use their most precious resource, which actually isn't their money, but is their time to walk around here to learn about these technologies because Oracle Open World is actually about them. And the reason I get so excited, whether they're enormous banks out of Germany or the U. K. Or Brazil or small chocolatiers from Argentina or a telco from a tiny little African country, all folks I ran into and met during this visit here this week of really nothing but visits and sharing. The reason that's so exciting is because all that technology means different things to each one of them, but it's useful for all of them.
The cloud for some of our customers is, as you heard, an engine for transformation, a way to get rid of how many 1,000 customizations they thought they couldn't live without move to the cloud. For others, the cloud is almost an IQ test. They said, but I'm a small business, should I and small for us, I don't mean Joe's Pizza. For small, it's an enterprise of the kind of size that makes sense to use our technology. But with the cloud, that's even smaller than before because they don't have to allocate resources to DBAs and application managers and whole IT department because with the cloud, that's actually us.
And for them, when I say it's an IQ test, it's because they are medium sized, they are small, they don't have the resources to use all of this technology on their own on premise. For us, for them, the cloud is the way to get there, the way to release resources to do the things that make them competitive. That's what this whole week is really about. And to watch the pieces of technology, I feel like that old Columbo television show, I know many of you are too young to even know what I'm talking about. But it would be like this.
He's walking out, he's talking and then walk out and he'd say, and another thing, and he'd come in and yes, and another thing, Another thing is the advanced technology we are putting into the silicon. Who thought we're doing that? Another thing is what capabilities we have in the cloud, whether it's the platform, the infrastructure, the what I would call horizontal applications or the vertical applications. I mean, I have to tell you, there's one thing very, very hard about working at Oracle, at least there used to be. You'd walk in and people would say to me, my dad very proud, would say, yes, she works for the software company.
And I'd say, yes, it's Oracle. And a regular person would really not know what I was talking about. And I'd say, like Microsoft, kind of like when you're an investment banker, which I was for many, many years, and my dad would say, she works at a bank. And they'd say, oh, how nice do you enjoy being a teller, okay? And it's very, very much now with Oracle, it's not that it's very, very true.
Most people don't have any idea that we are what makes your phone something other than a paperweight, frankly. And we are what makes really your whole day possible, whether it's the ATM, the ATM transaction or otherwise, all of you in this room, you know. But the reality is that when we see our applications, now I'll get to see them in restaurants at Micro. So I'm getting behind every counter to bring a few waters, forks and napkins, but really I'm just trying to figure out what they're using. But you see behind all of that is our technology, and that is phenomenally exciting because it's important to our customers.
Now I will tell you, I absolutely promise I will give you a chance to ask questions. So have no fear. Larry, as Ken told you, is going to be here in a little while. If you haven't gotten a full if you're not satisfied with a full hour of torturing Larry, you've got me back and you've got Ken. So don't worry.
But I did want to make sure you understood what we see is the understood what we see is the true opportunity for Oracle because I know that you're going to drag me into the spreadsheets and the enterprise manager in Uzbekistan trends and things like that. But Because for us at Oracle, the cloud is the Y2K opportunity all over again. Okay. That's what we're talking about. You see, when Y2K start, everyone knew it was coming, many companies and especially one of our formerly important competitors, SAP, would they got themselves ready and they locked themselves in really for the next 20 years almost, right, 2014.
They got themselves ready in 1995 and that was their lead in applications. Now during this period, of course, we became number 1 in database, number 1 in middleware, number 1 in a lot of areas, yes. But in applications, you know, we are and you all know what I'm going to say, we are number 2. Got you. We are number 2.
And we don't like being number 2. And being number 2 is where you end up when you weren't quite ready for the last go round. But this time, you see, Larry saw the cloud. Larry saw it coming now since way before I joined Oracle 16 years ago. It was business online, it was the founding of NetSuite, it was the founding of salesforce.com.
This whole area, he saw this coming and it was going to be our opportunity. Now we talked about it. We bought PeopleSoft, so we'd have the resources to make the investment, to build the platform and build a whole future of applications. We talked about it. We told you about it.
Larry said it was coming and we sat there and we built brick by brick, the most formidable platform in the world and then the broadest possible product line. And it's here because the one thing you have to see is our customers have recognized the opportunity for them now. Again, Oracle Open World this year is markedly different because everyone, small to big, security conscious or outwardly market focused or all the different things and whether it's the IT organization, the operations group, the line of business, the CFO, for everyone, there is value in moving to the cloud, whether it's speed of deployment or cost or efficiency or as a driver for them. Everybody sees what they need in what we're offering. And so for us, it is Y2K, but we are ready.
And what luck our formerly really overwhelming competitor in the application suite isn't ready. No ERP suite for them, no 100 plus modules, no references in financials or otherwise, but we're ready. And this is it. This, I would say, we are ready with the product. We are ready with the distribution.
We are ready with the references. And now with this show, we are ready with the customers. And that's really why we're so excited. That's why we're all here. I hope you this is going to play out.
We are darn sure it's going to play out exactly the same way. And this will leave us number 1 in every market we're in. All right. That's how we see it. Okay.
I'm ready for the question. Enterprise Manager in Uzbek We've got it. Okay. I don't know. You're the only one I see, so you win.
Hi. Kirk Materne with Evercore. Sephora, I guess, follow-up on that with the vertical apps that you guys have put together, the customer experience, this is touching to your point a lot of people outside of the traditional IT buyer. I was just kind of curious, do you feel like your go to market is ready to hit those people that are outside that sort of core IT person? And in your discussions, your team's discussions here at Oracle World this week, are you getting to the line of business person?
Because that seems to be where a lot of the incremental spending is coming from these days in software. Thanks.
That's exactly what we've been working on for the past, I'd say, 24 months. There's no point in getting to them when your products aren't already referenceable and ready to go. And that's really what we've been working on. You know what's very interesting? GE, fantastic Oracle customer, they bring 200 executives to a summit as part of Oracle Open World.
They go from morning, literally 7 am to night, all day and it's not IT. Yes, there are IT folks, but there are operations folks, there are line of business folks. And for folks like them, they're using going to the cloud as a way to drive their own constant transformation. When you're big like that, it's very, very important that you keep momentum going in your different lines of business. And those are the folks that are showing up.
Again, that's why I sort of implore you to talk to the customers because you're going to run into a lot of folks who historically, I mean, I can't tell you how many people said to me, I've never been to Oracle Open World, it's usually the IT guys. All of a sudden, it's the line of business. And so that's what we've been building in the sales force. That's what Mark's been focused on. That's what Larry's been focused on.
We had that's by the way, one of the benefits, frankly, of some of the acquisitions in cloud because we're historically go to IT. Many of the companies we bought, I mean Bluekai doesn't sell to IT. Eloqua doesn't sell to IT and all of Talayo. And so we've just gone ahead and built on all of those. And we've taken seeds and we've grown them, which is why Mark said, we feel like now we're really ready.
And additionally, by the way though, not only ready in North America, but the value that we bring is it is from enormous, I don't know, pick a country, Russia, China to Djibouti, I mean in Africa. I met folks from literally everywhere around the world. And that's another reason it's so darn hard to compete with us because it is global. Thank you.
Hey, Safra, it's Rich Rolland.
I'm wondering if you could
just discuss the dynamics financial dynamics of the transition to the cloud a little for us. There's obviously a lot of speculation about what this means. So we heard today that you get more revenue 2, 2.5, 3 times the revenue. And you've got the benefit of vertical integration. So you can sell a lot of things to the customer.
And if you sell them apps then you sell them whole stack. So I can understand that. The margin implication of the shift, so I've heard you say maintenance will continue to grow. License may not. You would expect license to get cannibalized by the move.
But together, I think for the foreseeable future, it sounds like you're saying together they're still going
to grow. Do you get more
just the math suggests it's lower margin, but you get more gross profit dollars as you give up a license selling. Can you discuss that? And also the CapEx implication, will at some point you need to increase CapEx for data centers as you get scale in the cloud?
So what is really wonderful about our business model is we are so large that we can do so much within the envelope of profitability. I mean, we have been building data centers and expanding data centers and filling them with computers now for a few years. And yet, you see our capital expenditure numbers are nothing like everybody else. Because as you know, we make all our own stuff, which means I can give myself a phenomenal deal on mostly everything. And I've not yet figured out how to generate my own electricity beyond my car, but as a general matter, this is one piece of it.
This is not an area that I am concerned about, frankly on the capital side. We've got we have a lot of experience here. Additionally, the dynamics in our business are such that there are 2 things going on. The first thing is that because historically customers have spent, let's say, this much and I know a lot of you have seen me show you this before. They spent this much on the software and the hardware and this much running the systems and implementing them and all of that, that they save an immense amount of money, immense amount of money by letting us handle it based on our massive economies of scale.
Because we aren't one customer, even a big customer, We are 100, actually thousands of customers. And so we have such a highly automated engineered cloud, whether it's at the infrastructure, at the platform, at the applications, at the vertical applications that they save an immense amount, okay? So you got to start there because it has to be compelling to the customer. Now because they are saving so much, they can and they do give us more money to do the work they used to do. Now they don't give us all of that money.
They give us just a small percentage, but it is more than enough to cover the expenses. And it actually encourages them to do even more than they were able to do before. If there's anything you heard from these customers, you heard how they're it's not only they saved money, they got up and running faster, but all of a sudden they were able to do more. They were able to have capabilities they couldn't possibly have. Imagine it took them 14 days to come up with a lead to the salesman.
Now it's all well and good to hand a saleswoman a 2 week old lead. Think about what a waste in cycle that is. Now they're down to an hour or 2. You mean when the customer is still interested in buying. So it not only brings them more revenue, but there's no I mean, if it took them 2 weeks to hand over a lead, Think how much how many hands it passed and then how much money that cost them.
And as a result, for us, we've put up the cloud service because it's up already. We've added the users. We've integrated it with the Zazaire system. Boom, that's it. The marginal cost of them using more, what do you think the marginal cost of that is once the work is done?
It is not very much and yet the marginal benefit of it is compelling. Now listen, you do not have to you cannot model from what I'm saying to you because it's almost unfathomable. And as I was telling you before we started, Rick, when we did Oracle's original transformation in 1999, we went from I know it's old news, but the pattern doesn't change. We went from 70 ERP systems at Oracle and we put up our own global single instance, made it available to our 100 countries. Now we didn't actually do a business plan on how much money we saved, but we knew it would be significant.
So if you had asked me, well, it's APRA, it's 1999, you just joined, next year, exactly how will this translate into increased profitability? I probably well, I know what I thought at the time, I thought it would be $1,000,000,000 actually, and it turned out it was $1,200,000,000 Now Larry shared that with those of you who were on that earnings call in June of 1999, but I couldn't have gotten it down to the cent, but I sure knew it was going to be big and that it would be profitable for us to do. For our customers that pick cloud, it's both profitable for them, because they're spending less. And the marginal cost of it, as we get to even higher scale, is overwhelmed by the marginal cost is way overwhelmed by the increased revenue we get yet again, the customer saves a fortune. That's it.
Yes, sir.
Derek Wood, Susquehanna. Maybe a more specific model question. 1 of the big product announcements this week was platform as a service putting database in the cloud, putting middleware in the cloud. I think a lot of us as we think about the 12C product cycle have thought of it as something that's going to be more perpetual license driven. Obviously, you're in a big product cycle right now.
But now with this new push to the cloud, do we need to think, is this going to have a material impact to kind of the monetization cycle? And maybe if you give us some color as to the sales incentive behind the platform as a service side?
Okay. Sure. So first of all, you are right about one thing, which is 12C is compelling. It's actually it actually sparked a number of customers literally sort of out of nowhere almost exclaiming after seeing some of the capability of 12C, 12C in memory that they simply could not wait to get to it. Now I have to tell you, I mean, this level of enthusiasm on a new version, we're always enthusiastic.
Of course, we understand the value, but this level of enthusiasm is actually stunning, astonishing, I would say. Now, of course, as you know, those customers who are already subscribers to our database who pay support do receive 12 C straight, they get that as part of what they pay. Now to the extent that they want additional options, whether it's multi tenant or in memory, that just costs more money. And again, so that's helpful, but it's not like a new version of Windows where everything you had, you have to buy it again. You've been paying, you've been paying, it turns out 1,000,000,000, billions in fact, to receive the upgrade, you are entitled to it.
So it's not bumpy like other companies. So first, 2, it is compelling. 3, your question is really focused on whether pass will cannibalize it. I actually believe, Larry and I and Mark believe that it will have the exact opposite effect. You see there are a lot of applications that are on premise and customers are perfectly happy keeping them on premise.
What it will do is it will have them try out some of these things as pass, maybe test development and then bring it on premise or so start in the cloud, bring it on premise. It is also true that some customers will go from on premise to the cloud. We do not believe and we have not seen at all in the behavior of our current customers that they will say, you know what, I'm canceling all my licenses, just not happening, not likely to happen because every single year, at least for the since the 80s, since I've been following Oracle, there's always this feeling that all the data in the world is already in a database. We don't need anymore. I remember when Intel processors got really, really fast sort of all of a sudden.
And very, very senior development heads at Oracle walked in and says, Oh my goodness, there's so much power in these new servers. They're just not going to need any more database because they got it all. Now guess what? Look around at what's going on. The exact opposite, The more powerful systems become, the more things are possible.
This is before the IoT, Internet of space, but you can't because you're not that different from the room next door. There is so much going on and so much of it is ending up in our database as we are not only the market leader, but our leadership grows every year. And our confidence is so enormous that at Oracle Open World, you walk around, I walked around the demo grounds yesterday, just the database side of the demo grounds. If you look just on the outskirts of our demo grounds and I don't know if you noticed, we put the demo grounds in like the hardest possible place to reach, right? You got to go through every one of our competitors first before you get there.
So this just shows you how confident and how comfortable we are that the new features in the database and that making it available as a platform, as a service is so compelling that we literally, I mean, you looked around, I probably struck it by now, but you look around in all of the little fancy names that everyone's talking about who are going to be the next company to put the Oracle database out of business, there they are parked right next to one of our features that we're demoing at Oracle Open World. And so PaaS, we think is going to accelerate it because you're not going to have to put it up. You're going to try it and maybe you'll bring it on premise or maybe you'll let us run it for you. And as a result, you actually pay us more. So that's because your overall spending so much less.
Okay. Yes, whoever Safra. There you are.
Hi. Joel Fishbein, BMO Capital Markets. I just have a follow-up to that last question you elaborated. So Larry had talked about database being the biggest cloud service out there. It was a little bit surprising to at least me.
Can you talk about how that would impact the model?
Is that more of
a subscription? Is it more licensing? And when do we expect to see it or how will we see it?
You're going to see it in the SaaS path IAAS line. I do not currently have it in the model. It is not it is one of those. We will meet again, let's say, in 2 years and it will be unmissable, frankly. We believe that as long as we execute well on it, which I know we will, our leadership in database will be even more obvious as PAS becomes larger and larger.
And as I said, we're not concerned that this will cannibalize. What it will do is expand. And for any customer here or there, they may say, you know what, I will move everything to the cloud, Hooray, we say, because those are customers who bought their license 15 years ago and now they're going to pay us more because we're going to run the whole thing for them. Fantastic. Overall, that business will grow.
So we are extremely bullish. But again, you have to understand, it is not up to us whether a customer wants their product on premise for them to run it or as a service for us to run it. That's their choice. Either way, it works great for us. Okay.
I think one last question. Is Larry here? Yes. Go ahead, Jerry.
This is Safra Brantfeld with UBS.
Hi, Brian.
Just to follow-up on Rick's question around the business model transition. You're not alone in the transition to subscription and cloud. The one common denominator among these companies that gone through this is the margins have reset for Intuit, Autodesk, Adobe, you go through the list, right? In the near term and to your point you expect the margins to rebound. But is there something we should consider that may not impact the margins during this transition?
Are there offsets that we should look at that perhaps we don't see that you're seeing that could give us a better sense of how you're managing that?
Listen, no matter what I tell you now, you're not necessarily going to believe it and that's the right answer because you're going to watch this play out. We are not Intuit. We are not Adobe. We are not any of those companies because you see the massive scale of our operation is completely different. And what I mean by that is we are very deeply ingrained in our customers, some of whom you saw today.
And these transitions will take time. For us, because we will be taking market share from our competitors in the cloud. But in addition, the move to the cloud will release so many resources for our customers that they will buy from us additional cloud services like platform to build add on to things that we have. We believe that maybe as we'll see how the percentages work out. Q1 is not a data point for you to all of a sudden think has changed our model in any way.
What you will see is that we will generate more cash flow, we will make more money at Oracle while our customers spend a markedly reduced amount of money. So you will see we are very, very focused on maintaining our profitability. The economies of scale that we have here at Oracle and the differentiated product line, both in breadth and in-depth, is unmatched by any other company. So do not think we will necessarily follow what there's what other companies' paths are. We will be more profitable and I guess that's it.
Oh, I can go a little bit more. Oh, joy.
That's an issue of the fact the vendors are U. S. Based. Do you think it's going to be different for Oracle in terms of where you're going to get penetration is going to be equal?
So yes, yes, yes. Okay. You're welcome. So most of the vendors were U. S.
Only. Many of the vendors that we acquired were U. S. Only. We are not U.
S. Only. We're an enormous export story. You saw here today quite a few accents, may I say, which showed you enterprises from around the world. I went to 5, 6 different receptions here during Oracle Open World.
You're wondering where all those folks are every evening. Yes, they're eating and drinking with us. Whether they are small countries, Chile, Colombia, big countries, Brazil, whether they're really remain, you name it, they're here. They are, if not as excited, if this is possible, they are more excited because many of them are catching up. Many of them don't have the years years of investment.
In fact, the most excitement is coming from countries and regions that are in a full out speed to move fast, to jump. If you ever if you want a model to look at, look at phones, phones in the United States, remember landlines and other kinds and then cell phones, the adoption rates, many countries skipped landlines almost. That's where we're going. That's what Oracle can bring that nobody else could afford to bring, let alone the development. You heard Steve today, Steve or Thomas, one of them talk about what it means to be a product that can be used in other countries.
It's not multi language. That's not enough. It's not even multi currency. That's not enough. It's knowing the regulations, if you're HR or if you're finance.
It's being able to do frankly, all the things we've been doing on premise for years. And we also have a sales force ready to go. But I'll tell you, the customer pull is enormous. Many can't wait. When is this coming?
I see you I mean, the most hilarious conversation I always find is a customer who I may end up being the executive sponsor for some reason or another. We acquire a cloud, one of these cloud vendors that is a U. S. Only. And I get an email asking when it will be ready for their country because they assume immediately once Oracle owns it off it goes.
I have to tell you the truth. It takes a few minutes to get that going, okay? And it takes Thomas and Steve and their whole team. But that's the expectation from us and that's exactly what we're delivering.
On the topic of joy, I'm joyful to get the mic and have possibly this
last question, cast on another list.
I see. Thanks.
Safra, good to see you so passionate.
How do I look
by the way? I know you said Mark looks good. Do I look alright?
Fantastic. Fantastic.
Kind of hurt my feelings.
So Should be on the cover of Fortune Magazine.
You're funny.
No. I mean that. It's a sincere compliment. With this model transition, sorry to drag you into the model. But as you work through this ARR, I think you throw out a statistic earlier today that or marked it license plus ARR grew double digit.
As you work through this transition, can you provide or will you continue to provide things like that, that can help us get confidence that we should not be just looking at the reported revenue, but it's something bigger than that that's quantifiable so we can all hang on to that? Thank you.
Well, yes, we'll continue to provide what we can, what we think is instructive, what is helpful. I myself love revenue, okay? So I very much like it. And I understand with cloud, especially in the very, very high growth phase, cash flow often proceeds what we can book as revenue. But me, I'm old fashioned.
So the truth is that it is starting to be obvious even on the revenue line between all of us and you see it. And it will become more and more obvious in the other lines on both the income statement and the cash flow statements. It is becoming more and more obvious that it is driving our business growth. Now it is very true. We are enormous.
If you saw some of the graphs and either that Mark just did or Ken will do assuming we still have time, you will see that cloud is growing, but we are really, really big. We have been at this for 30 plus years and we have the largest subscription base of enterprise customers for whom we are running their most important applications. And this will drive this will more and more drive growth overall in our software business. And we will give you markers for you to see the future. But the markers I like, I'm on the accounting finance side historically.
I also like those accounting numbers that just go boom, all that profitability down to the bottom line. And we're pretty excited about the capability there too. Okay?
Safra, Larry is about 10 minutes out. So the question is, yes, I got the sense.
A couple of
options here. You can stay up there and we can keep throwing it at you or if you want, I can come up and Jeff, please. I
don't know.
You want to take a vote?
I know what the answer is. I'll go to the back of the room.
How about we take one last question? Do we have enough time for you to do some of your slides? I think
we can run through it. Yes, Larry is a little bit out. He's on the bus and he didn't have exact change. So yes, yes, yes. Well, this happens.
You're on, man. You win. All right.
All right. Yes, He's on the bus. That would be good. That would be good. Yes.
Thank you, Safra. It's been a good sport. That's awesome. We're doing this real time. But did you see me in
the video? Did you see it? Anybody?
No, I liked it. I thought it was funny. All right. I'm blowing through slot. Okay, safe harbor.
I'm going to read that to you for sure. That's for sure. I'm going to read you that one too. Bingo. Okay.
I'm going to take a variable time to spin through our financials depending on where Larry is. So Tanya, I see in the back of the room, just kind of give me a wave when he's really close and I'm just going to go flying through. So forgive me here, but I am going to take a spin through our financials. More than anything else, there's so much going on at Open World that there's the technology and you've heard a lot about that. And you've heard Safra talking about the business model.
Mark talked about strategy and the things that we're going to do in cloud. My job here is basically is to take some of the business model dynamics and then just distill that down for you to give you a sense. Boy, that's starting to look like action. What's going to go on? So yes, it's all good.
Half our revenue is based in the Americas, about onethree is in EMEA, and then we've got about one sixth of that revenue is going to be based in Asia Pac. If you look at our business, 3 quarters of that business is basically software, a little bit more than that, a little bit less, one quarter is hardware and services. Now, I'm not going to spend too much time on hardware and services for the simple reason is that if you followed Oracle for any period of time, you know that while it's 3 quarters of revenue, it's a heck of a lot more in terms of our profit and cash flow. In fact, if you look at our filings, about just a little less than 90% of our margin dollars are driven by software. Now in hardware, the only thing I'll call out for you there is the Engineered Systems product family running about 1 third of hardware.
So in this case, about 5% of company revenue, driving double digit growth, while our competitors, namely IBM, HP, all seeing double digit declines. We're seeing double digit growth, continues to be a strong part of hardware, but I'm not going to spend much more time on hardware other than that. If I take the software piece and split it out for you, you can see that cloud is about 4% of total company revenue with 72% being in the traditional on premise software. If I look at the amount of time and attention I get on this, I don't get 4% of my time and attention and questions coming from you on cloud. It's a little bit higher than that.
Namely, growth rates are obviously points of interest in terms of revenue acceleration, bookings and then a lot of noise from our competitors. The company revenue over the last 5 years, CAGR there is basically just a little bit less than a 9% CAGR. And if we drill into that a little bit more, what do we got here? Software basically driving a little bit more than a 9% CAGR. Again, you've heard a lot talking about the technology.
And I was kidding with somebody outside about how in a way and maybe a perverse way, we love to torture you in that we walk you through all this technology for a very specific and deliberate reason is that what goes on in making all this simple for customers is incredibly complex. And if we don't talk about the complexity and the strength, which is our strength, the technology, if we don't do that, then how do you make this differentiation of Oracle versus somebody else who just has a nice marketing story? There's a lot of engineering behind what goes on. And it's that engineering that allows us to drive to be the world's largest enterprise software and cloud company. And you can see here that the revenue has been growing steadily over the last years.
In fact, in our most recent quarter, that on premise software grew 6%, again, very steady consistent growth. If I take that software and I start bursting that out, you can see, as Mark talked about earlier, cloud growing 43%, on premise growing 8%. Now it's not on the chart here, but Mark did talk about it earlier, so I just want to reinforce the point. Database, double digit growth. Middleware growing.
Applications growing. In fact, even inside applications, whether we're talking and Mark did this, whether we're talking the Siebel CRM, whether we're talking the PeopleSoft HCM, Oracle E Business Suite ERP, whatever one you want to talk about, all seeing growth in their particular areas. Cloud, obviously, growing very strong, but a lot of it's kind of masked. It's SaaS, PaaS, is it growing, 88% CAGR there. There's a very high degree of growth.
You can see underneath that is basically the infrastructure as a service. Now that's currently mostly made up of our hosted services for customers. But that's an area, as Larry has talked about and others have talked about, how we really do expect to see very good strong growth in that area as customers have a very material portion of their spend goes to development and test environments, and we think that's something that we can really monetize in terms of seeing that opportunity. So look for us to do more there. Now if you've been following Oracle for a while, you know the strength of the company financially as investors.
It's the business model. When we sell software, we sell software support. And virtually every customer that buys a license buys software support. Now what we call software support, you can think of as being like subscription or recurring revenue. And you can see our installed base of this recurring revenue just keeps getting bigger and bigger as customers renew those software support contracts.
And then when we sell cloud subscriptions, that's even more recurring revenue. Here you can see that over the period of time, recurring revenue as part of software is nearly 70%. Now remember, recurring revenue drives profits, recurring revenue drives cash flow. With that cash flow, you can see double digit growth in terms of free cash flow over the years, expect to continue to drive a very strong free cash flow. In fact, this last quarter, we generated over $7,000,000,000 in free cash flow.
Now to put some of those numbers in perspective for you, 10 years ago, over the course of the whole year, we generated $3,000,000,000 in cash flow for the whole year. Now we do $7,000,000,000 in 1 quarter. Or maybe put it another way, a year ago, we talked about how our free cash flow has subsequently passed IBM in terms of free cash flow. Now, we're basically it's a year later, our cash flow, you can see it here, bigger, IBM lower. We're growing, they're declining.
Just 5 years ago, our free cash flow was half that of IBM and now we're larger. In terms of capital allocation, you can see that we've been putting that cash to good use. In fact, nearly 90% over the last couple of years have been returned to shareholders. We doubled the dividend last year and our share count is now more than 12% lower than it was 3 years ago. So just to wrap up, I see Larry is here just to wrap up for you.
Here's how we see it. We basically have an on premise business for software that continues to grow. We have on top of that, we have a cloud business that is absolutely growing rapidly. The dynamics that we've always seen software drives and the software and cloud drives operating income growth and we will opportunistically be in market buying shares. You put all these pieces together and you have some very solid EPS growth.
So with that, I'd like to welcome the stage our Executive Chairman and Chief Technology Officer, Larry Ellison.
Whatever you guys want to talk about. Hey, Rick. There we go.
Oh, go ahead. Go ahead.
Go ahead. So
can you discuss with us
the unique ability that Oracle has because of your vertical integration and now with platform as a service, infrastructure as a service, how you might be able to inflect here? Is this an inflection point for the company given number of announcements we've seen this week and how you can create maybe something that's a little more visible to us as shareholders in terms of real traction in the financials?
Okay. Well, we're approaching $2,000,000,000 I would say $2,000,000,000 We're the 2nd largest cloud company on the planet. So I realize that people say, well, it's only 6% of your revenue or something like that. That's okay. I mean, we could try to get rid of that other revenue.
Then it would be the $2,000,000,000 be 100 percent of our revenue. But the other revenue is quite profitable. So first of all, let me just agree last couple of years we've been we have been. Last couple of years we've been very vocal, but 8 more 9, 9.5 years ago, we started rewriting all of our applications. Fusion ERP, you think we did that in the last 2 years?
We did that in the last 9.5 years. We had to rewrite all of our middleware for the cloud. We had to rewrite big chunks of our database for the cloud. And we had to rewrite our entire ERP HCM suite for the cloud. Now if you think we did that in the last 2 years, Hey, we're really good, because it actually took us 9.5 years to do.
So we've been working on this for a very long time. Again, I'll go back. This is a little me feeling insecure. People said, I was a CEO until very recently and I just didn't get the cloud. I started NetSuite.
It was the 1st cloud company. And I don't mean I invest I wasn't an investor in NetSuite. I mean I put in it was my idea. We started it to do small companies ERP in the cloud. And we didn't know it's called cloud.
In fact, I've ridiculed the name cloud. That's pointless now. It's just that's the name. People decide to call servers on the Internet. God bless.
And without the cloud straight, it's a very charismatic name. But we started working on this thing. I made a major I started NetSuite. A year later, I made a major investment in salesforce.com. It's not that I didn't notice or think this was a good idea.
I thought this was a good idea for a very long time. For Oracle to move to the cloud is very different than NetSuite building an application for the cloud or Salesforce building an application for the cloud. When we move to the cloud, we have to move all of our middleware, all of our database, rewrite our entire ERP suite, HCM suite and CRM suite. That's a lot of work. It takes a long time, takes a decade.
We've been at it for almost a decade. Now there's no reason for us to be enormously vocal about cloud, cloud, cloud, cloud, cloud when we're in the middle of engineering for the cloud, but not delivering cloud products. And we started getting aggressive in promoting cloud is the right way to go a couple of years ago, because it's when our first cloud product started coming out. And now 2 years later, we think we're in a much, much stronger position to move our middleware business and our database business customers to the cloud just by pushing a button. I mean, mean, Java is an important brand.
I mean, by the way, Java is not like a dinosaur technology from a dinosaur company. Maybe it is, but Google thought it was important enough to steal. And they're like really cool. So the Android phone is entirely a Java phone. That's our technology.
And it's the most popular programming environment in the cloud and on premise. That's our technology and our brand. So but us moving our enterprise customers to Java in the cloud, redoing our middleware for the cloud, putting mobile interfaces on all of our middleware, that's just an enormous job, Making our database multi tenant, big job. And at the same time making the database handle all the data in memory, big job. There's a lot of work to do to move this company to the cloud.
No reason to spend a lot of time talking about it until we actually had products to start to sell. And that was a couple of years ago. So I do think I mean, I think this is an inflection point. It was my speech on Sunday. It was my speech again on Tuesday that this is a turning point for the company because now we have the exact same database that we have had on premise.
We have that exact same database capability in the cloud and you can simply move the database by pushing a button. We've never had that before. There are millions of Oracle databases out there. Now you have a choice. You can rewrite from MongoDB and rebuild all your applications or you can push a button.
By the way, in the cloud, everyone uses Oracle. 19 of the top 20 SaaS companies use Oracle in the cloud. Oracle is by far the number one enterprise database and if people want to move to the cloud and get the benefits of the cloud and have lower costs and monthly payments and all these other things and not pay upfront license fees and have us run on our servers on our network, use our storage, do all of that. They can now do that with a push of a button. It's the same exact database that they have on premise they can now move to the cloud.
That's a big deal. We think that's going to be our biggest cloud business very quickly. And that's why we're quite confident we'll blow by salesforce.com, because salesforce.com has had no platform competition. What used to be called force.com and now it's called Salesforce 1 is a highly proprietary programming language that you use for extending and building applications on Salesforce's platform. Well, we don't have it's interesting and I pointed this out before, Salesforce builds on top of our Oracle and our Java.
That's how they build applications, but that's not how they encourage their customers to build applications. We encourage our customers to build on top of the same platform we build on, Oracle and Java. We encourage our customers to build on the same platform that Salesforce built on, Oracle and Java, except you can't get it from Salesforce, you can only get it from us. We encourage our platform our customers to build on the same platform that SAP builds and runs on. Ariba runs on Oracle.
SuccessFactors runs on Oracle and Concur runs on Oracle. Those are the that's their entire cloud story. They do say HANA powers the cloud, but I don't know what cloud they're talking about. Certainly not theirs, not ours, not these other 19 guys. And the other and the one of the top 20 SaaS companies that don't run on Oracle is Workday and they sure don't run on HANA.
They run on their own proprietary object database. And by the way, Workday has no platform. I mean, at least Salesforce has a platform. I mean, I think it's think there's a problem that it's not standards based and it's proprietary. There's only one place in the world you can get that platform.
You don't get more closed than Salesforce's platform, because the only one that sells Salesforce's platform is Salesforce. Java and the Oracle database are based on hundreds of industry standards. Their stuff is based isn't 100% proprietary. So we have what we think will be the most attractive platform in the cloud and that's going to be a very big business for us. So that's yes, that's an inflection point in and of itself.
We finally got our ERP suite out. The whole thing, there's still a few missing pieces, but the bulk of the ERP suite is out. And we sold more ERP customers in our last quarter. You've seen you said you've seen no evidence that we're doing okay in cloud. We sold more ERP customers in our last quarter than Workday has sold since the beginning since they started their company.
We've totally blown by them in mid range and high end ERP. We're selling more HCM systems in Workday right now. And we've had lots of big brand wins against that against Workday. We are Salesforce's only serious competitor in high end sales automation. We're competing in lots and lots of areas of the cloud, platform, database, Java.
I know you've seen a lot of the fact that our platform also includes social mobile and this whole big issue of security where we think we have a huge lead over salesforce.com. I mean, do I have to sit here and convince you that our platform is more secure than salesforce.com's platform? We've been working on this problem for 30 years. So we provide, I think, a very attractive platform made up of Java and the Oracle database, where customers can migrate to it with a push of a button. No one else has anything like that.
You might look does IBM have that? IBM has DB2. Does it can you push a button and move your DB2 database to the cloud? Can you? No?
IBM has WebSphere. Can you push a button and move your WebSphere application to the cloud? No. So our primary database competitor IBM and Enterprise and our primary database competitor in middleware IBM WebSphere has no answer nothing for the cloud. It's good for us.
So we go from competing with IBM in the platform business to competing with salesforce.com with their proprietary platform. I like our chances. So yes, now that we're in the platform business, it took us a while to get there. We have a lot of software. When you reengineer a lot of software, it takes a long time.
But we have the platform in the cloud. We have CRM customer experience suite sometimes called used to be called CRM. I got to get with it. It's now called CX. HCM suite, ERP suite, they're all available.
And they're all quite differentiated. If you look at our user interfaces, everything we have, all of our applications have mobile interfaces. All of our cloud applications have mobile interfaces because it's built into the platform. We didn't put multi tenancy at the application layer like Workday did and Sales Force did with all the inherent security problems of that, mixing data, different customers' data in the same database. We didn't do that.
We gave you secure separate pluggable databases. We gave you a multi tenant database where all the security stuff still works.
So
it's much harder for Oracle to move its portfolio of platform applications and ERP and CRM, it takes much longer than for a sales force to write a single app.
It takes us
a long time to get there. But now that we're there, we think we just have huge competitive advantages in saying, gee, if you buy our sales automation application, you can extend it using the Oracle database and Java, the same thing that it's written in. You have built in in memory big data analytics built in, because it's built into the platform. Salesforce doesn't have that, Workday doesn't have that. And we have security because we don't have multi tenancy applications because people don't want well, if people can buy suites they want to buy suites.
Here's another story. Suite vendors always win. In the early days of a new technology, a new platform, you get a lot of point applications, this clever point application, not clever point application like a concur. It's a very narrow area, travel expenses. And they put the one application up, but they don't have a platform to go with it.
They don't have a suite of applications. In the end, those point application companies never survive. They never survive. It's all in the end, it's always won by suite providers. If you look at the last generation, the 2 big application were SAP number 1 with their ERP suite and us number 2 with our ERP suite.
Suite companies always win. The point guys always disappear. They get acquired or they just fail to compete. Now the suite in the cloud is really interesting, because it's not only is the suite in the cloud customer experience in HCM and ERP, but to compete in the cloud, there has to be some kind of platform. There's got to be a way to extend your database, to extend your applications, to enhance your applications, to connect your applications one to another.
There's got to be a way to do that. So you've got to offer a platform. Salesforce offered a platform. They've been around for a while. A lot of these guys have no platform.
You can't make it without a platform, I don't think. IBM hasn't started. IBM no DB2 in the cloud, no WebSphere in the cloud. SAP, their business isn't they're not the giant in expense reporting for travel. They're an ERP company.
They have no ERP in the cloud. None. Nothing. They haven't started moving their stuff
to the cloud yet. Took us
10 years. Now maybe they're twice as smart as we are. Maybe they can do it in 5 years. I don't think so. I really don't.
So they're 10 years away. I'll tell you, we don't even think about them as a competitor anymore or IBM. We worry about the new generation of cloud companies. And we think we just have a huge advantage over those companies given our breadth of application products and the power of our standards based platform and the ability to move all of our existing customers' applications and all of our existing customers' databases to the cloud with a push of a button. They spend less, we get paid more.
We like that model. If you ask a nicer question, I'll give you a shorter answer. Way in the back.
Hi, Meryk. Cash Rangan of Merrill Lynch. Nice question would be the database cycle. And you've sounded quite bullish on in memory and multi tenant. And it sort of harpens back to RAC back in 2003, you talked about how people can save money on by using commodity servers instead of more expensive ones.
So that was a very obvious cost save for the customer. The cycle worked out quite great. In this cycle, what do you think could be those compelling factors that would allow the customer to see the value so obviously that you can start to see that kind of cycle? Thank you. Well, I think
everyone's talking about real time analytics. IBM talks about real time, everybody's talking about big data. The way to process huge amounts of data very, very quickly is to put it in memory. I mean, Hadoop is a batch system. And again, without going into all the details, look, we sell Hadoop, we support Hadoop, We connect Hadoop.
We're big Hadoop supporters, but it's basically batch. It's like a big sort merge project. In terms of real time enterprise, real time big data analytics, the way you do that is you put your data in memory. That's not what Hadoop does. Hadoop does something what it does, it does quite well.
It doesn't do that. So we think as customers want to analyze large volumes of data, They want to put it in a columnar database, compress that data, put it in memory and be able to query that data very fast and then build all sorts of dashboard, embedded analytics in their applications etcetera. We think that's a huge obviously SAP has been talking about it for ever since they've been pushing HANA. And there have been tons of university papers on it before that. I mean in memory databases has been something that we as an industry have been working on for a decade.
And okay, so why did Oracle come out within memory database recently as opposed to did SAP really beat us to the market within memory database? Well, kind of, but not really. So let me explain. The when we put in memory into Oracle, the Oracle database, it means that every existing Oracle application has to run-in memory without any changes. We've got to have this concept of upward compatibility.
We've got to take all of our millions of databases and make sure that they work. All of our millions of applications have to be able to work in memory with the customer not even with the customer not changing anything. Now SAP didn't have that small problem because they just came over the first version of their in memory database called ANA, which I don't want to go into, but it's I think it's a quite a primitive product. But it's a laboratory product. It came out of the labs.
It's version 1, okay? Version I mean, version it's a version 1 product. Great. There are lots of versions. I mean, there's a company called HP bought something called Vertica, which is a columnar database.
This has been around for a lot. This is not a new idea. The thing is when Oracle adopts these things, Oracle didn't have the 1st object database, but we have objects in our database right now. We didn't have the 1st text database, but we have text in our database. When we do that, we have to put those things in a way that is completely Upwork compatible and accessible to all of our existing customers.
So it's much harder for us if you will. It's a much bigger challenge for us to build in memory into our database and not procure and customers push a button just like moving to the cloud. You push a button you go to in memory. You push a button you go to the cloud. It's called upper compatibility.
And we've been doing it for a very, very long time and we have to do it. And it's part and parcel of the job. A startup or a lab project that doesn't worry about any of that stuff or doesn't worry about in memory having to work with RAC, in memory having to work with data guard, in memory having to have 7 levels of security. I mean, it has to be the real it has to do all of those things. We can't regress in any way.
We have to be as secure as fast and add this new feature where customers just press a button everything's in memory runs 100 times faster. It's much harder job for us than for others. But we do it. Now how does that benefit customers? Well, here's what the customers have got to decide between.
Totally rewrite your application for HANA or install the new version of Oracle and it runs 100 times faster. Plus we're a lot faster than HANA. We did a better job. But that's not the big thing whether we're faster in memory or they're faster in memory. The fact is those millions of databases and those millions of applications now run-in memory without change.
It's just a totally different issue. So in terms of adoption, which is what you're asking, in terms of adoption, who doesn't want to press a button and run 100 times faster? Who doesn't want to press a button and enable big data analytics in all of their applications? We think this will be we're already seeing adoption rates. People using this in terms of bringing in house, developing stuff, moving stuff, but we've already seen a very rapid early adoption of in memory, which is not it hasn't been around for that long.
So we think this is going to drive our database business on premise and as well as driving our database business, our platform business in the cloud, if you look at those two things. So we think we're on a very good cycle for the database with 2 major features. Again, I'll use the word charismatic again. 2 features that have caught people's imagination. To make your existing applications multi tenant by moving them to Oracle 12c, make your existing databases run-in memory 100 times faster by moving to Oracle 12c.
What else do I have to do? Nothing. Just upgrade your database. All the applications are multi tenant and all your data runs in memory. So all you have to do.
And we think that that means we're going to have a very strong couple of years on premise. But I would say even more exciting, you're going to see our platform business just take off. Way in the back, right here. And we'll move
around. Hi, it's Phil Winslow from Credit Suisse. You provided some good historical context that application suites win in the cloud, they won in client server, they're going to win now in the cloud.
No, they won in mainframes, they won in client server, they won in Internet. So we've seen it happen 3 generations, where the suite providers have won. But keep going.
But I was hoping you could provide a similar type of historical context, but for the database and some of the perceived threats that the Oracle database might facing right now, NoSQL, Hadoop and maybe how the Oracle database manage the previous technology waves like object oriented XML and maybe just provide some context there?
I can't this is by the way, this is our 87th 88th threats to our very existence is NoSQL and Hadoop. And we're kind of dead. I mean, we're dead with object databases. We're dead with unstructured data. I mean, some people spent in excess of $10,000,000,000 built getting an unstructured I mean, getting a database to store all your cat videos.
It's I mean unstructured data was going to get I never get the pitch was most data is unstructured. And Oracle only handles structured data and we're going to kill them because we're going to be the kings of unstructured and they're kind of screwed because they just handle structured data. Well, yes, structured data like banks and phone companies, phone records and connecting phone calls and banks and the military targeting things and insurance companies and all that videos, dog videos, videos, pictures of your friends, pictures of your Facebook pictures of what you had for breakfast. Now the question is, which are the banks going to pay more to keep track of money than consumers are going to pay for to keep track of their cat videos. And it turns out banks are still paying more than consumers in terms of monitoring.
Cat videos you store for nothing. So it turns out that unstructured data versus structured data was not the death knell for us either where objects, Okay, NoSQL. We have a NoSQL database. We have a very we bought Berkeley DB was the biggest NoSQL database. Wasn't called NoSQL database.
It's called a key value pair. Let me tell you what it's called. It's going to be called ISAM. I mean this is talk about Back to the Future. This is 19 late 1950s technology.
I'm not saying it doesn't have value. We have one. We have a NoSQL database. It has value. You don't need an a priori schema.
There are things that are it is very good at and you should use it for. But it had nothing to do with competing with us. I remember when MySQL was going to kill us. Another relational database was going to wipe us out. I can't I mean, the death knell for Oracle has sounded so many times.
It's hard for me to jump up and run out of the house and every time in my underwear every time that happens. The now Hadoop, I mean I know what Hadoop is. I actually know what it does. Most people writing about Hadoop, I'm not accusing you of anything, have no idea what Hadoop even does. All they know, it's got an elephant and it's written kind of by Google and Yahoo!
It's open source and oh, it's Oracle screwed. I mean, it has nothing to do with what we do. It's a big sort it handles mass amounts of data. It's highly parallelized. MongoDB is I mean, we actually follow all this stuff.
It is not a competitive product. It doesn't do the same. Why do you think 19 out of 20 of the biggest SaaS providers today are running Oracle? You think they're all confused? You think they all they couldn't find they couldn't download MongoDB?
It's just preposterous. Again, MongoDB is a highly distributed data. It does very interesting things. We have a NoSQL database. We sell Hadoop.
We put SQL in front of Hadoop. We've done a lot of things with Hadoop. Again, it does some things extremely well. It just is not a product that competes with what we do. It coexists with what we do.
And the Workday doesn't run on Hadoop. Workday doesn't run on NoSQL. Even the one guy that doesn't run on Oracle doesn't run on those things. It doesn't run on Mongo. It runs on its own proprietary object database where you can actually build applications and actually do online transaction processing, which none of these well, Mongo kind of does it, but Hadoop certainly doesn't.
Okay. So it's just they really aren't a threat to what we are doing. They're interesting new technologies. Insofar as we can incorporate those technologies into Oracle, we have done that. And so far as the hey, Hadoop does certain things, does this pair lots and lots of servers doing basically sort merge.
It's not exactly sort merge, but it's called MapReduce in parallel process a lot of data. And when we put the SQL language in front of it or we have very tight coupling to Hadoop for so customers can use Hadoop and use Oracle in concert. This is not something that will take the place of Oracle. It's different. It's a little I don't know, it's a little bit like saying laptops will take the place of steamships.
They won't. I mean, they won't. They're too different. So our big database competitors, we continue to gain database share on premise and in the cloud. And we think now with our platform, we'll be able to amplify that advantage, because our biggest competitor IBM is not there.
The other the interesting other competitor that's kind of shown up relatively recently like us is Microsoft, which has moved a lot of its stuff to the cloud. And they do have a legitimate relational database. It's pretty good. And a bunch of and platform services they got dot net. We have Java.
We've always kind of the world's always kind of self selected between Oracle and Microsoft in terms of what you want to we have Linux, they have Windows, we have Java, they have dotnet, we have the Oracle database, they have SQL Server. But Microsoft has a pretty complete platform. It's kind of the other pretty complete platform out there with a lot of applications built on top of it. And they're going to be an interesting competitor going forward. I think Bill's return to the company while it hasn't been heralded has made a very big difference.
I mean, I've always had I mean, competing with Bill over the years always thought he's a very smart guy and he is. And he's helping a lot over there. Yes, sir?
Brian, on the cannabis, Gerald. Just a question on a lot of media reports around consolidation in the industry lately, not small companies, massive companies EMC, HP and a couple of other big IT vendors were mentioned. So I'd just be curious in getting your view on kind of the IT landscape. Do you think there's going to be more consolidation among these vendors, big vendors? Last year you talked about cloud consolidation, but where
do you see it and
how does this impact Oracle?
Well, I think if your business or if our if we hadn't made some moves to the cloud, in other words, if we just said, okay, we're never going to offer anything in the cloud, we're going to keep selling on premises hardware, keep selling on premises software. That's what we're going to do and that's all we're ever going to do. That would be a precarious strategy. I mean, I would not be comfortable with that. I mean, I think we can do fine.
I don't think on premise is going away. But I'd like to have 1 foot in on premise and 1 foot in the cloud to get some hyper growth in the cloud and some decent growth on premise. So we can grow our profitability grow our cloud share and grow our profitability at the same time. And we have to grow in both areas I think. But if you look at well, EMC is interesting because of VMware.
But VMware, while it's done very well with enterprise customers, has is not represented in the cloud at all. There are no cloud companies that use VMware. So that's really an enterprise kind of an early enterprise software play. Virtualization was a big deal. They were there first.
But as you move to the cloud, Azure doesn't use it, Google doesn't use it, Amazon doesn't use it, we don't use it. We use something called Zen, an open source VM. And all the big providers have gone with open source and standards based. And we use a lot of open source stuff by the way without going into with not just Linux, but ZenVM. There's a long list.
Some of this gets us into trouble because there are sometimes there are security issues with open source software. But us along with the rest of the community are working very hard to address those issues. But so EMC with VMware and then their storage business, VMware nowhere in the cloud, their storage business really nowhere in the cloud. I mean, that's not good. So people said, well, they haven't grown, but Oracle your growth hasn't been so great.
If you look at the growth of our software business, it's been pretty good. What has shrunk is our hardware business and our consulting business. But our software business is now in excess of 80% what percent is their business? In the 80s. I know it's in the 80s.
I don't know I've had, but I'm guessing 82%, 80% anyone no one knows, but it's almost mid-80s total. That's what I said mid-80s, 72. Okay. We'll have to go back and check her math, but she's the boss now. What can I say?
I just move on. So but if you look at our software business, our software business has grown quite well. And our cloud business has gone from nothing a couple of years ago to where we're the number 2 player. And I don't think it's very far we're very far away from being the number 1 player given the kind of growth we're expecting over the next 24 months in our platform. But if you're in HP, what's your what are you selling?
If you're an IBM, what are you selling? If you're EMC, what are you selling? It's what you've always been selling. And as the world changes, if you don't make it across the chasm, you really are a dinosaur. We hope to be the only dinosaur that makes it across the Cretaceous Tertiary Boundy.
And all those little soft furry mammals, yummy, yummy, yummy. So imagine a velociraptor and a bunny. And that's how we see the opportunity, but we got to make it across. And it's hard and it's not simply a matter of an answer to Rick's question. I talked about a lot of the engineering we had to do.
And that's a big job. That's just the start. Once you get all the engineering right, you've got to restructure your sales forces against a whole new set of competitors. You got to lower your cost of selling because the size of a lot of these cloud transactions are smaller than what we're used to doing. We have to add a lot of sales people to get better coverage because because we can go lower in the market than we used to be able to go.
And again, we have to change the focus of the sales force from on prem to cloud. And it's much easier to get a start up. You got 1 and only 1. You're a start up and you sell on the cloud and that's all you do. It's very easy to do.
For us, we have to say that's not priority 1 anymore. Priority 1 is ERP in the cloud. Priority 1 is HCM in the cloud. And we have to get the comps we have to train the people. We got to get the compensation systems right.
We've got to get the coverage right. So there are there's a huge amount of engineering work to do on the foundation side. And then there's a huge amount of distribution work that has to follow that. And then you have to get your 1st wave of references and your next generation references for all these new products. So it's kind of a startup inside of an existing company.
It's very tough. It's a cultural change, structural changes, engineering changes. That's why most companies don't make it across the castle. But the opportunity, if you think about it, just let's say, just toss a coin, what happens if we in fact make it across the chasm? We with our $5,000,000,000 a year of R and D become the cloud company?
What happens to the little furry bunnies over there? And I think we I mean we got to do it. And I think we're well on our way. And I'd say the difference is now we're actually in the cloud at $2,000,000,000 just under $2,500,000,000 a year. We're really in the business.
We have real customers, real references. We're winning big brands, not just mid market. We're getting some very, very large customers. We're competing aggressively with Salesforce. They beat us more often and we beat them, but we're creating aggressively with Salesforce.
We're competing aggressively with Workday. We beat them more than they beat us. So we're actually in the game. We're on the field. And just kind of suspect you're handicapping it.
What is the percentage? You're trying to pick percentage. What's the likelihood that Oracle actually makes it across the chasm? This big tech company makes it across the chasm to compete with this whole new generation of startups. I think we're the only one.
SAP hasn't started. You can't just do 3 acquisitions and say we're in the cloud. We rebuilt all of our ERP. We built all of our HCM. We rebuilt all of our database.
We rebuilt all of our middleware for the cloud. You just can't you can't buy 3 things and say we're in the hey, we're big in the cloud. Look at our revenue. Not the point. So if we make it, we're going to be a very formidable competitor in the cloud and we're going to make it.
Gentleman right here.
Thank you. Larry, you see significant upside from the cloud and not from your on prem business. Where do you see the dollars coming from? Is it just the dinosaurs? Or is it more internal in terms
of IT, etcetera? Well, okay. So let's I mean, where are we taking share from? Well, I think we'll well, even if we ran Workday completely out of business, it's not very much money, right? So you'd all yawn.
Great job. You ran Workday out of business. Who cares? It's $40 Great. So you're right.
The big money is replacing taking more database share with our platform business from IBM and to a lesser degree from Microsoft because Microsoft is actually competing in the cloud with the platform. Microsoft should be able to move their dotnetsquelserverapplications to their platform. I mean, why would you guys come to our platform? Applications already built, you can move to Microsoft's platforms, the dot net SQL Server application. People do convert from SQL Server to Oracle because they want to go larger scale and handle bigger customers and more data.
But if that's not a problem for you, you just move to Microsoft. Our customers, we got a lot of them will move to our platform. But where do IBM's customers go? Where do the DB2 customers go? Where do the WebSphere DB2 customers go?
So we think we pick up a huge we continue to take share from IBM. And we've been taking share from IBM for a very, very, very long time. We think in ERP mid range and high end ERP, Now it's going to be a slow process, but I'd love to hear what SAP's plans are. I know they're talking about some simple edge applications. They've done a few acquisitions.
They've got nothing. Their last big internal development they canceled. Business by design just shut it down. Whoops, didn't work. They're now obsessed with HANA, but they don't even use it.
They market it aggressively. But I mean think of how embarrassing it would be for me if I said, hey, Oracle Fusion applications run on HANA, but not Oracle Database, pretty preposterous. But all of SAP's cloud apps run on Oracle, not HANA, everything. And they've been obsessed with this. They've had another obsession before that was NetWeaver.
So they've Haso bless his heart has always wanted to be a techie not an accounting guy accounting apps guy. And he wanted to be techie. So he wants first he wanted to compete in middleware and he tried with NetWeaver and that didn't work out so well. So now he said, okay, I couldn't beat Oracle at middleware. I know what I'm going to do.
I'm going to beat Oracle in database. Okay. I mean, you can try. I thought that I thought he was insane. But he's not as you said, get me the name of that pharmacist.
He wants to play us in database. They're the number one ERP company in the world. We're number 2. If I were him, I'd want to play us in ERP. We're the leader.
They're not in the top 500 in database. I know, okay, they bought Sybase, great, that antenna. So they want to play us in database and they talk about it and talk about it and they never talk about ERP. So they shut down business by design give up on NetWeaver and I'm telling you they don't use HANA. What is that how long have they been talking about HANA?
Rick, you've been a big HANA supporter. How long they've been talking about HANA? Probably about 4 years. About 4 years. Rick, I know Rick's been really saying this thing looks really good.
Why do you think they don't use it? Yes, 4 years. Okay. They're porting all their products over to it, right. Okay.
So they've had 4 years. They don't use it. They don't use it. It's astonishing. And that's where they're putting their marketing efforts.
That's where their ego is. That's where their R and D is. They lost a lot of key people, including the primary architects of HANA. And I'm telling you it's not going to it's going to be like NetWeaver. It's unmitigated disaster.
But that's not the problem. Dehana never needed to work. NetWeaver never needed to work. What needs to work is ERP. That's their business at least 98% of their business.
And they have not started moving that to the cloud. What are they going to do? So where's the money going to come from? IBM, SAP. We're going to take 1 by 1, we're going to take a lot.
Starting in the mid market, we're going to take ERP customers from them. And they got no answers. They got no they got nothing. Now people don't make ERP changes every day. But if you want ERP in the cloud, you can't get it from SAP.
So that's another huge reservoir of money answering your question. So IBM, SAP. And strangely enough, though it sounds funny, the a lot of the hardware companies because we sell storage as a service and we sell compute as a service. So now when you buy our ERP applications, it comes with storage and it comes with compute and it comes with networking and all that stuff. So and we chart and over a 10 year period, you pay a lot more for our ERP as a service than you pay for the license on premise with support.
And the reason you pay more is we do more. We do the backups. We do the restores. We do the upgrades. So you get a much higher quality of service.
But also we provide the computers. We provide compute and storage and networking and all that other jazz. And that means companies aren't going to be especially in the mid market companies aren't going to be buying servers. They're not going to be buying storage. So that's also money that can come to us in the so in this massive shift as computing begins to look like a utility, we have our traditional competitors SAP and ERP applications and IBM Middleware.
And then we have people we really historically have not been competing with, which are kind of all of these different server companies. And whether it's an Intel server running Linux or a Windows Intel server running Windows or a Unix server running IBM AIX doesn't really matter. We don't we think people are going to be buying less and less of those. And they're going to be buying a lot of that stuff in the cloud. Again, it's a gradual but just a gradual trend, especially in the mid market.
In the high end, our engineered systems are still growing nicely. People like engineered systems, because people are coming to expect their suppliers to do the system integration so they don't have to. Why do I like the cloud? I like the cloud because it includes compute and storage and memory and the operating system and the VM and the database and the Java platform and the application and the service to upgrade it and back it up and run the whole thing. I like it.
So the cloud provider, the cloud services provider integrated all those pieces for me. I don't have to. I don't have to. Same idea behind engineered systems. Exadata, it includes storage and networking and the VM and the OS and the database.
And we will manage it for you if you want us to or not, if you don't want us to be attached to the system. But it's a lot easier for you to manage because when we patch an Exadata system, we send you one file and it patches the firmware and the VM and the OS and the database all at once and it's all been tested together. So the fact that we have these pre integrated suites of hardware and software that go on premise, we have the cloud obviously pre integrated and you just access over the Internet as a service. Kind of the same benefits getting the labor out of enterprise IT, getting the human element, the cost of the labor and the human errors and the project delays and the overruns and all of those things out, because suddenly the supplier is responsible for the integrate doing the integration, not the enterprise customer. And we think that's attractive.
In the cloud, obviously, but we also think for those banks that are not going to move to the cloud overnight, we think an Exadata sure makes more sense than buying your own storage, your own network, your own operating system, your own servers, your own virtual machine, your own database and piecing it all together and patching it all separately. Think about what happens when you come by new Red Hat comes out with a new version of Linux, VMware comes out with a new version of VMware, Oracle comes on the new version of the Oracle database, the server manufacturer changes the storage firmware. I mean, it costs a lot to keep that stuff current. And there are and who does the testing? The customer does the testing.
The customer is a system integrator. It's a very bad model. It's a very inefficient model. So we like our cloud business and we like our engineered system business. On the blue shirt.
Yes, sir.
You said you thought you could be the largest SaaS company in a couple of years. And if you look at Salesforce's growth rate, if they grow at a similar declining rate for the next couple of years, they'll be an $8,000,000,000 company. And if you grow at a sort of mid-30s rate over the next couple of years, you'll be a
$4,000,000,000 company. We're certainly planning to grow in excess of 50% a year at SaaS. So I mean, our internal plans are well above 50%. And remember, sales force has to make the right acquisitions to keep growing at that rate and they have to continue enjoying almost no competition. So we think we can slow Salesforce down and accelerate our business.
So we're not our business has got to be in the 1st digit of growth that we're targeting is a 5. Percent and but not 5.0 percent, maybe mid-50s, let's say. And that's not including pass. So our intent we think we can and should be the number one SaaS company, because we have we think we're very strong. We're kind of the pioneer in ERP mid range and high end ERP.
NetSuite is the pioneer of ERP kind of mid to low. Low. We're the pioneer mid to high ERP. We think that's a very valuable market for us and we're way in front of anybody. So we think we can be clearly the number one player there.
We are worldwide, are we the number one player in HCM? Probably. I mean, it's close, but we think we're ahead of Workday. And we're certainly in the last couple of quarters, we sold more customers and we've had more wins in Workday. We're number 1 in marketing.
We think we're slightly in front of sales force and service. We just added field we just had a field service acquisition. We keep on adding around. We've got a very strong data business is new for us, but we think we're very optimistic about that. We think it can strengthen our position.
It helps us strengthen it's an all new business for us and strengthens our position in marketing. We have such a large we're number 1 in recruiting and talent management. We have such a large portfolio of products. The real challenge since we've done I think a pretty good job of engineering and acquiring. And I'll just you've just listed the things we bought versus what our competitors bought.
I think we bought at better prices and better assets. We've been the 1st mover in acquisitions. And we've been building for the last decade or almost the last decade, ERP, HCM sales, things like that. We've got a very strong portfolio. Now the big thing is getting all of the secular sales forces lined up to compete with sales force and sales, to compete with sales force and service, compete with Workday and core HCM and just blaze the trade compete with ourselves and compete with ourselves in mid range and high end ERP.
Just go ahead and aggressively pioneer that market. So we think we have all the we have the right portfolio to do that and the very strong platform underneath, which is a differentiator at the SaaS level. In other words, if you're buying HCM SaaS, do you want to buy let's say the products are equivalent. I think our product is much better than theirs. Ours is social.
Theirs is not social. But without going into that big argument, why we're better than Workday, we have a platform
that allows you to extend
those our HCM application and
nothing.
And so and it's unfortunately, it's a small number it's a fairly small number. But yes, no, we'll continue to look at acquisitions. There's not a lot out there. Let me tell you, we looked at Concur. We looked at Concur and thought it was again, I know I'm just sitting here knocking SAP.
Why do we want to do travel expenses? How is that strategic? How does that help us? What other product the simple question is, what other products that help us sell? Again, we say suites win, right?
The big thing. We think talent management helps us sell core HCM. Core HCM helps us sell talent management. It's the same buyer. ERP, general ledger payables receivable helps us sell enterprise performance management and budgeting and reporting.
And so enterprise performance management helps us sell ERP, ERP helps us sell EPM. They're related products. Same CFO is very interested in both. Same buyer would like to buy the Suite. With Concur, if we had bought Concur, how do we leverage that into selling more products?
That's what we didn't buy. We didn't buy we could have bought Ariba. We have much more money than SAP. We could have bought Ariba and SuccessFactors and Concur, no problem. That was not to be a problem.
We have a lot more money than they do. None of them were deemed strategic. Ariba doesn't help. They don't even use the Ariba software at SAP. They just use the procurement network.
They still use their own procurement software. Concur, there's no leverage out of Concur. It's a very high priced product. And maybe they can convince some analysts look how big we are in the cloud. There's no growth in Concur.
So it would slow down our growth. You'd complain. If we bought Concur, it cost us a lot of money and it would slow down our cloud growth, except for the 1st year, which would create the illusion of growth. We've got hyper growth from our Fusion apps. Again, we think ERP is just a matter of getting the sales force focused.
Okay, guys, stop selling on prem and then just sell cloud, cloud, cloud, cloud, get all that done. We are we've won the battle against Workday in Europe and outside the U. S. And we're still fighting in the U. S.
Finish that, get that thing won. And then continue chipping away at Salesforce's 15 year lead. We think our sales products well, we're ahead of them in marketing, we're ahead of them in service, but in their strength, we got to compete aggressively in their strength, where our pitch is we have tools to help you sell more. We do more than simply manage your opportunities and forecast the quarter. We also have tools that allow you to engineer sales processes and actually sell more.
So we've just got to compete aggressively on all of those areas. And even without additional acquisitions, we think we can maintain that mid-50s. It's not a matter we got to look for a big acquisition to do that. By the way, there are no big acquisitions left. I mean, what we've looked around.
When we look at Toa field service, we were buying a relatively small business that had very good technology that we can grow have a good core of engineers, good core of customers, but a relatively small business. It wasn't for that one shot of the illusion of growth through acquisitions. But that's a business we think we can grow. I don't think SAP can grow Concur. So but again, your question is, do we need to make big acquisitions to get to the mid-50s?
No. Gentleman right here.
Bill Lyman from ISI. So 10 years ago, you said the tech industry wouldn't grow that the leading companies would do nicely, but the industry overall wouldn't. Cloud would seem to put that on steroids. What do you think if anything has changed? What would your next chapter be?
And what does that imply about M and A, not just in software that you talked about, but across software and hardware? Okay. So are
you saying cloud is making I'm not sure what your question was. Did you say cloud is really making the industry grow rapidly or cloud is proving it's not growing rapidly? What does cloud prove?
Cloud would seem to deflate tech spending, which
you had indicated as well.
So you're saying cloud has depressed overall tech spending including cloud? Everything hardware, software services. Right. And I think that's right. I think cloud has hurt the traditional vendors.
I totally agree with that. However, if we make it across into cloud, I'll tell you what's really hurt are the system integrators, right? So I don't think it's hurt our business. I don't think it's hurt our business. If it has, it's a very, very small amount.
And I think ultimately it's destined to dramatically help our business because we think we can deploy our software assets and our hardware assets very effectively and package them in the cloud. And that's what we're going to do. But it's much harder for an IBM to do that. It's We get paid for the software. We get paid for the hardware.
We get paid for the labor, the service about well, actually there's not much labor in backing stuff up because it's highly automated. There's not much labor in upgrading our software because it's highly automated. But we get paid for all of those additional services that right now is done by human beings at the enterprise level. So we're we also do the integration. We do all the integration, which is done by the customer or the system integrator.
So the biggest move the biggest problem in terms of the industry getting smaller is the labor being automated away. As the labor gets automated away and the system integrators get smaller and smaller and these I mean, you remember how big an SAP implementation was for a big company? Anyone remember? Yes. I mean, it's just astounding.
That's not going to happen anymore. That's huge amounts of money. The EMC storage business, I mean, a lot of these businesses now I mean if you look at what Amazon charges for storage and what EMC charges for storage, there's a big gap. And that's going to be it's a problem. What you sell is storage.
These are commodities. But we're not in a lot of commodity businesses. I mean, we have some commodity hardware businesses and they're getting smaller. Our engineered our non commodity hardware businesses are growing nicely Engineered Systems, Exadata, Exalytics, Exalogic, our big data machine, which runs Hadoop by the way. So we've got a lot of engineered systems, Spark Supercluster, all of these things are 0 data loss backup appliance.
I mean a lot of these they are a collection of hardware and software all pre integrated, which are designed to take the labor out. You don't do the integration. We're trying to just get all the rid of all that integration money that's spent. Plus think about the number of errors that are made as every company does their own unique SAP ERP implementation. I mean, it's not just the system integrator, but how much of the IT department of that consuming company spend in terms of labor to put that thing in and then upgrade it and upgrade it again and then bring in the EMC drives and all this other stuff and the HP servers.
And so we think we have an opportunity to package those technologies in the cloud with lots of differentiation and lots of value add and make our business grow really nicely at the expense of other people. Yes, ma'am. Okay, boss. Last question. This is hard.
Can I have 2? Okay. The gentleman then that's it over there.
Okay. Karl Keirstead of Deutsche Bank. Larry, it'd be a shame for you to leave without taking the CEO so I'll ask it. And there's 2 parts. One is, I'm wondering if you could give us some context to your decision to give up the CEO title.
That's the easy one. And then the other one I'd love some color on is how things might change now that you've got more time to devote to the technology function?
Okay. I think I don't think there are going to be any large changes. I mean, it's always been it's been a team effort for a very, very long time. So Safra and Mark have been running the vast majority of the company for a long time. I've run engineering at Oracle from day 1 and I continue to run engineering now with extraordinarily able help of Thomas Kurian and John Fowler and Ed Strevan, so with a phenomenal team of people.
But it's always been a team effort. I think we get along very well. I mean, we're all kind of we're all both specialists and generalists. I think we all if we have to go out and sell. We all if we have to we can go out and manage processes and do all of those things.
I think we can all analyze acquisitions and figure out if it's accretive or dilutive and all those. I think but frankly I specialize in the product areas. Safra runs everything from finance and legal to manufacturing and what we'll call the back office in the broadest sense and Mark runs everything this customer facing. And does it mean I'm going to stop making sales calls? No.
But it really means that they get the recognition that they have long deserved. They've been doing this job for a very, very long time. And I've been focusing on engineering for a very, very long time. We'll continue to work together to work together as a team. I think we get along very well.
It's not as a matter an issue that like Lincoln and his cat, believe me, I want to say itself to Lincoln. But Lincoln after reconstruction held a vote and there were all nays in the cabinet in one eye and Lincoln overruled everybody. That's not how we work. It's not that we're consensus managers. It's just that we discuss everything thoroughly.
And I think people with the same facts and who are good at reasoning tend to agree. And I think we're all very fact based. I think we're all kind of slaves to reason and we communicate well together and we tend to agree on things and work extremely well as a team. And for me, it was important that both of these guys get the recognition and the credit they deserve. I mean, they really have been running their parts of the company for a very, very long time and the world should know that.
Their titles are now correct. And I've always wanted to be I like the product. It's my favorite part of the business. It's where I started as a computer programmer. And I will as I said on stage, I'm excited about my new job.
I'm excited about all of the things we have in the pipeline that's just come out. And you ain't seen nothing yet. I mean, we spent a lot of money on R and D and I think we get a good return on our investment. So I'm very excited to be on the team and we're all in it to win it. And these guys again these guys now have the titles they have long deserved.
And this is the last question.
Thank you, Larry. James Gillman with Tretzel Hamilton. You have a very exciting vision going forward. My question though pertains around vendor lock in. Your vision kind of would say that single source supplier, but I think enterprises want to avoid that vendor lock in.
Can you comment on that? Thank you.
Well, if that was true, no one would buy from Workday and no one buy from Salesforce, it would be great. So if you build an application on force.com, let me tell you where you can run it, on a computer owned by Marc Benioff. That's it. And let me tell you what you pay, whatever he wants you to pay. If you build an application on our platform, you write it in Java and the Oracle database.
Where can you run it? You can run it in your data center. You can run it on amazon.com. You can run it on in the Microsoft Cloud, Azure. I mean you've got lots of choices.
You can move it back off our cloud. Our stuff is all standards based. There is no lock in, in our platform. Their platform exists 1 and only one place. It's 100% proprietary, runs on one set of computers, the computers owned by salesforce.com.
Workday, same thing. I mean the only place you can buy Workday is Workday. We are the bulk of our business, our platform business, our Java business, Java is open source for God's sakes. Java is open source standards based. The Oracle database is based on standards.
100 of industry standards. There is no lock in. You can actually that's why people move from DB2 to Oracle. That's why people move from SQL Server to Oracle. God forbid, I hopefully that no one moves from Oracle to SQL Server.
Maybe it's happened where one guy someplace in Mongolia did that. Nothing against Mongolia. I love Mongolia. I've ridden horses in Mongolia. It's a fantastic place.
Great history. But there is no lock in with our platform. There is a lock in with the Salesforce platform and there's no lock in with the Workday platform because they don't have one.
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