Thank you. Thank you. Thank you for coming. 2013 Financial Analyst Meeting, very excited to have you all here. I would be remiss if I did not pass up on the opportunity glory of this moment in that we've seen what is truly the most remarkable comeback in all sporting history, just phenomenal.
And one of the key elements of the team will be in a little bit later this afternoon to speak with you all about that. Hoping. He'll be here. I don't think you can stop him from being here. Let's see.
So some basic housekeeping things. If you haven't already gotten lunch outside, if you don't know where the restroom is down the hall, you don't know how to use Wi Fi, go to another meeting. Careful not to trip in all seriousness stuff. We've got a lot of electrical in here. We try to help you out power and availability, make sure you don't kill yourself or make a fool out of yourself.
So careful coming in and out. The doors, the doors you'll notice there's some chairs at the back. Over here, you've got doors we'd like you to kind of use the egress to come in and out. As a courtesy, when you open up the big doors, a lot of light comes in, makes it hard to see some of the screens. So let's try to use that door.
You also should receive an email, which points you to the survey. As you'll see, when we get to the agenda, we try to make the event better for you each and every year. Some of the feedback you provided last year results in some of the changes in the format this year. I encourage you, you've got it, go online, complete as you go, it just makes it a little simpler. Now this is always my favorite slide.
I don't write it, but I certainly get to read it. So as a reminder, today's discussion will include forward looking statements, including predictions, expectations, estimates or other information that might be considered forward looking. While these statements are forward looking and they represent our current judgment on what the future may hold, they're also subject to risks and uncertainties that may cause actual results to differ materially from the statements being made today. Throughout today's discussion, we will attempt to present some important factors relating to our business, which may potentially affect those forward looking statements. And as a result, we caution you against placing undue reliance on these forward looking statements as they reflect our opinion only as of today.
And as a reminder, we're not obligating ourselves to revise or publicly release the results of any revision of these forward looking statements in light of new information or future events. And we've been encouraged 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 our future results or the market price of our stock. I also would like to make sure that as we go through the presentations, in particular, the technology discussions with Thomas and team, that they're being presented today for informational purposes. And then finally, we will be using shortly here in the financial discussion, we'll be talking about some non GAAP measures. Just want to make sure you understand what goes behind some of those.
So thanks for your indulgence. You're going to see some of our presenters present these first two safe harbor slides. When they get to that part of the presentation, they may make reference to what Ken discussed earlier. This is what they're talking about. Okay.
Let's turn to the agenda. So I'll and shortly here just spend a few minutes just walking through some of the financial highlights. Many of you understand Oracle, so it'll be brief. We'll just kind of drive home a couple of key takeaways from the financials we would want you to be thinking about. And Saffron would like to come on up and just share a few thoughts with you.
And then what we'll do is we'll get into the technology, namely a lot of discussion today about engineered systems and cloud. Thomas will start with a development overview and then Leland Louayza will come up, speak about our engineered system strategy. Andy Mendelson will follow then, talk about in memory software. Thomas will come back up on stage, talking about platform and infrastructure services at Oracle. And then we'll get into the applications.
Steve Miranda, Chris Leone, Thomas, we'll all be talking about ERP, HCM and customer experience. And then time permitting, we'll get some questions from Thomas. That should take us up to right around 2 Then we'll have a little bit of a break, give
you a chance to take
a breather, get some food, soda, use the restroom, whatever. Well, then we'll come back. After the break, our Chief Communications Officer, Bob Evans, who's here today, will be leading a panel discussion with 3 of our customers, and I made references earlier to surveys and your feedback. One of the things that always comes back, we'd love to hear more here from the voice of the customer. The voice of the customer will be here today.
Bob is going to be leading a panel discussion talking about how some of our prime customers at Praxair, UBS and the University of Pittsburgh Medical Center, how they're using Oracle technology to better run their business so they can focus on running the business and then the technology being taken care of with their efforts in Oracle. That will take us about 3 o'clock. We'll then take another short break. So we've got a couple of breaks today, of spreading it out a little bit. And then what we'll do, if you've been following the America's Cup, we'll be going around marker number 4 heading for the finish line.
As we do that, Safra and Mark will basically take a Q and A session. It's free form. This is your opportunity to ask the questions that you really would like to have addressed. This is it. We know you enjoy this part of the program.
We want to make sure we keep going on that. And then lastly, Larry will come on in and we'll talk about that. Now as a personal suggestion, those of you asking questions of Larry, whoever starts off first and he'll decide who he wants to call on, I would just kind of encourage it somewhere segue in America's Cup into the question, because if you don't, he's going to talk about the America's Cup, I have no doubt. It's a phenomenal event. I actually, if I have to give my little coaching here, there's a lot of Oracle as part of Team Oracle in terms of the technology.
Think about a question that kind of reps the 2 together because they do work together. Okay. Let's turn to some financial highlights now. So obviously, there's a lot going on at Oracle from both the technology and a financial perspective. The breadth and depth of our technologies without peer, Safra, Thomas and the others will be talking with you about that.
My job is basically to distill down our financials and our business model into a couple of key takeaways for you. So to start, Oracle is the world's largest enterprise software company. Notice I say the word software. Yes, we have a hardware business and yes, we have a services business. But at the core, Oracle is a software company.
And that software revenue has grown very steadily over the last 10 years. Last fiscal year, constant currency growth of 7%, most recent quarter, constant currency growth of 8% and most of that organic. Now that software revenue turns out to be very important for us as a company because software drives earnings for Oracle. Nearly 90% of our company margin is driven by software. And it's our business model that makes that happen.
When we sell software licenses, we sell software support as virtually all, underscore the word all, customers attach a support contract to their software licenses. Now when we talk about software support, you can think of this being like subscription revenue. Subscription revenue in a very large installed base that gets bigger and bigger and bigger every year as those customers renew those support subscriptions. Now here you can see how the installed base has grown dramatically, essentially almost quadrupled the size of what it was 10 years ago and software support now makes over half the revenue of the company. Now that turns out to be very important because software support in turn drives most of the margin and profit for software, which in turn drives the earnings for the company.
And of course, you see that running through our financials. Operating margins up 1100 basis points in 10 years. Actually, it's 1100 basis points in 7.5 years, because along the way, we picked up a hardware business that essentially was running at 0 operating margin. And in 2.5 years, we essentially are back at record levels and we continue to see very strong margin in our business. Now growing revenue and expanding margins have done very well for our ability to generate cash.
Just this last quarter, we generated over $6,000,000,000 of free cash flow. Now to help put that in perspective, that's more than double the free cash flow that we generated 10 years ago than we've done it in 1 quarter. We're coming at a different way. We're essentially now on par in generating free cash flow with IBM, when just 5 years ago, we were generating half the free cash flow of IBM. Now the strength and the technology of our business model have resulted in a remarkable to generate cash, as I mentioned.
And we've taken that cash and we've reinvested it back in our business through R and D to develop new products. We've also acquired nearly 100 companies and we've returned $39,000,000,000 to shareholders in the forms of dividends and buybacks. More recently, as we look into capital allocation, you can see there's been a dramatic increase in that capital allocation and return of cash to shareholders. The dividend has been recently doubled. And over the last 4 quarters, we've reduced the share count by more than 4% 5%, excuse me.
And you see all these elements coming together in our earnings per share growth. Earnings per share over the last 10 years up at a 20% CAGR. Now, I'm wrapping up the elements that have enabled us to be successful in earnings growth in the past, namely a growing software business, expanding margins and share repurchases have generated very good earnings per share growth, and we see very bright future for that same EPS growth over time. With that, I'll turn it over to Oracle President and Chief Financial Officer, Safra Katz.
Thanks everyone and thanks for coming today and sharing this week with us and the exciting win we had yesterday. I usually put up a bunch of slides and talk about our margins and our cash flows and our durable unique nature of our business model. And we talk about the fact that we acquired a hardware company and we still deliver margins in excess of really all of our competitors. And we talk about our ability to deliver EPS growth both organically and with the use of our cash. But it dawned on me that you actually already know a lot of that because that's why you're here.
That's why you're shareholders of Oracle and one of the reasons you've been with us. So what I thought I'd do today though is actually and I wrote it down, so that I make sure I hit all the points because I assume they're obvious. I actually assume that you all recognize that the things we've been working on for over 30 years, which is performance, scalability and security. What we have spent literally 1,000,000,000 building and continue to invest 1,000,000,000 into every year. I actually took as for granted to some extent that that is actually more important today than in any time in history.
That as the changes come that Larry's vision actually saw years ago that the heavy compute model would be, we didn't call it cloud, he didn't call it cloud, but would be in very, very scaled performant data centers and the users would have simple devices and yet be able to access immense amount of capabilities. Those days are actually here and they come and they get bigger and bigger every day. And they actually work towards us because no time has it been more important to have the massive scale that is necessary, the intense performance and the security. We believe that all roads actually lead to us that the secular changes are great for us. And you know what confirms that feeling every single time is not our own internal meetings or anything.
It is our customers. It is one customer after another. I as you all know, I run day to day operations, so I don't get out much. I'm not in sales. I don't meet that many customers on a daily basis.
But in Oracle Open World, they let me out. And I get to actually talk to our customers who make our products fly, who actually finally get use out of our products. And do you know what some customers told me? Exadata saved their job. But for the Oracle transformation they did with fill in the blank, J.
D. Edwards, E Business Suite, Fusion changed their company. We have industrial, massive industrial companies come here with not 100 people, but 300 people they send here because they know how critical our technology is to them and they want to be how many customers told me they actually want to be first to using some of our products. That's what's going on. And every single year, the enormous scale and ability to handle massive amounts of data securely are more important.
Larry said it a long time ago and then I just actually saw it on a video I've never seen, which is this is the information age, not the data age, but the information age. And what actually in many ways makes it even harder these days is there is such enormous volumes of data and yet businesses now have to stay on top of it. And it's our products that make that possible. Our products allow them both the ability to handle these important these enormous amounts of data, but also the analytics and the tools. Okay.
So every year, I've been working with Oracle actually since the 80s and I've been actually employed at Oracle since that's it. There's database is maxed out. It's going to slow down. There are secular changes and Oracle will be left in the dust. I've now heard it probably half a dozen times.
And each time we look in we continue on, we persevere and we focus on meeting our customers' needs. We came out with Engineered Systems and I want to talk with you a little bit about that because our entire intention with Engineered Systems is to package solutions for our customers, so that they become the best way to implement our systems, our software. And our design goal was not 10% better than what IBM has or Dell has, not 50% better. Our actual design goal was 10 times better. And I've been watching as I'm sure, as I hope some of you have watching the America's Cup.
But the way we work at Oracle is to try to always do the unexpected, the impossible and to break with conventional wisdom. And delivering software as part of an engineered system has really created an entirely new area. That business is doing very, very well for us. I cannot tell you how many customers walked up to me, not even ones I had meetings with telling me they have 2 Exadata, they're getting 4 more. They tried it, they're going forward because they said
it was
compelling. And that's our goal. Our goal is not to be a little bit better or a little bit different. Our goal is to be way better, because the demands of technology are bigger today than at any other time. I have to tell you, it is our moment.
We know it is. And whatever the economy brings us, we will ultimately gain share. For the past 30 years, we've been working and each time we have a new secular competitor and we have outlived and outgrown all of them in every single sector. And with that, I want to turn to cloud because the way we approach cloud is frankly somewhat different than all of our competitors. Because what we think is that in cloud, a customer still should have choice.
I was asked actually at one of these big industrial meetings, what's the best practice for cloud? Do you go all cloud or do you go half and half or do you stay on premise? And you know what the answer to that is? The answer to that is it depends on what the customer wants. Only our product line gives them the flexibility so that they can run the exact same code base on premise, in a private cloud or in the public cloud.
And by the way, after they've made that choice, they can change their mind. They can start off in the cloud and bring it on premise or vice versa. Only we can do that. 2, there's this concept or word term called cloud services. And cloud services, I almost don't even understand it.
It's like jumbo shrimp. It's the whole idea behind cloud is to minimize services, to make it as simple as possible, as quickly up and running. And yet only we actually have the capability to deliver a fully integrated cloud services, whether it's HR or ERP or CRM. Again, a competitor you would think would be doing, would be trying to do that is SAP. And yet all we hear about is HANA, not a single word about bringing their entire base into the cloud.
So for us, we think all of these things bode very, very well for us. And finally, I want to cover big data, the Internet of Things. I've gotten the question, is big data the end of Oracle? And I've stood up here and I've tried to explain to you that big data is great for Oracle. There has historically been no bigger data than what we handle every year.
And when our competitors come up and they say, they can handle 1,000,000 blah, blah, whatever it is per day or per week or per month, we can handle whatever it is per second. And the more data, the more actionable intelligence our customers want to get. And to get that, they use Oracle. So no matter how they collect it and if they want to use Hadoop, we want to make sure that Hadoop brings it in. But ultimately, the more data there is, the more Oracle they buy.
And mobile, how do we play in mobile? Again, all those devices inevitably reach back into systems running Oracle. And so these are the Internet of Things, big data, social, mobile, all of these things ultimately result in enormous volumes of data that have to be handled securely with high performance and handle massive, massive size, which requires scalability. And for all of these things, we continue to invest. And every I think what you'll see is that very similar to what happened with the sailing team in the past couple of weeks.
There's a moment where everybody thinks, oh yes, they're finished. It's over. Not so clear now. So thank you for coming. We hope you get a chance to spend as much of the day with us as possible.
Thomas and his whole team are going to actually go over individual products and segments, so that you can see how all of these play in to our strengths. And we are as you can tell very, very confident about our ability to get further and further in front of our competitors And to any competitors that may be in front of us in any particular area now, they should be careful because we have a history of winning at the end. So thank you. Thanks very much. And I'll see you later.
Thank you. At this point, we'd like to shift the conversation into one of technology. With that, let me introduce Executive Vice President, Thomas Kurian.
Good morning. It's my pleasure to be with you. I'm going to give you an overview of our product strategy and then we're going to give you an update on some key areas of product where I'm sure all of you have questions. Okay, so I'm going to start with the safe harbor, but okay, our product strategy, We're focused on 3 important things to deliver engineered systems, which combine hardware with our software to deliver breakthrough performance, scalability and availability innovations. 2nd, to continue to deliver the best in class database, middleware and leading business applications with brand new capabilities, which drive new options and drive additional revenue for Oracle.
And third is to take Oracle's best in class infrastructure software, our platform technology database and middleware, as well as a complete suite of business applications and deliver it to customers through the Oracle Public Cloud. These 3 allow us to then use our scale, our installed base and our product breadth to upsell and cross sell solutions to customers. Now our strategy, if you look at it, involves taking these 3 software systems, database, middleware applications and vertically engineering them on engineered systems to deliver really great performance, reliability and availability advantages, as well as to make sure every piece of this stack is best in class and open and works in a multi vendor environment allowing customers choice. Now we are a leader in many, many, many market segments. And even if you look at Gartner's Magic Quadrants, we lead in over 90 product categories and we entered 13 new product categories this year, okay?
This year was a busy year for our software team. We delivered a number of new product releases and we are going into a very strong product cycle. We are a leader in database. We introduced Oracle Database Release 12c with a number of important new options, the in memory database, the multi tenant database, advances in compression, much more new capabilities in Golden Gate and Active Data Guard, etcetera. 2nd, we also introduced Fusion Middleware Release 12c and there's a lot of new capabilities in Fusion Middleware 12c, support for mobile solutions, extending identity management, which is our leading security suite up to the cloud and also to mobile technology, support for a back end to support the Internet of Things, etcetera.
And then finally, in applications, we introduced in every major product line at OpenWorld, we announced a major new release, E Business Suite 12.2, PeopleSoft 9.2, JD Edwards 9.12, a new version of Hyperion, new innovation pack for Siebel, as well as new industry and edge applications. So we are going into a very strong product cycle with lots of new product capabilities. Now today though, we are going to focus on 5 topics because they're top of mind for you. The first is engineered systems and the view that we have on the growth of that business and the new products we're introducing there. 2nd, we'll talk about in memory database and what the fundamental differentiators between our in memory database and others.
And then 3rd, we're going to do the cloud. And we're going to talk about our platform and infrastructure services, the ERP solutions we offer in the cloud, human capital management and customer experience or CRM. So with that, I'd like to invite my colleague, Juan Loaiza to come up and talk through the strategy we have and the new products we're delivering in Engineered Systems. Juan, welcome.
Okay. Thanks a lot, Amit.
So I'm going
to do a very brief presentation. I think about 10 minutes is what I have on Engineered Systems. I could talk for hours. I have been talking for hours all week actually. So let's start with our safe harbor.
This is very important. Please read all that very quickly. And then if you haven't had enough of that, read it again. Now we go on, let's see. Okay.
Our strategy is really, we want to win across the board in Engineered Systems. We think they're going to be good for data warehousing, transaction processing, for applications, for in memory, for analytics. We're going after the whole market with engineered systems. So that's a very basic strategy. It's pretty simple.
And we think we can win across the market. We have a number of engineered systems today. Our first engineered system is Exadata database That's probably our lead engineered system. It's been in the market the longest. It is doing extremely well in the market.
We have Exalogix, which covers middleware, bespoke applications, web applications, Exalytics analytic platform. I think Mark had mentioned we had unbelievable quarter last quarter with Exalytics. We introduced big data clients a little over a year ago for Hadoop. Now that's been extended to also be a platform for our own NoSQL database. We have Supercluster, which is Spark based, which handles multiple application workloads that's been updated to our new Spark chip.
And we also introduced a couple of actually 3 new engineered systems this year, which I'm going to talk a little bit about. Before I go on and talk in detail about these, let me say, one of the really the key thing about engineered systems, is it's a software led effort. It's a software led architecture. So we show pictures of machines. We have lots of hardware.
We have great hardware. But the key thing that differentiates us from a lot of other players in the market is it is a software led effort. So the database team leads the database machine effort. The middleware team leads the middleware machine effort. And that's both on the product side and on the sales side.
They're primarily sold by, for example, a database machine is sold primarily by our database sales force. They are the ones that can articulate the value prop of it. And that really makes it different because the software team owns the product and is responsible for making it succeed. That means they're incented to adapt their product to run best on these platforms. So for example, in the database machine, we have written a lot of software.
We have a large team that's been going now for about 8 or 9 years, writing software that exclusively runs on our database machine that makes it a better platform for running our database software. And I'll talk a little bit about that in a minute. Key value props, faster time to value. I just talked to one of the big banks today. They said they get an estimate in 2 weeks, it's in production in a mission critical application.
So 2 weeks time from the time it hits the dock to the time it's running mission critical applications. Extreme performance, we've talked about that. We have any number of case studies for that much lower TCO, much lower risk. Deploying an engineered system is a much lower risk option for a customer. It comes completely locked down engineered.
We've taken care of all the problems. We've made it very highly available, very robust. It also provides one stop support and we have special support offerings around our engineered systems. So there's a lot of benefits to our engineered systems. Let's go on.
So I'm not going to go into the details of this, but I want to emphasize there is a lot of software in the engineered systems. That is really the key. That's what sets us apart from everybody else that sells systems in the market. These are engineered, meaning there's a ton of software that's specifically written. It runs our industry leading software products that Thomas mentioned.
So you can't do this unless you have a big installed base and customers are using your software to begin with, then you can sell them an engineered system, then you can add the extra differentiators for running that software on the engineered system. That's very different. You can't and it's not something that you can replicate in another company. You have to have the Oracle database that's installed in every company in the world. You have to have WebLogic that's installed in every company.
You start with that and build on that. That's not something that somebody else can waltz in and do. The other thing I want to mention is we've gone on kind of a journey with our engineered systems. So we started out, for example, Exadata, we started for data warehousing, OLTP consolidation. The next big thing with Engineered Systems is what we call database as a service.
So we have our in our database, we have multi tenant option. So it's no longer looking at individual applications or not so much no longer only looking at it yet. So the way we've sold them in the 1st few years is we said, hey, give me this really hard problem and we're going to prove to you that this thing is going to work. So your industry, by the way, the financial industry has now become the industry has now become the number one industry by far for that's interested in these engineered systems. So over half my schedule this week was filled up by financial services companies.
And what we started with was the really hard problem. So risk management, regulatory reporting, the problems that were really making a lot of trouble for financial service companies. So we took the hardest problem in the company and we said, we're going to solve that problem for you. Now we're in there, now we've proven ourselves with the very hardest problem. The next step that's happening now is expanding that footprint to encompass the whole rest of the systems in the enterprise.
And that's what we're seeing more and more of it. It's the snowball that's starting to roll. So if you talk to your own IT department, what you're going to see is they've taken 1, 2, 5, 10, 20, 30 of these systems now. And the next step is let's take 50 or 100 because we're going to move everything on to this. We're going to move on math.
It's no longer I'm going to pick one application that's really hard and deploy it there. I'm going to move a very broad mass of my systems onto there. And that's what's really going to grow this market for us. And it's also going to make it easier because when you're taking on the hardest problem in the company, you have there's a lot of proof that has to go around. Once you when you move down a step, it becomes much easier.
The customers are already very comfortable with the platform. They've deployed it. They know about it. They've tried it. They've got their own experience on it.
And so it's much easier to deploy in a widespread fashion. Exologic, same kind of thing. There is a ton of software in Exologic that is specific to Exelogic and that's what differentiates the product from every other product on the market. The same thing is true of Exelogic. There is a ton of software.
There's a lot of very specialized software that we've written, the software team has written for this platform to make sure it outperforms, it has better ROI, better time to value, better availability, better management. It's the safer choice than other platforms on the market. And that's the big all those things together are the big differentiator for our engineered systems. There's 2 actually there's 3 engineered systems that we've introduced this year. I'm going to talk about 2 very briefly, 2 that Larry introduced in his keynote.
He introduced the M6 Big Memory Machine, which we're building an engineered system from called the M6 Big Memory Supercluster. And this is actually an interesting twist in the market. So Andy is going to talk in a minute about our new in memory database option. And when you go to in memory database, something interesting happens, which is we have been moving toward sort of commoditized systems for a lot of years. So if you go back to the 90s, a lot of customers deployed big FMP systems.
As you went into the 2000s, that market started declining and the market for sort of commoditized 2 socket servers kind of more or less took over. This new technology that's coming in this end memory database is very interesting because that's going to run really well on systems that have a lot of shared memory. So if you have a cluster, in memory is going to work great, but it's not going to work as well as a big FNP because you're going to have to communicate with other nodes in the cluster to get their memory. So if I'm on node 1 and I need to the memory that's on node 3, I got to send the message to node 3, you got to go get that memory for me and send it back to me. In a big SMP, you don't have to do that.
You just you want a piece of memory, you just go get it. It happens in nanoseconds. So this remains to play out, but it's an interesting development in the industry. The pendulum swung very far away from these big SMP systems for a number of years. And it's very possible this new memory technology will start swinging the pendulum a little bit back.
And it remains to be seen, like I said, in the market, but we have now introduced this machine along with our new in memory database option and it's going to be a great combination. And I think I've seen a lot of customers interested in this technology again that haven't been interested in the big machines for a long time. So anyway, so that's interesting development in this area. Another yes, I mean, just a quick slide. Our new big SMP machine actually has a very powerful machine, has a lot of memory, has a ton of cores, it's very high bandwidth network, very high bandwidth to memory and it's very low cost.
So if you compare it to our leading competitor, we're way ahead on all the metrics that matter. There's a brand new system. It's really quite ahead. It's quite far ahead of the competition and all the metrics that matter here. Okay.
And then another engineering system we've just introduced, so we have things for database, for middleware, for analytics, for big data. This is actually taking another step, something that Larry calls the database backup logging recovery appliance and I can even say that now. This again, it's taken a different approach to a market that's existed for a while. So customers take backups all the time, right. They back up their data in order to protect their data.
But the state of backup today is frankly quite poor. So if you take a backup of your system last night and you have a problem now, you're going to lose all your data between last night and now, right? That's the way it works. And that's not what anybody wants anymore. So look at yourselves, financial services, retail, telecom, nobody wants to lose data.
Nobody can accept losing data anymore. So the big news with this database backup logging recovery appliances, we'll be able to deploy them customer data centers and we'll no longer lose data. We'll be able to back up their production systems and go to the CIO and say, how do you feel about not losing data anymore? Does that sound good to you? Are you happy with losing your financial data?
Are you happy with losing your customer data? Are you happy with losing your order data? Does that make your users happy when that happens? Or does that drive them absolutely bananas? How do you since data kind of flows around the enterprise, if you lose part of that data, what about that huge mess you have about the data that kind of partially went to all these other systems?
How do you sort that out? How do you feel about not having that problem anymore? So I've actually talked to a lot of customers about this this week. People are very excited about it, because the fact of losing data is no longer acceptable in 2013. It's a very simple value prop.
It's very simple to explain. In addition, there's a lot of other value props. It puts a lot less load on the production servers, it's much easier to manage, it has much faster restore times, it manages the data end to end through disk, tape and replicas. So there's a lot of other value props as well. And so this is a new engineered system that was introduced by Larry this week.
And it kind of opens up a new category in the market where again, we're trying to take it up big notch from what exists in the market today. There's a lot of differentiators. We really have a very unique product in the market in terms of what we have. Nobody else has a combined OLTP warehouse consolidation appliance. Nobody else is looking at this kind of multi tenant architecture at all or particularly with an engineered system.
This is also very powerful in public clouds. We announced last June a very large deal with salesforce.com to base their infrastructure on Exadata. And they're not doing that because they love Oracle. They're doing that because they see the value of it. So that's how powerful the systems are.
Let me just finish up here. We have a ton of customers running Exadata now. We have thousands of customers. It's been or I should say our engineer systems now, it's been on the market. They've been on the market for about 5 years.
Our customers are seeing very big value props, huge speed ups, huge cost savings, much safer to deploy, great returns on ROI, lots of consolidation and just freeing up their IT to actually do more useful things. So that's all I'm going to cover today. I'm going to hand it off now to Andy. He's going to talk about our new in memory database options and our new in memory efforts across the companies.
Okay. Thanks, Juan. I'm actually going to start off by giving you even a bigger picture of what we're doing at Oracle with our in memory software across the stack and then we'll drill down into the in memory database that Larry announced on Sunday. Okay. So what's our we got this.
Okay. Let's start with strategy.
So what we want to do is leverage the new technologies that are coming out, the latest processors, DRAM, flash memory technologies to deliver the best in memory software performance. And might I add, we also are driving the chip vendors to make sure they are adding to those chips, the technologies and support we need to make our in memory software run really fast. So we work with Intel and our own Spark chip designers on in memory processing. Of course, in the database tier, we want to deliver the best in memory database and we want to make sure this database runs all the traditional database workloads at a high performance, whether it's a data warehouse, OLTP or anything in between, big data, etcetera. And then as we move up the stack into the middle tier, we are doing in memory data caching, in memory business intelligence as well.
And then finally at our applications here, we are delivering business value there by delivering applications that are optimized to run on our in memory software technologies. And let's go down to products, some specific products. Let's start the bottom up. Oracle is now, as you know, a hardware vendor. And we don't design flash memories, but we leverage flash memories and DRAM memories.
But then we do design chips. And so I can tell you our Spark chip designers top priority right now is to make sure that their chips run the Oracle database and our other in memory software faster than any other chip on the market. And this is their top priority. This is what they live and breathe. This is life and death for them, make our software run fastest on their chips, right?
I can tell you the competitor competing chip vendors are not only focusing on that direction. Moving up the stack, in memory database, of course, Oracle has 2 products there and I'll talk a little bit more about both times 10 and Oracle Database. And then moving to the middle tier, our times 10 technology can be used as a database, a relational database cache in the middle tier. And of course, we have Coherence also, which is our in memory data grid technology. And then we have in memory business intelligence.
We have our Exelix appliance that Juan talked about that delivers high performance in memory business intelligence and then our in memory applications. And I'll talk briefly at the end about what we're doing there. Okay. So let's start drilling down at the database. We have 2 database products and memory database products.
TimeSten is the world's leading in memory database product. It's the most widely deployed in memory database by far. What's its use case? It is primarily used as an embedded database. It gets embedded into prepaid billing applications or program trading or gaming systems, gets embedded right into the application tier itself.
And because of that, it can deliver sub microsecond response time, very low latency response times for applications that need incredibly high performance real time processing. It's also embedded in our Exalytics BI Appliance. The in memory database for Oracle database is going to go after the rest of the market. The traditional stuff we run transaction processing systems, ERP, data warehouses, data marks, etcetera. And this product where times 10 is pure in memory database.
When you start up at times 10 database, you take all the database data, you load it all into memory. So you have to have enough memory to store all the data in the database. With the Oracle database, we are not going that approach. We want to be able to deal with gigantic petabyte data warehouses. There is no way any customers are going to buy enough main memory to store all that in memory.
So we have an architecture where we want to store all the data on disk and then bring data into flash memory and DRAM as it's being accessed. Okay. So I hope a lot of you saw Larry on Sunday night and if you missed him, he did a really great job introducing our in memory database technology in about 45 minutes and I'm going to do about 5 minute version of that. Larry's I think there's a replay of Larry available on oracle.com. You should all go and watch that.
So what are we doing here? So my group prides itself on being 5, 10 years ahead of the competition in our relational database technology. But from time to time, there's a feature that we're not the first with and in memory calm store technology that Larry described is something where we're not the first, but when we're not the first, we aim to come out with a technology that's not just a me too technology. We are going to blow away the competition with what we're doing. Anybody who saw what Larry demoed knows what I'm talking about.
This technology is going to be seamlessly integrated with the Oracle database, which means all those other things that we where we're 5 to 10 years ahead of the competition are all going to transparently work with this in memory technology. So all those great applications that keep people written for all the years are going to continue to work. They're just going to run faster. Okay. We are going after all the typical workloads.
And as Larry mentioned, our goal here is make analytics run 100 times faster. Our goal is also make transaction processing run faster, only maybe by a factor of 2 or so. And the key thing here again, when we do innovation in the database group, almost everything we do is transparent to the applications that are out there today. Customers don't have to rewrite a line of code to take advantage of, for example, 12C multi tenancy that we added to the database as part of the 12C project. The same thing is going to happen here with in memory database technologies.
Everything's going to work. All the applications will continue to function. The capabilities are DBAs know and love like RAC and Data Guard, all that stuff will continue to function and things will just go faster. Okay. I'll do a very quick intro to what we're doing and why it's quite different from the competition.
Larry goes through this in a lot of detail again and he does a really good job. So you should definitely watch him. But the bottom line is that there are 2 ways of representing data in relational databases. There's a row format and a column format. And row formats are really good at doing transaction processing.
Times 10, for example, is a row format database. Column format on the other hand, which has been around for quite a long time, 25 years, people have been experimenting with column formats, has always been good for analytics, but it's not really good for transaction processing because it's really hard to update the data. So the problems with what people are doing up till now with in memory databases is they make people make a choice. When I create a table, do I optimize it for OLTP and use row format or do I optimize it for analytics and use the column format? And so what we've decided is, okay, people want both.
They want fast OLTP, they want fast analytics and they want to be able to do analytics on the transactional or operational data as well. So what we are going to provide is this dual format where we have both row and column formats in memory at the same time. And we have our query optimizers smart enough to figure out based on the workload being run, which format to use. And we keep these two formats completely transactionally consistent. So as far as a developers or user is concerned, it's all consistent.
And as Larry showed some demos, this stuff is incredibly fast, 100 times faster for analytics, at least he demoed us running at over 7,000,000,000 rows per second on a single core of an Intel processor. Our competitors actually have announced that they're very excited because they can run about half that performance. So this is already double the performance of what our competitors claim they can
do. Okay.
Juan talked about Exadata. On Exadata, of course, we will be running this in memory technology. And on Exadata, we implement this mass memory hierarchy where all the data can be stored on disk at the cost of disk, which is 100 times cheaper than than main memory costs. So we can store lots of data, petabyte scale databases at very low cost And we will bring the data into memory, into flash and then to main memory to deliver extremely high performance at the best cost performance. Okay.
As I mentioned before, this technology is completely transparent to applications. Every application written against Oracle will continue to run with this technology. The DBA designer just has to tell us whether they want a given table to be in memory or not. And we will make the application just run faster transparently to the application developers. They won't have to write anything.
Of course, all the applications from Oracle and third parties will continue to work with no change. And the other thing actually that's mentioned on the slide is there's no migration. So if you want to go to 12C with the in memory technologies, you don't have to take all your data and change the format on disks. You could have terabytes of data, it could take you days to do that. You don't have to do anything.
You just install the new version of the software. You tell us which tables you want in memory and you're up and running and running fast. Okay. So let's go to the differentiators for this technology versus the competition. The number one thing here is that we are the 1st database vendor to really go this dual format route.
And so we are the only ones who can really deliver analytics against your live operational data. Nobody else can really do that. Everybody has a compromise. One competitor says store everything in a column store, which makes the analytics run fast, but makes the transaction processing or ERP runs slow. Others say, no, sometimes use a row store, sometimes use a column store.
We're the only ones that do this dual format. And so we have a unique advantage there. I mentioned before extreme capacity cost effectiveness. We are not requiring all your database data to go into main memory, which would be very expensive as databases get very large. We have this mass memory hierarchy on our Exadata storage, which of course in the Exadata database machine and the super cluster.
We are a chip design company. Our Spark chip designers are working feverishly and I can tell you they are determined to deliver a chip, their next generation Spark chip that is not going to be just about the same as Intel's chips, but much, much faster at running in memory database technology. And we're very excited about that. We call that our software in silicon strategy. And then finally, now as I mentioned before, this is all transparent to all those applications that have been written for Oracle all through the years.
There's no migration, No, why would somebody move their database to some other database, which is huge expensive effort. You have to rewrite applications, retrain DBAs. With Oracle, it's a simple transition. You just install the new software, you're done, right? Now the other last thing I wanted to mention, of course, is that once we have this feature, now there are also the 25 years of differentiators that Oracle has in the database space that all come into play.
Again, why would you use an immature database that's been out 3 years or whatever when you can use a very mature, robust, scalable, secure, highly available product from Oracle. Let's just go quickly through some of the differentiators here. Oracle has always run-in all the different platforms, hardware platforms, operating system platforms. The contrast is people like Microsoft SQL Server, it only runs on Windows, on Intel Chips. SAP HANA, it only runs on Linux, on Intel Chips.
They don't run on Spark chips. So if Spark happens to be a little faster, we will benefit from that. They won't. And of course, we run-in everybody else's platforms as well, whether it's IBM or IBM Power or HP Itanium, whatever. Okay.
Again, we have we just announced database 12c. We have the 1st enterprise database redesigned for cloud computing. We have this very exciting new option and I can tell you every customer at OpenWorld is incredibly excited about this multi tenant capability in 12C. Plus we have things like RAC and Exadata that make us a great platform for running private clouds or running databases in the public cloud for software as a service. We have our integrated systems for big data and data warehousing.
It's very unique. Our Exadata is a great platform for data warehousing as well as our big data platform, big data clients that Juan talked about for Hadoop and our NoSQL database. Then finally, we have this very unique and differentiated technology for high availability architecture, consisting of things like RAC, Data Guard and Golden Gate. Okay. So that's the quick run through of what we do for in memory database.
And I'll just quickly mention, of course, as you move up the stack, we have an initiative that Steve Miranda's group is doing with our in memory applications. And of course, we are taking it going through all of our applications. We mentioned about 12 here that take advantage of our in memory technologies on our engineered systems, especially and run much, much faster. And I'll go quickly through a few customer examples of customers taking advantage of our in memory technologies. The first two are times ten examples.
China Mobile, of course, is the biggest telco in the world. When Guangdong China Mobile is using times 10 for their prepaid billing application. U. S. Postal Service, every envelope that's sent through the mail is being scanned by a system powered by times 10 that in real time is looking for fraud in the postal system.
UniCredit, big Italian financial service company is using Hyperion on our Exalytics in memory machine, delivering 10 times better performance than they were getting for planning before they were on Exalytics. And finally, Fold and Hogan is a large Australian civil construction company. They are taking advantage of our JD Edwards in memory planning application and again getting great value from that. And with that, I will now hand things over to Thomas Curran, and he's going to talk about the cloud.
So now that we've covered 2 of the topics that you had all asked us questions about, which is the growth in engineered systems and how we feel that in memory databases, we have a technology that any customer can run any application on with enormously faster performance without having to migrate to a new platform and retrain all their people and pay for additional license from a different vendor, I wanted to focus now on the cloud. So on the cloud, we've got a very simple strategy with the Oracle Cloud. We want to deliver a complete suite of cloud services that are all engineered to work together. They consist of 3 parts: infrastructure as a service, including elastic compute and elastic storage and identity services, platform as a service, including our database, middleware and a set of services focused to developers and a set of services focused to business users. And then a full suite of software as a service, including ERP, human capital management, customer experience, supply chain and social.
So let's start by looking at infrastructure as a service. The first thing that's clear is we are the only vendor that offers infrastructure, platform, applications all in one cloud. If you look at Amazon, they offer infrastructure. If you look at Salesforce or Workday, they offer applications. If you look at Azure, it does platform and infrastructure.
We believe that companies need all 3. And by putting them in a single cloud, if you're a person who's buying human capital management and wants to extend your applications with a platform or infrastructure, you can do it in 1 cloud rather than saying I got my human capital management application in 1 cloud and to get infrastructure to go with it, I got to go to a totally different cloud, manage data across both, manage security policies across both. Okay, so let's start by looking at what we're doing with infrastructure. So we are in the final stages of rolling out these platform and infrastructure services. On infrastructure, we start with the 2 big ones, object storage and compute or elastic compute.
Okay. These came from an acquisition. The technology came from a small acquisition that we did of a company called Nimbula. Nimbula are the core 30 engineers who wrote Amazon Web Services years ago. They are now part of our engineering team and have a very, very proven technology stack to allow you to get object storage and elastic compute.
And to that, we add a number of capabilities, identity management, caching, message queuing and sync. These are all services that developers who are building a cloud application typically need. Let's look at object storage. The core thing is if you want to take digital content or files or backups of our database or any kind of archive, you can go to our cloud, you can request a certain amount of object storage, you program to load the data using either a Java API or REST API, and we support an industry standard called OpenStack. So it's not proprietary to Oracle, you can simply load the data.
You can load it either from one of our cloud applications into that, or you can take an on premise system and load data into that. And because it's built in a very proven stack, we have a lot of capabilities around performance, capability, and you can choose your quality of service, single mirror, double mirror, triple mirror, and you get the resource granted to you and you can use it. 2nd, we also offer Elastic Compute. Elastic Compute is you can get a virtual machine instance in the cloud. It is fully isolated from a network point of view.
And we also give you the capability called Elastic IP, which means you can burst up and down workloads. If you're running an e commerce site and you need extra capacity for Black Friday for a few hours, you can we auto scale it up or auto scale it down and you can choose a variety of different profiles of workloads, standard workloads, CPU intensive or memory intensive workloads. Okay. Now to this, we added the platform as a service. And this is basically we're delivering a full suite of Oracle platform technology, database, Java or WebLogic, developer service, mobile service, document management, business intelligence and we also are live now with a cloud marketplace.
I'll talk about each one. So when you look at the Oracle database as a service, today what we have available is something called a schema as a service. We have a number of customers using it. I'll talk about that. But this gives you a full fledged dedicated database instance, okay.
You can get a full fledged dedicated Oracle 11GR2 or 12c database instance in a cloud. You can pick 1 of 3 flavors, a single node, a single node with disaster recovery or a fully highly available configuration, which includes RAC. What's interesting about what we're doing with our platform services compared to what other cloud vendors do. And so the question we get asked is, so why would I use your cloud platform as a service compared to taking Oracle and running it on AWS or Azure? And it is because we manage the database for you.
Okay. In Azure or AWS, you get the ability to take an Oracle binary and run it on a compute service. If you want to patch that database, you have to patch that database. If you want to upgrade that database, you have to upgrade that database. If you want to configure it for high availability, you configure it for high availability.
So what they give you is really infrastructure as a service and the ability to run an Oracle image on it. What we give you is the ability to get a fully managed environment. Okay. The whole all the things that you would expect, we do nightly backups, we give you point in time recovery, we patch it, we manage it, we upgrade it for you. And so the core value proposition for customers is the following.
If you buy infrastructure as a service, we're giving you the ability to use hardware for a shorter period of time. For example, if you're running a workload temporarily, or we can do it in a more cost efficient way. We certainly offer that with our Elastic Compute and Storage. But with our platform as a service, what we are really doing is displacing the heavy cost that IT organizations have associated with managing environments. And so there's a significant differentiation in what we're doing with platform as a service than any other cloud provider does.
Okay, so that's example number 1, database as service. Java as a service is very similar. What we're doing is putting our WebLogic server in the cloud. You get a full ability to access the WebLogic instance, both on the database and WebLogic. It's a dedicated environment.
So all the tools that you use on premise simply work. You want to manage it, you use Enterprise Manager. You want to load data into it, you can use your favorite ETL tool. You want to start and stop this instance, you can do that. And the advantage we give you therefore is full portability between your on premise environment and the cloud and back from the cloud to your on premise environment, it's literally as easy as another database or another web logic instance on your premise.
So that opens up a set of people who want to use test, dev and other workloads in this environment. It really opens it up because they come and say this literally looks a standard Oracle WebLogic and database, I can program against it once I'm done, if I want to take that workload back on premise or if I've got something on premise, you simply export the file, put it in there and go. And the value we give you is we manage it, we maintain it, we patch it, we back it up, we restore it, we do all of that for you. For developers, we're also offering 2 important new services. You can use our cloud strictly as a place you run apps, but you can also use our cloud as a way to get teams of developers to collaborate.
So we give you a Git repository up in our cloud. We give you a source control, continuous build, an environment for developers to collaborate. We have a bug management system, a task tracking system, etcetera, and this allows us to offer one stop shopping for developers. Okay, so you don't have to say in order to build an application on the cloud, I still have to have an on premise source control system and things of that nature. And one of the big applications we see people wanting to build are mobile apps.
So we've got a mobile service that allows you to take your on premise applications or cloud applications and without installing any technology on a premise, extend them out to both tablets and smartphones and get a secure endpoint in our cloud. For business users, we're also in the final stages with these 2 services, document management and business intelligence. Document management is you get a cloud folder where you can store documents, you get a project team and a team workspace, you have the ability to create projects and share documents with people and then we can sync that to a number of different devices. And then for business intelligence, if you're a user who uses business intelligence and wants a data mart in the cloud and you want an instance of our analytic tools to build and publish reports from, you can go directly to our cloud and get access to it. Okay.
Finally, we also have a service up called the cloud marketplace. What this is, is if you're a customer of our SaaS applications or if you're an ISV who's running your applications on a cloud or a partner and you want to make it easily accessible so that people can find applications they want and complement us, we provide you an environment where you can build your applications in our cloud, publish them to the store and users can come, see the ratings and reviews about your partners up and there's another 300 or so that will go up over the next 3 to 4 months. Now there are lots of differentiators between what we're doing. I wanted to touch on a few of them. It's the only cloud that offers the broadest range of Oracle software fully integrated.
Each service is highly differentiated. Take our platform service called the database service. It is the only place, only the Oracle Cloud gives you the right shared storage, so you can run Oracle RAC and Data Guard in a highly efficient fashion. No other cloud gives you that. So you can't give get a highly clustered, highly available system in other people's cloud.
We fully manage it. That's a big value for customers that we manage the pack up point in time recovery patching and maintenance. That is the thing that customers want from a cost point of view to get out of their IT function is all the work manual labor associated with doing that and we do that for you. And lastly, we integrated seamlessly with our applications, so that if you want to extend our applications, you can easily pick and choose one of these, deploy them in the cloud and use it. So if you're a CRM team and you want as part of our sales cloud, you want a little data mart to load your own data and do analysis, You want to share documents so that when you're building a sales plan to go after a particular customer and you want your demos to be put somewhere, you can use our document cloud, you can do in our analytics cloud and do all of that, you don't have to go anywhere else.
Okay. So there are lots of customers using these, the platform layer. A year ago, we introduced the Java and database schema as a service. Here's a small set of the example customers and I thought I would give you a flavor for them, which give you a sense of what kinds of things people are doing. Deloitte, Deloitte is a system integrator.
They actually do projects and eventually the software associated with the project is going to run on premise at one of our customers. Now they don't want to buy machines, 100 and then take the software because it's 100% standard Oracle software. You can simply move it when they go to an on premise environment. There's a lot of interest from system integrators to do that. Siemens, big German multinational company, customer of ours, they're the e commerce application for partners.
They didn't want to run that infrastructure. They put it on our public cloud platform as a service. They run it in production. So this is not a temporary project they're running in production. You may ask, does this appeal to mid market customers, wind stream communication, they're smaller voice and data network communications company, they use our database and Java cloud service and they are in production on application because they wanted something very fast to spin up an infrastructure very fast to get an application up and running.
And then an example of an applications customer who wanted to extend the applications, Zameel Industrial is a company that's large conglomerate in Saudi Arabia, E Business Suite company. They wanted to extend E Business Suite out to mobile and also integrated a variety of other systems. They're using our platform as a service in the cloud to do that. So first step in the cloud was to add to our SaaS applications, our great platform technology and an infrastructure to both extend the applications and offer customers an environment where they can build, deploy and get applications up and running quickly and then the business user solutions to complement it. Now we are going to focus on drilling down in these three important areas, ERP, HCM and customer experience, all about our cloud products for that.
And I'd like to invite my colleague, Steve Miranda, up to talk about ERP.
Good afternoon, everyone. So to start off the application part, something we're not going to talk about, I'll just cover at the beginning is everything that Juan and Andy and Thomas just talked about in terms of the platform, that's all leveraged and differentiators in our application cloud. We run our application cloud on our engineered systems. We run our application cloud on our database. And more than that, we run our application cloud on the database as it was intended to be used.
In other words, we do not commingle customer data together in a multi tenancy fashion, which really eliminates all of the security features that Andy and Ron and their teams have built over the years for the Oracle database. And in the cloud where security of the utmost importance, leveraging that capability, that investment, that scalability and all the security components that we've talked about in the database as differentiators is key in the cloud for applications. All of our applications run our engineered systems. All of our applications run on our database, leveraging all of those facilities. In addition to that, we believe we have the broadest suite, in fact unquestionably the broadest suite of applications in the cloud available today.
HR, talent management, enterprise planning, financials, marketing, sales and service across the board of CRM. But more than just broad, let's go ahead and drill down into the 3 areas. And I'm going to start off with ERP, talking about financials, supply chain, projects and procurement. And across ERP in the cloud, I'm going to talk about how we have the broadest set of ERP application available in the cloud today. But more than that, we have the deepest set of applications in the cloud and the most scalable set.
And by scalability, I mean, not only the most performance to handle the most volumes, but also scalability to be the most global. So you can run the application in anywhere in the world or you can be a multinational and be confident that we have the capabilities to support you in terms of size of performance, as well as scalability for performance. Now within our ERP, what is our objectives and strategy? We want to take the modern capabilities, integrate things like social, integrate like things like the modern analytics, integrate things like mobile for self-service experience into the ERP platform and I'll give you several examples as we go through the details. We want to have take the deep functional breadth that we've had for years at Oracle and then use that knowledge and leverage that knowledge from our PeopleSoft install base, our JD Edwards install base and our E Business Suite install base, Not only do we have the teams that have built these products globally and scale them for years, we have the customers to give us input on the requirements and scalability and needs they have for ERP and leverage that to bring the best in class scalable and for ERP really legislative required functions across ERP.
Add business intelligence pervasively throughout the product set and add and embed social pervasively across the product set. Talk about breadth first of all, it's in the broadest set of applications, specifically financial planning and budgeting, core finance meaning GLAPAR, governance risk and compliance for both audit as well as Sarbanes Oxley and similar type of of requirements that are available globally. Reporting for both business reporting and management reporting. Procurement, not only internal procurement, but external indirect procurement as well as sourcing capabilities and reverse auction capabilities, supply chain categories like costing and inventory, project and portfolio management for the service related industries. Then when these area, I said not only do we have the broadest, but we have the deepest.
So let me give you a couple examples of the depth of the applications that are just differentiators. So I'm not going to go through the nuts and bolts like within financials. Of course, we do journal entries. Of course, we do AP invoicing. Of course, we do payments.
Of course, we do bills receivable, etcetera. But in addition, within financials, we took a couple of key areas from our learnings in the past as well as our investments in our technology. 2 specific examples, within the consolidation and the GL process, what was the state of the art before the cloud was basically you would have a PeopleSoft GL or an E Business Suite GL and then you would have a Hyperion consolidation. And many, many, many customers use that today. With the combined organizations with Hyperion as well as our financial development teams, we looked at, well, that really works really well, but what are the key problems that customers have?
One was a problem of timing. At the end of the month, is it in their GL, is it in your consolidation system, what happens? The second was the issue of drill down. I've now pushed it to my consolidation instance. How do I drill down to actually find the details when I need to do data analysis?
And the third was security. Most companies have a management hierarchy for management reporting and they have a line of business hierarchy for kind of the line of business to give those reporting. And keeping those 2 in sync was problematic. And that's why most organizations have a back office finance group and what do they spend most of their time doing. They run tons and tons and tons of reports and try to get those reports out to the line of business.
And why can't they do that self-service for the line of business? They have the security lined up for what that line of business could see. So what most back office finance groups do, they spend lots of time slicing and dicing these reports to push those out. So what do we do with our approach? When we built our cloud based financial applications, we really combine the 2 pieces.
When you post the general ledger in the financials cloud, you simultaneously post to the Essbase cube, which is a Hyperion consolidation engine. What did that do? It eliminated the timing problem because we simultaneously do it. It eliminated the drill down problem because we retain the links between the two systems together. Eliminated the security problem because it allowed us to manage the security within one place instead of 2 disparate systems.
So we took best in class capabilities, but made 3 significant advancements, what nobody else can do and it's a significant differentiator in what's 10 to 58, well that's just general ledger. So there's not much going on there in terms of innovation, significant advancement, significant differentiator. Secondly, across something as fundamental and frankly just rudimentary or boring as AP invoices. What do we do about that? Well, we now have document image scanning technology as well as character recognition technology for AP.
Used to have to go to a partner. And in fact, with most of our competitors in cloud, you still have to go to partners for image scanning. You have a separate workflow. We've built that in. In our financials cloud, you now scan invoices.
We have character recognition. It brings the invoice on the screen and it automatically routes the workflow, And then of course, we have the broadest set of applications from the core financials, reporting analytics, planning and budgeting, cash and treasury, travel, revenue and then the statutory reports. Next, the project and portfolio management. Frankly, this is one entire slide that most companies in the cloud don't have at all. So what is it?
Project and Portfolio Management is really geared at any company that's a service organization that does business on behalf of some customers and perhaps build those customers. So any system integrators or consulting type companies, legal type companies, financial service type companies, any company that works on a project, IT organizations build those projects back to different customers. What do you do? You plan and budget those projects. You do forecasting around the projects.
You have a budget, which you have then have cost control. You have things basically billing and revenue management because it's basically the way you build those projects are you use funds, expenses or internal funds and then you build those funds to your customer based on and then there's specialty accounting rules. So the entire project portfolio management suite is an area that folks like Workday and NetSuite have not even the products much less the depth in the products. Moving to procurement and supply chain, again, beyond core purchasing and again, major components that the folks like Workday and NetSuite don't even have the products, much less the depth of the products. Sourcing, so basically if you're doing indirect procurement or you do direct procurement and you want to have like an online auction or an online reverse auction or have particular RFPs put out to respond for procurement, and online sourcing, contract management to not only store the contracts, but negotiate the contracts that's there, analytics on top of the applications.
If you're a supply chain company or a company that actually does business on hard goods, having inventory management and then costing, which is essentially accounting around movement of inventory and how you treat the inventory for depreciation and other pieces kind of costing capabilities. Again, modules nobody else has in the cloud beyond core ERP, core financials. And order management logistics. So I talked about the breadth. I talked a little bit about the depth, but I also said we're more scalable than everybody else.
And I said scalable in a couple of ways. Scalable in terms of most throughput in the application, but also scalable in terms of most global in the application. So what most companies will tell you is they're global because they have translation. We have full translation to 22 languages. We have things like multi currency support.
We have multiple time zone support. We have multi Braadex support. We have multi payment support. So you can have the payments in different currencies. All that's the easy part.
The hard part is the legislative requirements and ERP that are required globally. So just because you do business on the cloud and just because you do business in Spain, just because you're in Spanish, that's not good enough. That doesn't make you global. If you're doing in Spain, you need to do VAT reports. If you do it in Italy, you need to have something called the Libero Generali report for tax reporting.
If you do business in China, you better have your golden tax ready. If you do business in Japan, you better understand the grounding rules for fixed assets depreciation. And if any of you want to know fixed assets depreciation, rounding rules from Japan, I'm your guy. So the reason why I say that is that those things don't happen overnight. The reason why we're able to leverage these is we did not start our cloud application build from a blank sheet of paper with a bunch of new developers.
We had 20 years of E Business Suite, PeopleSoft, JD Edwards development teams, product and customers that have guided us to what we need to do, how we need to do it. So that's why I claim when you hear things from other competitors talking about their global, it has to go beyond they're in different languages and they support multiple time zone. It's an ongoing list of legislative requirements that, oh, by the way, change every year. So you better have development teams, development staff knows how to update those, find out those developments and continually keep up with legislation on a global basis and service those on a global basis. And then finally, we're just frankly more faster in terms of throughput.
So last week, a competitor talked about being able to scale to up to 200,000,000 journal lines a year. Our general ledger benchmarks at 200,000,000 journal lines an hour. That's today in the cloud. Again, that's not by accident. We had those programs built from our e business suite product.
When we built Fusion from the ground up, we did not start from a blank sheet of paper. We took best in class capabilities, best in class open technology, but then we leverage learnings and programs from the past to start off with a highly scalable application in terms of breadth and country coverage and also throughput scalability. So that's what I mean when we talk about ERP, broadest set of applications, deepest set of applications with a couple of examples and then most scalable. So let me go with a couple of customer examples. So first, here's a sampling of our customers that are just our ERP, just ERP in the cloud with some specifics.
And one thing I'd like you to notice in the specifics is it's a global set of companies. It's a wide range set of company sizes and the solutions they've chosen to start within the cloud have varied because that's one element that the breadth of applications gives us the benefit that where the customer pain point is, we allow the customer to start at that pain point. Land O'Lakes, a large dairy foods producer had the E Business Suite, has the E Business Suite was formerly Ariba customer, chose to go with Oracle Procurement in the cloud, use procurement as a Ariba replacement, integrating into the back office in payables E Business Suite on premise. Old Mutual, a large financial institution in the bank has a requirement for consolidations eliminations, upgraded E Business Suite to release 12, used the financial accounting hub infusion in the cloud for high scalability and things around what's called average daily balances for banking requirements specific for vertical. PNNL, Pacific Northwest National Labs, they're a pseudo government agency that does government contracts, government projects.
So that project billing capability I talked about, they get a budget from the government, they need to track what they spend and pass that back and billing to the government at a highly detailed level with very specific accounting. They use our project and portfolio management fusion to do that capability. British Telecom, obviously a large telecommunication global company uses governance, risk and compliance to do the audit and the controls around their financials in a highly scalable fashion. O'Reilly Media leveraged the product hub. So this is basically a master data management solution to their ERP to control their products.
Keppel Energy, and then the last 2 are smaller companies, but I wanted to put them there as examples of companies that have gone full ERP. So not a coexist with something else, but really a full ERP end to end. Keppel Energy, a Singapore developer of power plants running end to end. This is a Microsoft Dynamics upgrade, end to end GLAPAR with Fusion in the cloud. And then Oasis Investment from the Middle East, a large holding company, again, formerly on Fusion or pardon me on E Business Suite ERP, full upgrade replacement GL, AP, AR across their financials.
So that's just a sampling. Hopefully you get a sense of the depth, the breadth, the scalability and then customers across a multitude of industries around the world, all taking advantage of different parts of the financials and ERP solutions. So with that, we've done ERP. Let me introduce Chris Leone and Chris will cover HCM.
Good afternoon, everyone. It's great to be here. It's actually great to be at OpenWorld this year. I just like to look at it from the standpoint of where I was at last year. Last year, I think I had 8 sessions at the conference.
This year, we had so many HR and talent management customers that wanted to come and tell their story. We had a separate conference within a conference. Now that we have a separate conference within a conference, I only had one session, which is probably made the open world that much better for me. So I'm going to go through a little bit around our strategy and overview. And all of you here today certainly use an HR system, probably most of the time just to go look at your paycheck every couple of weeks.
But let me go through a little bit more detail about what we're doing in the cloud, what our HCM systems are doing and how they're differentiated. So first, what is our strategy? So our strategy is really to transform human capital management and we're doing that by delivering information rich, socially embedded applications, unified HCM and talent management. These applications are modern. They have a modern consumer oriented user experience.
Customers were blown away from what they saw from a UI perspective this year. It was probably one of the most exciting things that we were able to talk about. They also can have access to these applications anytime, anywhere. We deliver a full set of mobile applications, whether it's on a tablet or whether it's on the phone, and those applications can be disconnected. So whether you're in the parking lot about to go in to see a customer or you're 30,000 feet in the air and you want to look at headcount or attrition reports on your iPad, you can absolutely do that with our applications.
We have full global and industry depth across our applications and I'll go into more detail around that. And from day 1, we've built in engineered and business intelligence, not only for backward looking processes, but predictive and forward looking planning aspects as well. And I'll give you some details on that. And we deliver it on top of an extremely robust platform that allows us to provide the extensibility that our customers need and demand, especially the largest and global customers and the integration requirements that they need to integrate to their hundreds of downstream systems. Let me go into a little bit more detail.
So first, we have the broadest and deepest suite of HCM and talent management cloud applications delivered as a service on the planet today. Nobody is as deep and as broad as we are in what we deliver. Those applications can scale down. And what I'd like to say is we have some customers that are smaller than 1,000 users. So we have mid market customers.
We have a customer Peach Aviation in Japan. They are the low cost carrier Japan. The Southwest Airlines of Japan has less than 1,000 users live on our core HCM systems. And then we have some of the largest companies in the world that are using our applications over 100,000 users like Schneider Electric, like UBS, like British Telecom and I'll talk about them later. So we can scale down and we can scale all the way up.
We have a full suite from core HR, pay and I'll go through more of these in detail and a full talent management suite including talent acquisition recruiting as well as learning. But the platform is where we really begin to differentiate ourselves even more from the competition. So embedded in our platform from day 1, we delivered social capabilities injected into all of our major business areas. So every single business component in HR and talent management is what I call socially active. Comp plan, whether it's a goal or performance document, all have social capabilities that change the way our users are interacting with their systems and I'll give you some examples of why that's different.
The next area is BI. So again, day 1 we delivered, we changed the way our customers and our users are going to interact with our systems by delivering pervasive BI across every single screen or virtually every single screen within our application. So as you're interacting with the application, as you're about to perform a transaction, you have that extra bit of information that gives you a little bit more information about what you're about to do. But we went beyond that. We baked in predictive capabilities.
So we looked at things like propensity to perform or propensity to a trick the organization. I'll talk about more a little bit more of that later in the presentation. But if you're going to sell to some of the largest companies in the world, like some of the ones I mentioned, you have to have extensibility that's designed into the applications because if you look back on the applications that have been out there on premise for a number of years, they're all customized. Customers have learned their lessons, but they've gone in, they've customized these applications to meet their specific business requirements. We engineered in a layered way to configure, personalize our applications at different layers of the stack and everybody can still stay on the same code line, get the latest and greatest features and continue to move forward in our SaaS fleet.
And we did it at different layers. We did it at the UI layer. You can configure and personalize the UI. We did it at the BI layer. You can configure and personalize business intelligence, your reports, ad fields, do ad hoc analysis.
We did it the application layer, so you can extend the applications, extend the business components, but we went beyond that. Thomas talked about platform of service where we're uniquely different and nobody else is doing this in the human capital management spaces. We offer platform as a service capability, which means you can go now create a completely custom application in our Java cloud and integrate that through our public APIs to a completely standard HCM and talent management solution and they can run side by side. And I will tell you this helped us close one of the largest deals that we've closed. Customer came to us and they said, we have this PeopleSoft application, it's called the holiday application.
When is that coming? And I said, holiday application, I worked at PeopleSoft for a number of years. I'm not sure what that is. Their holiday application is they give a gift to every single boy and girl for all their employees every holiday season. And they had built that application in PeopleTools and it's completely custom, but it had been there so long, they actually thought it was part of their PeopleSoft system.
And I said, well, we don't have a holiday application and we're not building 1. But what you can do is you can go to our platform as it serves and you can build your holiday application and you can integrate it back into our systems and keep HR and keep talent management upgrading on the latest releases and all the key features that they want to get and still customize and keep them separate. That's the value of a platform as a service and nobody's doing that in this space. Let me go through a little bit beyond getting your paycheck, everybody getting their paycheck on every couple of weeks. Let me go into a little bit more detail about what our core HR applications do and then I'll talk about talent management.
So core HR is important. HR leaders, they want to spend more time being strategic within the organization and less time worrying about keeping up with compliance, less time worried about record keeping, less time just delivering basic HR capabilities to the business. And so with our modern HR solutions, we can do that. We have global capabilities that we've built in. We support 180 plus localizations today.
We're translated into 29 different languages and we've gone beyond and delivered detailed statutory reports for 14 countries. So that lowers the cost of ownership. So we're extremely global. And then we have capabilities like workforce management where you can manage time and attendance, workforce rewards where you can manage compensation, make sure you retain the right employees, manage your benefit plans, workforce optimization, where not only do you have the ability to look at some of the predictive capabilities we have and predict people's potential propensity to trip the organization, but you can plan your organization. So if you're going to grow your organization in China, you want to start going more offshore, you can start to design that in before you deploy it in our planning applications, HR planning applications.
We deliver insight through workforce analytics and then social. Social is something that we didn't think about after we released our product. Social is not something that we put on the side of our product. Social is something that we delivered in context to every major business area. And let me give you the example why that's so important.
So I love when our competitors talk about we got social, we're going to go out to some 3rd party social provider and we're going to do social over there and then you're going to integrate. That's like saying email is part of your HR application. It's completely separate system. So how a goals process might work today and what customers do and what I do with my team is we send out a document that says here are our goals for the next year. Here's what we're going to agree to and there's a collaboration that goes on.
My direct say that's a little bit too high and I say no it's not and they say yes it is and then we come
to an agreement. And this
is the goal that goals that we're
going to have for the next year. And traditionally, that's done in the offline email system. And at the end of the year, my direct or your direct come back to me and say, I really didn't agree to that goal. It was a little bit lower as far as I remember. And I have to go dig through my email system and I had completely changed.
Now we deliver social in context to the goal process and in context to the performance process and in context to the benefits process. So I just can go to my discussion thread. I can see calendar year 2014 goals discussion and it's right there. I have all the documents that were created and all the comments that were made and it's right part of my system, very different. And that's why we're thinking about social very differently.
From a talent management perspective, so the number 1 or 2 things that you hear most CEOs talk about is I need to build the best talent within my organization. It's mission critical. I'm going to execute and be the best company. I need to have the best talent. And you can't do that without the right systems in place.
Systems enable you to build and grow and sustain the best talent. And we have the broadest suite of talent management systems that are available today. Starts with recruiting and candidate sourcing. So we can find people, we can bring them on quickly, we can onboard them, we can get them productive. Learning and development, this is where I grow my employees and stay current on my compliance requirements.
Full Learning Development Cloud, performance management and goal management. This is where I define the goals that I want my organization to achieve. I cascade them throughout my business and then I hold people accountable to achieving those goals. We have talent review. What's great about talent review is it's a calibration solution that allows you to calibrate across teams.
So now I can see who's better across teams fully deployed today. And then succession management, how I build talent pools, how I create my next generation of leaders within my organization. All of that is delivered today. So where we're different, why we're unique, some of the key differentiators. So the reason we're able to target and sell to some of the largest companies in the world that were here speaking at this conference like UBS was here, like Siemens was here.
Siemens was an old time PeopleSoft customer has now made the move, they announced a press release to move to Fusion HCM and payroll in the cloud. The reason that these large global multinationals want to go and see the value of going to the cloud is because of our global capabilities. Like I said, we're localized in 180 different countries. We're translated into 29 different languages and we deliver statutory reports into 14 different countries today and continuing to build on top of that, so extremely broad. The user experience, incredible.
So one of the big takeaways you'll see if you look on Twitter, how great the user experience was at this conference, what customers saw not only from a UI perspective, but from a mobile perspective. We do mobile different. So not only do we support the mobile web, we support some great technology, ADF Mobile, but we built very unique applications that take advantage of some of the device side capabilities. So simple things like if I'm an employee and I want to make sure my picture is up in the organization chart, I can take a picture of myself or use a picture I have on my phone and simply upload that to the cloud and have that as my picture. Again, taking advantage of some of the device side capabilities, delivering unique mobile experience.
We're also broad and deep, talked about the breadth and depth that we have across all of these areas. But a couple of different things I want to talk about from an innovation perspective. I gave you the social innovation and in fact we were just awarded in HCM by Ventana Research 2013 Most Innovative HCM technology and that just came out a month ago. So we're innovating in social, but we've taken social to the next level. So some of the assets that came through the acquisition of Taleo were around talent acquisition.
We've taken the recruiting process and made it social. So we've introduced a concept called social sourcing. Social sourcing is fantastic. It allows you to leverage the social connections that your employees have outside of your organization on Facebook, on LinkedIn, on Twitter and create campaigns where your employees can help refer candidates into your organization that have a much higher rate. So social sourcing has been delivered and allowed us to reengineer the talent acquisition process.
We also just released in the latest release that we announced at this conference something called reputation management. So taking social and starting to look at the individual reputation of every employee, building up your reputation within the organization in a more formal way and begin to think about how we can use that in the performance process, in the goals process in building teams for new initiatives. So taking social not just where we were yesterday, but where we're going to be tomorrow. From a BI perspective, we've innovated in BI, delivered it pervasively in Release 1. Where we're different in BI is we have predictive built in and we've continued to extend that.
So all of you, the majority of you have probably gone on to Amazon and experienced a kind of shopping store where Amazon predicts or gives you a recommendation as to which product you might want to buy. It says people like you in their this particular age, in this particular geography probably want to buy this book or these vitamins or whatever. We've taken those same front office concepts, leverage the power of data mining in our database, the algorithms that we have and we put a prediction engine into our core HR and HCM system. So now we can look at 130 different HR attributes that exist today. We capture that every single day and we can start to predict the propensity of employees to a trip the organization.
And what that does is allows managers, it's usually not your rock stars, your fives, it's your low fours or your high threes from a rating perspective that you want to go and save and make sure that they stay within your organization. So we use front office techniques in the back office for the first time ever and that's delivered today in our solutions. And then big data, I love when our competition talks about big data and it's just an analytics solution. In order to talk about big data, you actually have to have big data. So we have in beta right now a big data solution around our recruiting assets.
So in recruiting, we have 400,000,000 job applications that exist today. We're using that information to put benchmarks and best practices out to our user community so they can better target which sources are the best sources to hire from, where geographically can I get the best yield or return from my hiring practices? So that type of big data is what we're delivering. Let me go through customers. We have over 7,000 HCM and Talent Management customers, over 12,000,000 employees that are under or subscribing to this service, so extremely large business.
Let me go through a number of customers. I have I think 3 or 4 or 5 slides. First, Elizabeth Arden, global beauty products producer, full HCM and talent management solution was looking to get more pay for performance injected into their organization. BlackRock, Global Investment Management Corporation, they were here speaking at the conference around their core HR deployment. They're live and referenceable on core HR and talent management, really looking at some of the usability capabilities to get more traction within their organization.
Hyatt global operator of hotels, they streamline their talent acquisition and performance management processes with our talent management cloud service. Herbalife, Herbalife Live direct distributor of nutritional products does business in 52 different countries live on core HR. They were here talking to other customers about their experience, improved visibility, more automation into their systems live and referenceable, very great customer. Rogers, Canadian's leading media company live on our talent management suite of applications, onboarding new candidates, having a referral process or campaign to bring new candidates in quickly, key part of their strategy. Standard Life, another great company here speaking at the conference.
Standard Life live on HR and Talent Management, life insurance company want a fresh start, wanted to reinvent modernize their HR systems. Skanska, multinational construction development leader, again, full suite HR customer. Macy's, great story. Macy's is probably one of our largest customers, 175,000 employees, dollars 27,000,000,000 in revenue. They do during the holiday season, they staff up, they add about 80,000 new people, employees or temporary employees for the holiday season.
Huge number of transactions or transaction volume, I have 2,000,000 here, it's actually getting closer to they hit 3,000,000 transactions in one particular day. Talent acquisition is a strategic product, a strategic process at Macy's. If they can't onboard 80,000 employees, they can't meet their holiday requirements. And so it's mission critical for them. We spend a lot of time with Macy's.
When you have a recruiting product that needs to scale to this type of volumes, that's why what we have is the gold standard. Jackson Hewitt, so not a lot of people are familiar with our Learning Cloud. We have some very, very large deployments in learning. Jackson Hewitt, leader in full service, they do federal and state tax returns. Again, they scale up to 100,000 tax repairs every single year and they have to provide training to all of those tax repairs.
Again, 2,000,000 transaction a single day, very, very large deployment of our Learning Cloud. A couple more. EBay, everybody knows eBay, talent acquisition customer wanted to increase their referral process, wanted to get new candidates onboarded much more quickly. EBay is a customer. Michelin, in EMEA, they pay for training, making sure you're keeping your workforce fresh.
Michelin rolled out our full learning cloud and had a payback in less than 6 months. So great story. And then one of our largest customers, British Telecom, had an old aging HR system, wasn't modern, didn't have some of the unique capabilities. I've talked about social and mobile and BI and predictive built in. They wanted a modern new SaaS based solution and they standardize on our human capital management and talent management services.
Just a small set of customers here couldn't get through all of them. We're going to actually go to a video here and I'm going to show you a few more customers both midsized and large customers, many of them were here at the conference. So go ahead and let's roll the video.
Because it was a complete solution. It's very cost effective option
for us. It's integrated nicely with the EBS system and it allowed us to free up internal resources to focus on other priorities.
That caught my eye with the SDM cloud is the ease of access within the cloud system. And we want to see more systems for all of our functions, which is Oracle. We were able to design a system which would be truly doable.
Some vendors are very good at the different pieces of functionality, maybe talent management, maybe compensation, but very few had a complete solution.
The quality of what we're doing will go through the roof. And that's pretty much where we're going to do with Orocobre looking at success and things like that. For us, I believe what was missing from the other vendors was that global capability and really just that user friendly aspect. Oracle HCM Cloud was the most user friendly product that we looked at. We all fell in
love when we saw the product.
And the complete QI, which has been transformed with the transaction BI is phenomenal. I mean, that's what our users love.
For our users, it's very easy to use the RBCM cloud.
And it's so user friendly, it's so intuitive, it's so colorful, it's really fantastic. And we can't wait to be actually a release 7.
And Oracle is also constantly improving the usability of the product. So the user is seeing the transformation that's occurring within the product line.
We've definitely seen a change in our organization. Our employees are reaching to their managers and pulling for information. They want to be informed. They want to make sure that they have the right focus and they want to make sure that the company achieves overall strategy. Oracle HCM Cloud is changing the way human resources does business at our company by enabling us to be more strategic.
It's helping us with our succession planning program, mentorship program, career development program, for all of them. Globally, in real time, it helps us actually to have a much more analytical approach to take smarter decision.
Herbalife has seen a lot of improvements since we implemented Oracle ACM Cloud. It's changed the culture.
We've definitely seen increased productivity and it's again allowed us to have that mobility to take the product with us whether we're on the well site or in the office.
The Oracle HCM Cloud implementation took us 42 days from date of start. So I think it's the fastest HCM Cloud implementation.
I spoke with our Head of ICP in Muscat and we just make it happen in less than 2 months.
I mean, we have one of the fastest implementation at least in UAE.
The integration between the E Business Suite and the Oracle Cloud environment has been working extremely well. Eventually, we'd like to see ourselves in a full cloud environment.
Basically, we have got a foundation on e business, then we ramp up on the SaaS application, all the modules were integrated and we could integrate back with our e business and also single sign on.
To provide a way to integrate with our non Oracle, our legacy applications as well as with our mobile devices with social media. So I would definitely recommend Oracle's DreamCloud to any company that's committed.
So we've covered ERP, we've covered HVN and now I'm going to bring Thomas back up to cover customer experience.
So just one point to note, every one of those customers was a Fusion Human Capital Management customer. None of them were Taleo customers. I know all of you have questions on how we do in Fusion. Every one of those that you saw in the video is a Fusion human capital customer who's live. I'm going to close by talking about customer experience and what we're doing with it from a SaaS point of view.
Our strategy for customer experience reflects the transformation we see in how customers want to interact with organizations. Customers want a very simple thing. They want an integrated, engaging, highly personalized customer experience across every point of interaction that they have with an organization, across all the channels, mobile, web, social, contact center, point of sale that they have with the organization and across all the people in the organization that they interact with, marketing, sales, service, online, commerce, etcetera. So our strategy is to deliver that on a common foundation, which provides a single representation of the customer and includes social, predictive analytics, integration and extensibility. So what does this product suite look like?
Starting from the left and looking across, we give you the ability to build really rich websites using our content capability. So you can excite customers with engaging online experiences. If you want to put that on social media, we allow you to build that same engagement engaging experience on social media, like Facebook, like Twitter, like Google plus and 32 other social media platforms globally. You can also listen to what people are saying about your products and services on social media. With our marketing automation solution, which is the leading marketing automation solution in the industry, You can push content out to people across all of these channels, web, mobile, social, in store, etcetera.
And most importantly, you can monitor exactly what those people are doing on all these platforms and build a unified profile of that user. We call that the digital body language. Why is that important? Because it allows you to feed them into 2 important systems. If you're a B2C company into a commerce system, so that the recommendation engine can personalize recommendation of products and services to them.
And then if you're a B2B company to a sales rep, so that they get the most highly qualified lead that's possible. And then finally, customer service, allowing the organization's customer service people to support this customer because they know the entire history of the customer from the time they first saw that information to the purchase decision to actually using it. All of this is built on one unified customer experience foundation, single data model, single mobile client, integrated social network, so that marketing, sales people, service people, commerce people all can collaborate together and service the company. Now there are 4 important sub suites that I want to talk about. Marketing, the core of what we're trying to do is to enable 2 important things.
You start with customer segmentation, which is this digital body language about the user or prospect. And then you push multi channel campaigns to them. You can deliver it to email, to social media, online, mobile ads, sponsored posts, etcetera, from a single marketing automation platform. You can then monitor what they're doing on social media or on all these platforms. If somebody goes and opens an email, you can correlate to what they're doing on Google search.
And then you can bring them into a lead nurturing and scoring system, pass them into the sales enablement platform and then do loyalty, if you want to give them a loyalty card, for example, and finally, measure the effectiveness of how you're reaching them. What's unique in 3 ways against the competitor? 1st, we have a unified marketing platform, not just an email marketing system and a separate web marketing system. We have one marketing automation platform. Why is that useful?
You send an email to somebody with some information, they go to a landing page on Google and search about your products and services, we can correlate who they are, they cannot. Number 2, our marketing automation system includes a number of unique capabilities. Example number 1, we have a loyalty management application, they do not. We have an integrated capability between our social platform and the marketing campaign. So you can be on the marketing canvas and launch a campaign and simultaneously push information to Twitter and Facebook, concurrent to the launch of the campaign.
They cannot. And lastly, our revenue performance management and analytics allows you to get through a big data platform where we collect 1,200,000,000 events every day, a unified view of the customer that no one else can give you. So that's number 1, marketing. And we're used by many of the people in the world, many of the big companies in the world because they see us unifying this unified customer profile because we have single marketing automation solution across all channels. Sales, the notion of what sales force automation is changing.
Sales force automation used to be about the bottom things. I give you a mechanism to do contact management. I then allow you to push in leads. You can run opportunity management, track a forecast and then do quota management. We certainly do all of that.
But what we do differently is help salespeople sell more product. And here's the way we do it. We give you the ability to have an installed base that represents all of the products and services that a company has. You can bring it in from ERP into the system and we have built in customer data quality, so get deduplication and clean customer data. So you start with clean customer data.
You have a built in capability to do territory management. Why is that important? You can take your best people and put them on the best deals. Now you may ask, how do you find the best deals? Well, we have the sales prediction capability, which is built into the system and uses our data mining algorithms to identify the most important sales opportunities that you may have based on patterns that the system is recognizing.
And then finally, most companies have 3rd parties they sell with. We give you the ability as a salesperson to share leads with partners with built in partner relationship management. All of this is also complemented by all of the best of breed partners on our App Store. So if you want to use our product and do incentive compensation, you can go to Exactli and Callidus and do that or you can stay with our incentive compensation solution. If you want to use this platform and you want to add in quoting and contract management, you can go to a variety of different quoting tools.
In fact, we showed a number of these in our keynotes earlier this week. 3rd, customer service. So what we do with customer service is allow you to solve 3 important problems. First one is to lower the cost of customer service. And how do we do that?
The most expensive way to service a customer is in a contact center by getting a phone call. The lowest cost way of solving customer service is to let the customer find the information for themselves. And what that comes from is knowledge management. So we've got a best in class knowledge management solution. It's used by many of the largest companies in the world to build knowledge repositories that people can then go online, search and find the information themselves.
Every one of you access many of the world's leading websites, Yahoo! Apple, etcetera, all of whom you use us for knowledge management. Okay? Number 2, we've got the second thing we do is we unify knowledge management with the customer service experience across 5 important channels. You go online and let's assume you're trying to buy something, we give you web customer service.
So you can answer questions, you can interact with a web agent. If you do it on a mobile phone, we give you mobile self-service and you can do it without calling anybody in a contact center. Why is that? Because web is about $0.03 an interaction, a call is about $2 an interaction. Chat and co browse, you're in the shopping cart now wanting to buy something and it turns out that you are stuck.
Well, we can pop a click to chat in front of you and chat with you and resolve it. You don't have to go a separate chat vendor to get a chat solution. It's all built into the product. You can interact with them through e mail and we unify the interaction history across all these channels. Finally, we have 2 important capabilities that particularly for companies in public sector and other systems called case management and policy management.
This is think about if you call your police system and you raise a contact center ticket with them and it's a case because somebody took something from your home, there's a case associated with it and you need a life cycle management for that case. And we are the only ones in the industry that provide that capability built into the contact center application, which is very important in a number of sectors. And finally, social. We have unified a social platform in 2 important ways. We give you social listening and engagement, the ability to monitor what people are saying about your products and services on the web and then respond to them directly from your contact center.
You don't even need to leave the contact center desktop. You can directly interact with them on Twitter or Facebook. And the reason is we want to help people be responsive to customers who are either happy or unhappy. You can also build brands on social media. You can market on social media.
We have a social network that's built into the product suite and allows people to collaborate with one another in responding and helping customers. And then we're building the social profile of the user, which you can then use to market, sell and service better. Now there are a number of differentiators. I want to talk about a few of them. We're the only ones who offer a full SaaS suite that supports B2C, in addition to B2B.
In B2C, the core business process is e commerce. The competitors do not have such a capability. We do. So if you're a B2C company, and we'll show you a number of examples, it's a relatively easy decision on which vendor you're going to pick. And B2C is at least half as big a market in the overall world, meaning it's at least the same size as B2B.
2nd, I said we've got a single multichannel marketing platform. We don't have an email sending system and a separate system for marketing automation. We have a sales cloud that helps sales teams sell more. It's kind of important for a salesperson. We have a service cloud that lets you offer a highly differentiated customer service at lower cost.
And we're the only ones who have integrated important? Well, it's important to lots of companies. Here's a small list of those who use our customer experience cloud. Let's look at a few of them. IKEA, the retailer, uses Oracle's customer experience suite, commerce, social, service, marketing to transform the way they are changing customer experience.
I said we can do B2C and the competitor cannot. Here's an example. They don't have a sales team. So sales force automation is not as critical. Here's an example.
KPN, a telecommunications company in Netherlands uses our CX suite to build engaging customer experiences. They wanted an omnichannel experience across retail, online and direct. Again, the competitor has a sales force automation solution. They don't have anything that runs in the retail environment. National Instruments, the manufacturing company, wanted a marketing cloud to integrate with their ERP system.
We allow you to do that seamlessly, easy to use. If you're asking who do you have that's a pure play Salesforce automation company? Here's an example, Worldpay. It's a large online payments provider. They migrated from the competitor to Oracle.
They are live on Oracle Sales Cloud. TD Bank, a major financial institution in North America, uses our customer experience cloud to improve customer service. Vodafone, a giant telecommunications company, uses our commerce, service and social solutions along with our industry applications to transform their entire business process around customers. The U. S.
Army Training Command uses our Customer Experience Cloud to support and market and help 1,000,000 soldiers and civilians across 32 locations in 16 countries and Southwest Airlines, the most profitable U. S. Airline uses our customer experience and social cloud to build a number of innovative customer experience programs. 3 more, PepsiCo, the largest consumer products company in the world uses Oracle Social Cloud to both monitor social media and to build its brand on social media. Waste Management uses Oracle Service Cloud and our supply chain solutions.
And then Office Max uses our commerce solution. So a variety of different customers, different industries. Now many of these are the biggest brand names. And you probably have a question, first of all, are there any mid market customers using Oracle Sales Cloud? Because that's where the competitor particularly made its mark, selling to mid market customers.
So we thought we'd show you a video of a small set of customers, subset of customers who are in the mid market using our sales cloud. Please cue the video.
Moving to Oracle Sales Cloud was a fabulous decision for Cairo 1.
Moving to Oracle Sales Cloud is probably one of the most significant change to our business.
The reason we chose Oracle Sales Cloud program over other competitors is that it was very versatile, very easy to use.
So we selected the Oracle Marketing Cloud because it was a low cost option, lower risk option and gave us all the functionality that we were looking for from a new system platform. Choosing Oracle Sales Cloud is very easy for us because we are currently using JD Edwards as our ERP system and Oracle Business Intelligence. I don't know if Oracle Sales Cloud could get any easier. For our initial users, it has been an easy adoption. Onboarding has just been a snap.
It offers a professional complex marketing system which cover all needs and entice all various department needs together.
Management decision making is much easier today.
So the Visualize reporting ultimately customizable from a management point of view is a fantastic tool.
Oracle Sales Cloud tools have helped establish a connected fabric both within Aplico and within our clients to liberate and unify data.
The thing that probably tipped me for Oracle was all of the, in my own terms, back engine stuff that Oracle brings on. And it struck me that Salesforce wasn't allowed to do that or do it as reliably for them.
Oracle Sales Cloud as compared Salesforce provides superior product in terms of giving us a system which is going to grow and scale with Apple Co as an organization. And that's something which when looking at sales force needs, which is what we were using previously, it did not give us the solution that we needed. Oracle's
architecture that they've built into Fusion CRM is one of the best that I've ever seen.
Partnering with Oracle is very important in regards to they have the latest modern technology.
You don't need to hire an army of technical people to do work.
Oracle has really put in a lot of thought and a lot of effort into this product and you can really tell it is just makes sense.
The cost of implementation is significantly less than you would see with a traditional ARP type implementation.
The Outlook client is very good. It's almost as easy as using a consumer app. I have the application in my mobile phone, but I haven't really used it because it is so convenient to use it in iPad.
I can see lots of differences in my team. They are happy using Oracle Sales Cloud and they are more productive, of course, and they are more motivated.
We need to look at the company that can provide our option as we grow. Oracle is one of the company that we can rely on.
We are so happy with the experience and we want other folks to know Sales Cloud and the team at Oracle are there to help you meet your business goals in the most efficient and fun way possible.
If you're looking for a sales force automation tool, go get Oracle Sales Cloud.
So every one of them was also a Fusion CRM customer. So let's just net this out. Oracle has a very strong new product cycle. We covered the areas that we get most questions about. We have a new database release, we have a new middleware release, we have new analytics release, we have a lot of new application releases.
Those drive growth in revenue. 2nd, we have the world's best engineered systems portfolio. Not only are we seeing strong growth in our existing products, Exadata, Exologic, Exalytics, we're also delivering new applications on top of them and we've also added to the product line with a number of new engineered systems. 3rd, a year ago, a competitor said that their in memory database would replace us in a lot of customers. Why would any customer switch their database to a new platform when you get a faster performance, more usable application with 0 retraining on the same platform that you've been using for so many years.
And lastly, a year ago, people questioned how committed we were to the cloud. The Oracle Public Cloud today runs more than 15,000 organizations with 21,500,000 users doing 19,000,000,000 transactions every working day in 13 data centers around the world. If you ask the question specifically, how many of those users are Fusion users? We have nearly 2,000,000 users using Fusion applications on the cloud. So we said that we would be committed to delivering the best SaaS offering, combining ERP, CRM and HR.
Not only have we had a lot of momentum with users picking up these applications, now we're complementing them with the platform and infrastructure, offering our customers a unique value proposition as the only cloud provider that unifies apps, platform and infrastructure and gives you portability with the stack on your premise. So we believe that over the last 12 months, we've accelerated our product innovation and we've delivered a lot of new capability into the customer base and we've seen at this enormous interest and excitement our customers have with these products. So with that, thank you once again for your time. We'll take a 10 minute, 15 minute break and then we'll have you back to hear from some of these customers. Thank you.
Okay. Ready to be back. Every time I see those videos, I get pumped up. You cannot get excited seeing a boat essentially fly on water. It's absolutely crazy and amazing what they've done with the America's Cup.
We'll look forward to speaking with Larry a little bit about that later. As I mentioned to you earlier, we took your feedback from last year. We modified the schedule a little bit in the agenda. This time, we heard a lot of feedback last year. Let's hear more of the voice of the customer.
So what we're going to do now is Bob Evans is our Chief Communication Officer. And Bob is going to be leading a discussion with 3 leading CIOs. We've got Mark Franciosa with Praxair, Andy Brown with UBS and then Dan Drabaugh with the University of Pittsburgh Medical Center. Be coming up and talking to you about their experiences and work with Oracle and Oracle Technology. With that, gentlemen, please welcome to the stage.
Good afternoon, everyone. Thank you for being here. And as Ken said, this voice of the customer is going to come through pretty loud and clear here. We're going to jump right into this here with some of the questions. So Mark, can I start with you?
Would you tell us briefly about some of the history of Praxair, but especially when you and I talk, you described that the way the company operates and sort of its outlook now is quite different than it was a few years ago. What's made that happen? So it's interesting. Our company, our core business model and business strategy hasn't really changed over the last few years. We're an industrial gases company.
We're fairly capital intensive. We put a plant in the ground. We separate the atmosphere. We push it either through a pipeline. We push it into a truck and then deliver it over the road, or we turn it into a gas and put it in a cylinder and sell the cylinder.
As we grew up as a set of multinational as a global company, kind of a series of regional companies. And those companies owned everything from top line all the way through to their infrastructure, their application stack. So coming into the role, have a really successful company. We've grown fairly well over the number of years. We lead the industrial space that we're in.
But breaking out and looking for opportunities, we started transforming the way we operated and started looking at how do we use the Oracle products and enable the business in a more global fashion. Okay. Yes, thanks. I just thinking of it here with Financial Services and Healthcare and with what Mark's company does, we have health wealth and atmosphere represented up here. So Oracle health care business and some of the things you're doing at UPMC, would you mention I think that point about unlocking the secrets of human health and how that's changed really where your whole $11,000,000,000 organization
is headed? Yes. It's just fascinating right now with the breakthroughs in genetic sequencing, the costs coming down so low where all of us will be having our genetic sequence done comparing that integrating or intersecting that information with what we call the phenotype data, so the clinical data. So looking at across the organization at the phenotype and genotype data is going to revolutionize and finding cures for diseases. So it's very fascinating right now and fast moving, fast paced.
Dan, it's sort of collapsing that space that just a small number of years ago that was the pharma industry over there. But it's flipped it around now to where what had been a traditional academic research institution is doing really the work that's come from a very different industry.
Yes. That's very true, Bob. And IT has become center for UPMC and across healthcare as a whole. Mark is sitting over there and was kind enough to visit with us. And it was a fascinating discussion with our CEO.
In fact, Mark was responsible. One of the directives now I've received as CIO is UPMC is very focused on rebasing our entire revenues around IT. Okay. And so it's strategic for us, very strategic.
Is that something you would have thought about 2 years ago?
No. 2 years ago, we were focused on the implementation of the electronic health record and hitting meaningful use guidelines. That's where our focus was. And we undertook $100,000,000 analytics initiative across the enterprise and that's been the driver and focus for us now.
Yes. Andy certainly in the financial services field something that our audience knows pretty well. But one of the things that was interesting that you described was this notion of the industrialization almost of your industry. How is that happening? And what's the role that technology is playing there?
Well, I think a lot of cost has been taken out of the industry particularly since 2,008. And generally that's been taken out within silos. And what's happening right now is people are starting to look at process automation in quite a similar way to when I worked in the oil industry actually in that the inefficiencies associated with processes that don't run straight through is no longer going to work in the new cost structure that we have to run-in. And you've seen probably almost every financial services sell side company come out with cost targets at the end of 2015, which are extraordinarily aggressive. We're actually I think one of the few companies that's come out and said, we're going to use industrialization and a supply chain model essentially to change the way we work.
And that has to be process driven and it has to be top down and it is being driven from the board all the way down into the organization. So I mean clearly technology has a massive role to play there. The couple of things that we've done with Oracle that I think are changing the game for us are the HCM decision that we made and also moving to Oracle Database as a Service and changing the way we do everything provision databases, run databases, manage end of life and so on. And the harder you look into those processes, the more you realize how much inefficiency is buried within them. So you start measuring different things.
So a number of database instances per application turns out to be one of the most important measures that we've learned. It seems obvious probably to everyone in the audience, but inefficient development environments can lead to ratios in the 8 to 9 range. Very good ones are probably in the 3 to 4 range. And what we're doing with database as a service essentially is we can turn them up when they're needed and turn them down when they're not. And that is enabling us to go from somewhere in the 9,000 live database range to something around 4,000, 5,000 something like that.
Okay. Andy one of the things you said especially as you described the whole issue of cost and pulling that out of the organization there, these days there seems to be sometimes a trade off when you look at technology. Some people believe I can get better performance or I can get lower cost. Are you seeing something different especially with database as a service?
I think the way to think about it probably is that in most organizations, infrastructure cost breaks down into 3 buckets. There's fixed cost, things like data center depreciation, things like that. There's human cost and then there's everything else. So software depreciation, pass through services like mobile costs like that. When you think about those things, I believe in the next 3 years all three of those buckets are going to have to be attacked by the people who have essentially laid out what financial outcome they want to achieve by the end of 2015.
So what does that mean? That means you've really got to start looking at using technology as a strategic enabler for automation to stop hands touching processes that don't need to touch them and fully electronically automate them. That's why I used the supply chain term before. There is another important kind of consequence of that though I think which is the fixed cost piece which has traditionally been viewed as an untouchable item is going to change. The software defined data center is going to move us to a world where asset defined data centers and the cost of those assets no longer have to be borne by the enterprise and instead become more of a real estate investment strategy I think not necessarily for enterprises who aren't in the real estate investment business either.
Okay.
So I'm expecting to see a big change there too.
Fascinating overview of where things are headed. Mark, Sapa this morning talked about that there are some companies that are lining up more behind this range of things that Oracle is doing across the board. And as you talked about the business transformation that's occurred at your company over the last 5 years that seemed to be very much a part of the Praxair strategy. Yes. When we look across the services we provide, we look at the traditional transactional processes from the GL out procurement, the financial transactions.
But we've moved well into the supply chain, the manufacturing, the distribution piece of our business. So it's imperative for us to understand, for example, where all of our trucks are in real time and to do correlation on a bunch of events that we wouldn't normally do or we wouldn't have done historically. So it's important when trucks came back and historically we'd look at the data out of their black boxes on board computers and we'd be able to interrogate a number of those items. Now we apply a lot of analytics. So we look at both the windshield wipers went on, did the driver reduce speed?
And if those two events aren't correlated, we'll alarm the cab and say the wipers are on, it's obviously raining, you need to slow down. That's a real time action that we can take or we can apply analytics upfront to say, using a recent example, Superstorm Sandy coming up the East Coast. We know it empowers 1 of our biggest raw materials other than the atmosphere. So we don't want to be in a position where a big storm will have an impact on the power grid. Now we can operate the plant where there'll be a lot of destruction in the path of the storm and
we can't deliver product. So we've
used things like telemetry and mapping, customers. We map that to other external events like weather maps, like power consumption or power pricing. And we will deliver when we can either predict that there'll be clear path out or that we know that the customer will need product. We don't wait for them to pick a phone up or to log into a website and place it. So whereas maybe in the past technology was a history book where it helps you told you what happened.
Now you're using it to see what's coming
and
be better prepared more intelligent. Yes. The one other thing Mark that you talked about too that this is creating not just efficiency, but real barriers to entry. Some of the things you said you're doing is going to enable you in a very competitive marketplace to do things that your competitors cannot do. Yes.
So in certain industries or in certain geographies some of our industries are highly regulated for example in the medical oxygen space. In a number of parts of the world it's treated like a drug. So we do need full traceability. We need the ability to recall by lot number, batch number. And what we've been able to do is build some systems that allow us to not only track the entire manufacturing cycle, but all the way out to distribution and back.
So that no human intervention, you're not writing slips down, handing out deliveries, tickets. And that causes us to have a competitive advantage and a higher cost of entry to a local competitor that might come in and not have those services. And now we're extending that into their supply chain or into their operations. So if you think about a large hospital complex or a large electronics company, they can now move cylinders around on our platform. So we get a better visibility on their usage patterns.
We understand their consumption rates in ways that we would never have been able to do that before. Andy, interesting how both Praxair and you had talked about the supply chain idea. And also you talked about too with the HCM initiative that I think Mark had said it a couple of quarters ago. Where is that helping out now with what you're doing at UBS? How are you using that HCM application?
I think in many of the ERP applications that people have done in the past, there has been this temptation to customize. And we were definitely tempted and we definitely customized. So I mean we actually had a the guy running the project was at an investment dinner last night. A few people in the room were there. And he was talking about the difference between from a business perspective having a conversation about which standard processes you use back to the supply chain discussion again it's like a set of standard processes versus how do you morph the platform to deal with the way you currently do business.
Okay. And we've really industrialized HR as one of the first functions that we've done. So moving to an HR service center, moving all of the low value transactions into the service center and essentially now building out a platform to support much, much greater industrialization of HR. And HCM is a massive piece of how to do that. Now clearly, if you're a Swiss bank, security is one
of the biggest issues you've got
to cope with. And I think similarly for both my partners on stage here as well. And Oracle was able to step up and provide a security solution that we were very comfortable with.
Could you mention too if there are a couple of differentiators among other options you looked at where did Oracle stand out from the rest of the crowd?
Well, obviously, given the installed base that we had on PeopleSoft, the migration was actually easier or is easier. The second thing I would say is that the security was definitely a part of that discussion. The hosting location was also part of that discussion as well. Again European companies like European hosted platforms as well. So I mean there were probably 7 or 8 single actually ran that analysis.
So but those 3 are probably the main three.
Thanks, Ian. I'm going to ask each of the panelists another question or so and then we're going to open up in a few minutes to you folks. Dan, could I ask you, so if we turn the clock back, I don't know, 8, 10 years when at UPMC you first had the notion that you had to sort of redo the architecture end to end and you struck quite a landmark deal with IBM that scaled all the way up to a venture fund co funded by UPMC and IBM. So this was a long term strategic deal. But more recently, made a shift in who you think some of the infrastructure for the future is going to be for UPMC.
Yes. I think the big shift occurred with the analytics initiative. It was, I'll say, call the competition between Oracle and IBM. Oracle came out as a clear favorite. The Omics Data Bank was a differentiating product, Cohort Explorer.
Your approach, much different approach than your competitors. And so that was the start of some of the changes. And then we took a look at and Exadata was part of that initiative. Then we quickly saw across our health plan, we were having processing issues on the revenue cycle side, primarily with estimating the claims payments, had a 24 hour processing time, went into pilot with Exadata, reduced it from 24 hours down to 6 hours, basically providing the financial team an additional hour of estimating those claims payments across the board, 4:one compression difference that we saw. And the option was to retool and we were using Informatica and the IBM solutions.
It's just the hardware and software engineering was superior. So that was the first move. The second move was on the clinical side. We were on a product called Epic in our physician practice area. We have 3,400 employee physicians.
So it's all based upon the performance and the execution and we're seeing tremendous success with you.
Yes. I think I thought of some of the work you've done particularly when Juan the wiser was describing that notion, some companies picking Exadata and saying give us your toughest, hairiest business problem if we can fix that for you. It was like the foot's in the door there and you've been finding success with Exadate in other parts of the organization. Right. Yes.
Andy, you had mentioned that with the database as a service product that there was an interesting combination in there of Exadata and Nebula that had done good things for you?
Well, with the Exadata implementation we did originally, we did throw it into our hardest problem and it solved a problem that nothing else could solve at that time. With the implementation that I talked about earlier on, we're currently in pilot. We've done 100 migrations at this point. And we are very excited I think by the performance. The compression is very, very impressive.
And the fact that it can almost be run as a black box I think is also important. Back to the points I made before about automation and industrialization, you've essentially taken 3 skill sets around networking, system admin and DBA and all of those are essentially now combined and significantly reduced in terms of the amount of people that you need to manage. So it's actually also changing data center architecture and network architecture at the same time because each box essentially is a virtual data center in its own right. And now you need a completely different interconnect model between the platforms your apps are running in and the platform that's hosting your databases in terms of speed, so you don't lose latency or speed between those. And clearly, where Oracle is headed in the future is towards us being able to co host or sit alongside other components of the application infrastructure and potentially even the apps as well, which is very exciting in terms of speed.
So I think that's really the feedback. One other point just on the development side is just that the speed in dev environments has traditionally been poor because development servers are not spec to anything like what production is. And we're actually seeing an increase in productivity for developers not just through the provisioning and deprovisioning but just the speed of the platform. Running scripts that run 15, 20 times faster than they used to is an amazing thing if you're a developer.
And what at this point of the industrialization move that you mentioned more and more of that's going to happen. So that's again a competitive differentiator.
A lot of people I don't think really think about if you've got a change budget that's 1 point $25,000,000,000 and you save 20% in productivity, then you've essentially added that 20% back into the change that you can run over and above what you could run before. And people have been looking for efficiencies in infrastructure forever, but this is a way actually of going after efficiency on the SDLC development side, which is great actually.
So Mark, one of the things too that you and I talked about some of it and it's interesting today. Mark heard talks about this some that he said, is it time for the technology industry to take some of the burden off of customers, do more of the engineering and integration work on the vendor side rather than having the customers have to spend so much time and money and effort gluing things together. I think from some of what you've said Mark you found that that's become a particular business advantage for Praxair. Yes, absolutely. I mean even as Andy was describing it, when we looked at our environments and I described the kind of disparate architecture and data center strategy that we had historically, we were one of the first, if not the first J.
D. Edwards customer to run on the exit data stack. So it was important for us to be able to scale up quickly and not have to do all of that architecture. And historically, we would have looked at a best in breed stack, not only in the application space, but all the way down. So we pick the best hardware to run maybe play with the operating system and is it Wintel versus UNIX.
And now all of that largely goes away. The stacks run. We still have a lot of legacy applications around. We've seen exit data and the tech stack actually enable that through things like Golden Gate, where we replicate our data real time off the ODB or off the Oracle tech stack down to some of our other legacy apps. And we had to do very little to enable that.
I mean that was kind of out of the environment as we stood that up. We've now grown that out horizontally through the Exadata platform And we're using Exalytics to help enable some of the real time analytics that I was talking about before. And both in memory analytics and just the speed of the platform and not having to engineer whether it's the networking between all the different components or how it interoperates has been a huge cost saving for us. Okay. Can I
add one thing to that?
Sure. One thing I think people don't really understand in terms of cost is how complex infrastructures can drive costs through the roof and drive supportability down. I would say that in an average enterprise, certainly we're no different than the average of our size, you're going to see something like 500 to 1000 different configurations just at the hardware OS and database layer. And the reason for that is just because purchase cycles don't run annually. They run almost on a week to week basis as projects start business cases get approved.
Yeah.
And best in class kind of changes from 1 week to the next. So one of the other advantages I see of Exadata is you're going to end up with something like maybe 3 or 4 versions that are running, the ones that maybe are 5 years old and the ones that are new and the ones that are in that 2 to 3 year range. But just having done projects like that in the past in other areas of the stack like iOS, for example, the other iOS, the Cisco version, you see huge opportunity to take out cost in how you engineer and how you support. But more importantly then the integration that you are doing between app servers and databases you don't have to back test against literally hundreds of configurations. So maybe for the financial analysts and when they don't see that and I think it's important to understand that.
Good point. Ken, we're going to open it up to questions from the audience. So firstly in the back, Jason.
Hey, guys. Good afternoon.
I've got a couple of questions and
maybe Dan and Andy you can hit on this since you
were talking about Exadata. But what
are the type of cost savings are you seeing when you
do consolidations like this?
If you could speak to that?
And then as you look out forward, I think
you said something like 8,000 or 9,000 production database servers.
I didn't say production, but keep going.
Okay. 8000 test whatever. What do you think about in terms of consolidation opportunities to roll AXA through that installed base? And how do you is that something that you're looking at and actively considering? And does that give you some of the same cost savings from compared to some of these hairy problems that you've tackled?
So the first thing to say is that in our industry, the opportunity to consolidate is going in the reverse direction to centralization. And the reason for that is because of the credit crisis jurisdictions deciding to take control over where apps are hosted and where data is hosted for people within that jurisdiction. So you've actually got to come up with a model that allows you to get the best possible consolidation in Monaco and a model that gives you the best consolidation in New York, London, Zurich and Hong Kong and Singapore. And we've actually built a really quite nice combo model with Oracle where we're able to scale from very small branch infrastructures all the way up to massive campuses or central site locations like London and Zurich. So the consolidation percentage is huge.
I mean it's just in terms of number of moving parts, you're going from tens of 1,000 down to 100. I mean, that's a big deal first of all. The second thing is that the integration testing that I mentioned before, you almost don't have to do at a point. So once you're confident that the platform itself has been engineered correctly by Oracle, you stop doing that kind of testing, right? So always when there are new releases, you have to do that.
Whether it's the hardware, the firmware, the OS, the database, whatever it is, you've got to do that testing a few times. But once you're through that, then all of a sudden you're starting to get a real peace benefit, if you like, of not having to keep moving the dial every time you go buy a new piece of infrastructure.
So I
think that's important.
I like that. So there's a piece benefit. That's a good one. We'll go with that. Next question.
We've got one here.
Bob, if I could just comment
on Jason's question. One thing Jason on the health care side. So it's interesting. We're seeing I went through the numbers, 70% reduction in processing time, 70 some percent reduction in the operator side. But where we're seeing and anticipate seeing the big difference is actually on the clinical and operating side.
So some of you look at some of the results that come out of let's just take out that, okay, on the clinical decision support side and you're waiting till the next day to make decisions on, let's say, something like discharging a patient, waiting for the processing to occur to know if that patient should leave the hospital today. And we're seeing that. So on the front end with Exadata, we believe we'll see a major operational benefit as we introduce this technology into the workflow, into the work stream.
I just want to add one further thing. The other benefit that I was going to get to is actually in the complexity of how you design data centers. So if you think about fiber channel separate storage pools, how many network switch ports you need to connect all the legacy servers together, you start designing data centers in a completely different way, much more like the way IO thinks about data center than the way enterprises like ours have traditionally designed them. And that has a big impact on which vendors you spend money with and how you design. So that was the other point I
was going to make. Great.
Thank you. Hi, Michael. Hi, Corey. Thank you very much for being here today and sharing your time. My question is, what does Oracle and Oracle related spend represent as a percentage of your overall IT budget?
And how do you think about weighing the risk or concentration risk versus the benefits of a single throat to choke in integrated solutions?
Mark, can we start with you and we'll come across? Yes. So if I actually look at it and I'll answer maybe in a bit of a different way. If I look at our Oracle spend over the last, say, 5 years, it's increased dramatically. What it's allowed us to do is focus on the benefits that we're going to get from the overall stack, the engineered systems all the way up through the applications and not have to spend our money architecting, doing all the plumbing, if you want to call it, getting all the design work done.
So we're seeing a fairly significant benefit in areas outside of the Oracle stack. So while it's a growing percentage of our spend and of our overall cost stack, we're seeing significant benefits outside of it. As far as kind of single throat to choke or a single person to drink champagne with when we're on the deployments, I actually see quite a big benefit to that because I come from a different organization that used a competitor product and didn't own the entire stack. So we had a lot of people that were really good at figuring out IO ports, network design, as Andy was describing the data center design. We've gone through this fairly large transformation.
And in the core infrastructure ops staff, we haven't increased heads at all in that space. And we're actually taking heads out around the world that have run all these disparate systems. So to me, it's actually a much better design model and kind of relationship than having to have relationships with 5 or different major vendors and getting them all together when we have some conflict or configuration challenges. Now it's a much easier discussion point. Yes.
Indy, how about you?
I think you need to use the Elon Musk version of cost analysis to actually look at the answer to your question. So if you look at the fully loaded cost including not buying gas of his cars, it's very different than if you look at the including gas. And it's the same is true with Oracle. So if you look at the cost of running Oracle environments, has Oracle's percentage of spend of that total gone up significantly as a result of the project we're doing? Absolutely.
But is the total cost going down dramatically? Absolutely as well. And I think the point here is that the accountability for the success of Oracle in the enterprise did not rest with 1 person or one team in the old world. It rested that accountability was shared across networks, sysadmin, Oracle DBAs, database guys, data center guys as well. And now that responsibility has moved.
So the one throw to choke outcome is important in the context that now a lot of work that used to get done isn't needed anymore. And instead people are focusing on how do they use the only way actually to take the cost down significantly is to go to a utility model and a utility model where the vendor is taking accountability for the whole stack is both a blessing and a curse, right? The blessing is that you've reduced all of your integration costs and everything else. The curse is that you're quite locked in. So I mean, I think that's the pro and the con of doing it.
But overall from a cost perspective, it's the right thing to do.
Our IT budget is about $350,000,000 a year. Oracle has consistently been in the top 10. Over the last 3 years, though, there's been a movement within our organization to more and more of Oracle's products. I'll give you an example that happened over the last probably 8 months within our financial area. And I think many of you are familiar healthcare with the changes from fee to service to now where cost accounting is a major initiative and organizations want to move that way.
So our CFO with Hyperion development there around the cost accounting module that we feel actually feel in discussions excellent
products,
but we want to customize it a little bit to our excellent products, but we want to customize it a little bit to our vertical to healthcare. So take identity management within the healthcare environment around privacy, some major issues there. So we've found it very easy to work with Oracle. And so suite of products continue. I think their acquisition strategy has been very sound and so we continue to grow with them as a vendor.
Thanks. Next question, Hooten? Hi, Kevin.
Hi, Kevin. Merrill Lynch here. I'm curious if your thoughts on 12c multi tenant adoption, how broadly or narrowly applicable would that be in your database environments? And also the in memory option that Orp has been talking about, what are your early thoughts on that? Thank you.
Anybody working with those 12C Dan or Mark?
I'll take it. Sure. I mean I think what was announced this week is great news for existing customers who've already made the kind of investments that we just talked about. But the point I raised earlier is the important one, and that is every time you go through a version change, something changes. And your applications may or may not
be written to deal
with that change, whether it's the order that rows come back in or whatever it is. So I think probably for the first 5 or 6, again, you're going to be very careful. The next 20, you're going to be fairly careful. And then you're going to be fairly clear on how you're going to do the migrations. I mean, one of the things we've done with Oracle in the project I mentioned earlier on is also set up a migration factory with a very, very competent vendor.
And as soon as those vendors get trained on how to do the specifics of the 12 implementations, I can't see any reason why we wouldn't do it. The memory option clearly is from a performance perspective going to be different from one platform to the next, just like every other performance improvement since 5onetwenty 2, which is the first version I ever worked on. And again, you have to performance comes at a price, right? You've got to optimize code a different way. You've now optimized the relationship between data and CPU a different way.
So you've got to do the testing properly. But I think it's exciting and it's differentiating if it delivers what we heard this week.
Okay. And I'm just going to add from now that we're on the stack and moving more of our apps into an orange database into the exit data racks, the upgrades for us should become much easier. So before our big upgrades, we would plan out across all of the different application architectures we had, all the different platforms that we had, what investment cycle we bought them on. So, what may have been on UNIX versus what would have been on Wintel. So, I see a much more straightforward upgrade
path for
us even in the on prem space versus being able to use both an on prem model and use a cloud service and kind of have the workload balance across those 2. And the same within memory, there's a lot of applications certainly for transactional and manufacturing intensive business where we're collecting a lot of data points off of all of our plants around the world, where that would be a huge advantage to understand things that might be going wrong in a plant very quickly and take corrective action while not having to do that transactionally down in the stack and then bring it back up. All right. Okay. Thanks.
And we've got time for one more question. Dana, did we have somebody?
In the back. In the
back, the gentleman here.
Thanks, Tripp Chaudhry, Global Equities Research. I think this Oracle world was the most exciting conference that I have attended over the last 10 years, especially for the technology inclined audience. I was wondering on Monday, which technology you could just open and pay for it, like open the purchase order, approve it and get started because this we had a lot of stuff happening this time.
I'm just the moderator. Did our key account team ask you to ask that question? There was some remarkable stuff announced this week, no question. I think in the interest of time here, we're going to move along. I would like to thank our panelists.
You guys have been terrific. Dan and Andy and Mark, thank you so much for being here and thanks to all of you for coming today.
All right, very good. We're now in that home stretch, telling you around Marker 4, for the finish line. We'll take a quick 10 minute break. Please come on back. We'll have Saffra and Mark up on stage for Q and A.
And then after that, we'll meet with Larry. Thank you all. Incredible. Incredible. How a boat flies on water at 3 times the speed of the wind is beyond me.
That is absolutely incredible. Now, as you recall, we had an earnings call just about a week ago. So we're going to do a little bit of Q and A here with Mark and Safra. And then what we're going to do is Larry is on his way en route, very excited. We're not going to be able to get the boat through the door.
So those of you who are thinking was coming in, I'm sorry to disappoint, but nonetheless, Lara will be here very excited. So get out of the way and why don't we do a few questions.
I'm surprised there are any questions. We just did this. You want to do it again, Rick? I mean, you just asked a question
a week ago. All right.
Is it a good question, Rick? We're looking for good thoughtful, insightful, response.
Yes. Hi, Michael. How are you? Thank you.
If you
could talk a little bit about the in memory. How are you going to price it? How excited the sales force would be around this product? But also does it drive your engineered systems? Does it pull through
What? Engineer
systems. That's the hardware.
Rick, I'm telling you, you're pushing it. I mean,
I asked you already. I gave you an opening.
You told me you're going to be on your best behavior.
So, the business intelligence analytics seems to go nicely with in memory. So if you could just sort of talk about your salespeople have a lot more to sell now and it seems like it could pull along other products. How are you going to price it? And how optimistic are you about us seeing that in the numbers over the next couple of quarters?
Yes. I'm not sure I'm going to tell you much about any of that really. I mean you got Mr. Ellison coming soon. He can tell you about in memory pricing wise.
You're going to have to pay for it.
And we're proud of it. I think Salesforce is excited. Listen, I mean 12c and in memory particularly adds a ton of performance. And we gave you algorithms. I can't remember what Juan's improvement in his performance on that wiki.
What was it? How many 1,000,000,000? Dollars 1300.
1300 times faster, which is a little
bit faster.
So but good news, we're not charging 1300 times the database price. So I think Salesforce is excited. You wouldn't want me to tell you anything else. And I think it's a great product and you'll see us ripple it through the user base.
Hi, Kash Rangan and Merrill Lynch. Hi, Kash. Hi, Mark. Wondering if you could talk about the sales reorganization. You've gone through product specialty.
How far are you along with respect to having a fully productive HCM sales force that can win big deals against big competitors and the likes? Thank you.
Against little competitors.
Yes. I mean which ones you want big competitors or little competitors? Real so you started with the reorganization. This year we've reorganized absolutely nothing, okay? So we reorganized the sales force over a year ago.
I want to reiterate because it seems to come up a lot. Going into this year, we changed really almost no territories. We did all of our territory planning in Q4. We did all of our quota deployment in Q4. And by June 7, 8, 9, 95% of our sales force had a territory, had a quota, had a boss.
And so very, very minimal change to virtually anything in the sales organization in this year and in Q1. Now in HCM, our distribution has increased materially both on the phone and in the field. I'd say with a combination of product releases with what we've seen in Release 6 and what we'll see in Release 7 of HCM. We have a sales force that's on the attack, believes it can win virtually every deal. We are winning and we've been pretty clear about this more than half the deals in this country and materially more than that outside this country.
Now the competitor changes a bit when you get outside the U. S. So we do see more of a bigger competitor in HCM outside the U. S. Than we do here in the U.
S. So the competitive position changes a bit.
Hi. I'm Michael Turits from Raymond James. So from the past your comment about the impact on the financial model of a move to cloud has been among other things that it wasn't large enough relative to so much else that's out there to impact it. But cloud has come a really long way. Your CapEx is still very, very low.
So are we at the point now where it is going to start to make a difference where we'll start seeing an incremental change? Obviously, we have the example of Microsoft in front of us with them having raised their CapEx. So will we see a change at some point as it gets more material?
Well, us and Microsoft are 2 very, very different companies. You have to understand that we've been running people systems now for years. We have an immense amount of experience as well as economies of scale. And as a result, the marginal amount of capital expenditure will be more than overwhelmed by the increased revenues. And so as we're so I don't expect our margins to decrease.
And I actually think that we're going to continue to get a lot of leverage. So if you're thinking I'm going to come back in 6 months and tell you it's $1,000,000,000 more CapEx than last year or I think that's what Microsoft originally announced. You shouldn't expect that because that's not going to be necessary. Because remember, we make all our own hardware and all our own software and we've got incredibly efficient systems with enormous performance advantages over everybody else. So for us, we can run many, many, many, many systems more economically than our competitors.
I'd also supplement that on the OpEx side. We've added a lot of sales resource that's outselling ARR and or recurring revenue. As you see our margins go up, that cloud sales force is well deployed now. And it takes a couple to 3 years to get that to the equivalent productivity, in some cases maybe 3.5 of what you would see in a traditional license sales force. So we've done that hiring up within the context of the margins that you've seen us deliver over the past several quarters.
Ryan Molinschow from Barclays. Mark a quick question.
In the room here, can
you talk about the smaller SaaS vendors and obviously they are noise for you. But I mean the big battle for you in 5, 10 years' time are going to be the big vendors. Can you help us a little bit understand how you position the sales force more towards kind of the big strategic battles you will have with kind of the big blues with the our friends from Germany, etcetera? And Who was that? Sorry as a German I can see.
I think I started working on something though. Yes.
We gave him 10 years
to do it though.
10 years, but I think by then we'll be pretty far ahead.
To get going in 10 years, they'd have to start soon.
Yes.
So just help us understand how you're positioning yourself against the real long term strategic
No, listen, I think you're right in what you say in this context, right? There is a lot of technology revenue out there in the hands of very big companies. The big revenue is out in the hands of companies like what you described, IBM, others. We line up our sales force by buyer, by secular competitor. They are lined up directly against those buyers.
And frankly, our sales force knows who they compete with and they know who they sell to. We do not line up with a bunch of generalists that have 10 things in their portfolio and they sort of decide every day which one they'll sell and how they feel. They go directly up against competitor and they go directly up against or towards selling to a buyer. So it's hard for our group to get confused. When you get a group of our salespeople together, they are talking about their competitor.
They are talking about that buyer and our advantages relative to those competitors.
By the way, the reality is the reason we win, the reason we've beaten our competitors and database so soundly, our competitors in middleware so soundly, the reason we've nearly caught up in size to SAP and in some regions have passed them is because our products are better. You're actually looking at the wrong end of the chain, of the distribution chain because it's the $5,000,000,000 a year that we spend on R and D. It's the $50,000,000,000 plus in acquired R and D. It's the integration. It's the foundation.
And when you get that right and you get the sales model right, it is very, very hard to beat us. And that's really what we've been doing for the past decade, 20 years, 30 years, 35 years.
Excellent. This is Keith Weiss from Morgan Stanley. Thank you for hosting us today. As more of the solutions come either in a solution stack integrated all the way through down to the hardware layer or from a cloud based service, how does the role of your system integrator partners change? And do they still continue to be those key influencers for you guys on a going forward basis as you provide a lot more of that value?
Well, I think that market's going through change. Listen, our customers historically have taken applications and customized them. And IT has played a role of facilitating that customization with the end users and a great industry has evolved that being the SIs. They're going through the same issue the other folks are now that IT in some ways is using cloud, whether it's private cloud frankly or public cloud SaaS model to force standardization. And there's a couple of ways to approach it, to embrace it or to fight it.
And I won't give you a report card on various integrators, but we have partners that are really embracing it and they are growing with us significantly. And there are others that are going through change.
Heather Bellini with Goldman Sachs. Safra, I had a question for you related to you obviously have your toughest comp of the year coming up in this current quarter. I think it was plus 18% constant currency. But I'm also wondering are there other factors when you look at your guidance, which granted again off of a very tough comp. I'm wondering how much of the potential chaos that the U.
S. Budget might cause and whether that was factored into how you were thinking about the outlook for November?
Well, I can tell you I did not want to get out ahead with the level of uncertainty related to whatever is going on in Washington. And I felt that I wanted to be in a very, very safe place, give guidance in a range that I was very, very confident we would be in. And just looking at the tough comp, I don't want you to think I am not incredibly optimistic about our prospects this year. I think we're going to have an absolute fantastic year because our the changes have been made in our past. We're really gelling.
The products are all gelling. We've got a lot of references. If you walked around, I'm sure you did through Oracle Open World.
If you just at almost
a random customer, if you were to run into 1 of the 50,000, 60,000 that are walking around, you're going to hear them. They feel great. They're buying more. As I think I said before, customer told me Exadata save their job. I mean, not a customer I had a planned meeting with, someone I just literally happened to be standing next to.
And that kind of confidence is so I have no idea what's going to happen in Washington. I'm actually going to be there next week. And so maybe I'll get a little insight, but that's the only thing that went into my mind being a very, very safe place. I look at the comp, I look at the business. We're going to have a great year that I am sure of.
I think we'll have a great quarter too, but this is where I thought I'd put it for the quarter.
Hi, it's Brent Thill with UBS. Safford, you've done an impressive job on the operating margins. I think you're about 300 basis points away from your target around 50%. Longer term, not near term, how do you think about that framework? You still feel like you can go through 50 with comfort?
Well, first of all, I'd like to take full credit for all of it, Okay. I don't know what those other 124,000 employees were doing. I did this all myself. It is exhausting. Okay.
So I have to say, we are not that good. I am definitely not that good. This is very much a result of the incredible business model that Oracle has that we've had for many years, which involves having a very, very enormous base of happy satisfied customers who renew every year and buy more. And every time they buy more, it increases our installed base. A long, long time ago when we were in the 30s, we thought we'd make it to 50.
I think the way it works here at Oracle is every time you get to a finish line, you think you're there. Larry goes, no, no, no, over there. And so I actually don't see we think that we can be even more profitable, more successful. The cloud actually will make more money because though customers will spend less for the total service, they will pay us more. And there's and you kind of heard it even on the stage just now.
The Oracle share goes up and we are at scale as a company operationally, even when we buy companies, our G and A doesn't go anywhere. Our support costs don't go anywhere. They all stay where they are and yet the revenue comes in because the customers value what they're getting. So I'm not calling it today, but I can assure you the moment we cross 50, off we go. We're going to continue on.
Yes. Hi, Walter Pritchard from Citi. Just a question on apps. So we saw a pretty good presentation from a variety of folks talking about some of the traction you've seen with Fusion. And I
think when we look at when we look
at the numbers, you're not providing the same level of granularity between license and apps and database, but we make some of our own assumptions including comments like last quarter where you mentioned database grew double digit and we arrive at sort of the organic apps business declining and from a license perspective. And I'm trying to understand sort of the disconnect between what we hear and that in the numbers. And there's factors like your cloud business where the ARR takes some time to catch up. You've got quite a few options for customers to choose from in terms of Fusion and Applications Unlimited. And just trying to get a sense of is this sort of the normal state in apps and we should just expect a kind of a disparity between performance of the two businesses?
Or if not, what improves and what gives us some transparency into that cloud business which seems like it's doing pretty well?
Okay. First of all, I would caution you that you should never extrapolate from anything Q1 ish, okay? Because things are very, very lumpy. In my view, the numbers are very small. I know for a regular company, they wouldn't call Q1 small, but I would not extrapolate.
Secondly, I want to also remind you that in cloud there's apps and tech and the reason that we stopped actually breaking it out is because it's all mixed in together. When a customer buys Fusion HR, they get the database in there and middleware and a lot of things together. So the difference between whether it's tech or whether it's apps. And finally, even though as we talked about database grew double digits, there are a whole bunch of other pieces that affect. So some applications did extremely well, others did less well and that includes the vertical application.
So you shouldn't start expecting anything from whatever it is you calculated out in your little spreadsheet.
Which to add was not right how you got into the spreadsheet. 2nd, it's going up against a very strong apps
comp
from the year before. And so you're going to have to look at these things over more broader periods and we'll try to give you more insight as we go. But first of all, the calculation is wrong.
Yes. And there's no Going
up against a very strong Q1 as was Q2 by the way in apps.
One more.
Is there really one good one? Well, this is a lot of pressure. I don't know. You're waving hard. Listen, if it's a question, that's a simple number.
Hi.
Hi, Mark. It's John DiFucci from JPMorgan. Mark, a question about Exadata. A while ago when it first came out, you had to deal with customer base and they had to make some adjustments. There's a server guy, there's a storage guy, they had concrete and all that.
It took some time. First use case we saw that hearing from you and talking to customers that really saw a big adoption was OLAP. And then we've heard about mission critical OLTP large applications.
So a lot of
talk about 12c here and a lot of talk about the in memory option and cash rents and the multi tenancy. First of all, the 12 C, it just came out. Database usually takes the new version takes the time. I'm just curious when you think you're going to see the adoption when you're talking to customers because that multi tenancy is that the option to sell?
Yes, John,
let's go back. I mean, we said this on the call last week. What you saw in Q1 had nothing to do with 12c. 12c is just coming out. I think 2 things that are important that I'll try to relate to your point.
A lot of what we've sold in Exadata to date has been project based. Project on that an application needed more performance. Exadata has been well positioned to do that. It's delivered on it. What you saw today, which I thought was a really big deal when Andy was talking about what happened at UBS, It's a very different thing.
You saw somebody make an architectural decision, an architectural decision based on taking cost out, total cost of ownership. The ability to take whatever that number was, 1,000 different ways they figured out, which is amazing, to configure the Oracle database. Different servers, different OSes, different infrastructure. I can tell you the general use case, people like UBS have opportunities to take their run costs down by 30% to 40%, 30% to 40% by basically finding a different way to deliver the same capability they're delivering today on a standard configuration, standard versions of everything. And that gives us a brand new game to play.
The opportunity now that we've got the user base seeded with references that can validate compression, that can validate performance. And now that we can start to have those discussions about let's standardize your architecture on how we deliver the database, add 12c, add end memory to that very capability. This is a huge opportunity for us to ripple through our base and we'll do it.
But can the multi tenancy option allow somebody on one full rack instead of just focusing on a large mission critical so you can see
Run your own private cloud. Exactly. Run your own private cloud internally. We're going to see this at is that
happen like a year from now?
Is that typically is about
a year? You heard some I didn't tell you that story.
He did. This is one
of the biggest banks in the world. I can tell you those concessions are going on now. First of all, John, to your point, our sales force has had to get used to this because frankly the way we sell, who we compete with in these discussions has changed. And we're getting better and better at it. And now not only are we getting better at it, the customers are getting better at talking to each other about it.
It's a huge opportunity for us over the next year to 18 months.
Thank you.
Okay. All right.
One short question. I guess
you like a number.
Hi, guys. Peter Goldbacher, Cowen and Company. What do you consider your 2 biggest competitive threats?
3.
Ask the question 3 times or
No, he told me the answer. Listen, our competitive threats are ourselves always. It's all about execution. We have what we need, okay? We are spending enough on it.
We've cut the right people on it. We just have to execute. We see the goal line. We just got to keep going.
And there's no second one. No. I mean, this is for us. We've the good news about Oracle is we got 124,000 people. They're very talented.
They're very focused. Bad news is we have 124,000 people and we have to keep them led. And we have to keep them lined up. We've now got a broad product portfolio as we've described today. Our biggest issue Peter is really making sure we're in the field with clear simple messages that we can give the customers and we can go execute.
That is job 1. That is our job.
Okay. Okay.
Are we good? Thank you.
Thank
you all of you. Thank you.
I'm not Larry, just to be really clear with everybody. So there's a little bit of traffic. He's just a couple of blocks away, but you know how it is in San Francisco. I want to take the opportunity though to remind you, we did do the survey. We pushed that out to you and I don't know if it helped, but just by raise a hand, it'd be just some quick real time feedback.
We tried to do something a little bit different this year and bring in the voice of the customer. I think Mark, as he may have mentioned to it, like we didn't tell you what the customers told you. But by show of hands, I mean, was this helpful to you bringing customers to get that voice or is this just not something you care about what customers say? Okay. All right.
We'll look to do that again. You know what I'm going to do, Safra, Mark, if you guys are okay, I'm sorry to do this to you, but I really want to make sure we kind of keep the conversation going. We'll roll Larry in as soon as he gets here and I got to know he's going to be here any minute, but that's been like 3 times now. Yes.
I can't tell you how excited I am to come back. Are you not coming? Yes. Okay.
All right. Any other All right.
Any other questions? With that, Lita,
all right. Nobody has any questions, do you?
Sure. How about a
It's a long this is a long
week. This is just it's incredible. We go
through from Sunday till today with 60,000 people through here.
Derek Wood at Susquehanna.
One of
the big pushbacks on Exadata is the price tag. So I'm just wondering what the strategy is to drive more mass adoption of engineered systems kind of in a similar way that you did with your database software?
Yes. And Derek, as I said, I'm in a good mood. But when you saw 60% unit growth in Q1, you didn't that was taking a lot of share. So I mean, in the end, let's be clear. The server market is in, I don't know, 1 negative 1%, negative 2% unit growth.
We grew 60%. We've introduced an 8th rack, which has gained a ton of share. So our issue has been, I think, Juan, the team have brought together various configurations. We've penetrated with those configurations. They've shown up in share.
And it's worked. Okay. Good news. Thank you, Derek. So I think Larry is here.
Whatever you want to talk about as long as it's not sailing. Yes, Rick?
Thanks, Larry. Congratulations on the Americas Cup. Thank you. You could maybe just share a perspective for us on how you're able to come back so dramatically. And hold on, there's an Oracle question in here.
And maybe any parallels to Oracle company. If you anticipate, are there things that you see going on in the company now that you foresee might enable you to do a similar kind of reacceleration in the business at Oracle? Okay. Well,
we made a lot I mean, obviously, we had a big setback early in our campaign when we flipped our catamaran and it kind of floated out underneath the Golden Gate Bridge and started I don't know if you did that. I mean, we had had the catamaran sailing for about a week and Jimmy Spithill, who knows no fear, our helmsman, just so I was out practicing in 30 knots of breeze, 30 knots of breeze. And the boat in 30 knots of Regus goes about 60 miles an hour. And one of the bows dug in and the boat flipped over and the wing broke and then there was a big ebb tide. By the way, when there's an ebb tide, the water is flowing out underneath the Golden Gate Bridge and the prevailing winds are coming in.
So you have 30 knots of breeze coming in, a 4.5 knot ebb tide, which makes huge waves inside the bay because those things are going against each other. So in an ebb tide, a 30 knot wind is more like a 35 knot wind. And by the way, it's a geometric progression. It's not 15% more, 30%, 35%. It's close to the pressure is not double, but it's close to double, 50% more.
So anyway, we flip the boat over. The boat floats out underneath the Golden Gate Bridge and this is start being swept south towards Santa Barbara. It took us all night. We had to wait for the tide to come the other direction to get the did. And they came in much better prepared.
We were very focused on figuring out how to catch up to them, watching them in the Louis Vuitton Cup, how fast they were downwind. And we thought they were faster than us downwind. And especially this maneuver called the jive when you're going the boats don't go straight downwind. If they went straight downwind, they wouldn't go any faster than the wind. The boats go at an angle and that means they're like airplane wings.
These things are like airplane wings and it creates a low pressure or you're kind of sucked downwind. It's called the Bernoulli effect that takes you create a low pressure area in front of your sail. That's why airplanes fly. There's a big curve on top of the wing and the bottom of the wing is flat. So it's a shorter distance.
I'm sure you're thrilled about this answer. This will be this is the only question I'm going to take and I'm going to go home. The so you're sailing flips the boat over. We thought we realized right at the beginning of the watching Team New Zealand sail, they're faster than us downwind and they're much faster than us jibings. You don't go straight downwind, you go probably at a 30 60 degree angle off the wind and come back.
The back of your boat keeps going through the wind direction and the wind goes from one side and the sails go from one side to the other. And the maneuver is called jiving. And New Zealand had a technique where they stayed up on their foils throughout the jibe. We had a technique where we actually sat down in the water much, much slower. So we were working and working and working.
And by the time the Americas Cup started, we had caught up to them in jibing and what's called foiling jiving and downwind speed and reaching speed, but we had not caught up to them and we didn't realize we had a big deficit going upwind. And we painfully found that out during the first few races of the Americas Cup. We have lots of video helicopter video, lots of sensor data. We took all the data, what is New Zealand doing? So we had to figure out, A, we had to figure out how to speed up our boat, but we went to school on New Zealand.
We looked at how they were trimming the wing. The wing is called camber. The wing is made up of 2 elements. The wing itself and what's called a flap, just like an airplane wing, big flap going like and you kind of create that angle and the camber. And we were they were sailing at different wing trims, different angles, different twist and twist at the top.
So we made a bunch of changes to where we trim the boat. We changed the angles of our foils. We changed the angle of our rudder. And when we had these new configurations that we figured out, put more power in the boat, we then had to the sailors had then go out and use these new tools and change the way they sail the boat. Now typically in a boat, you wanted there are 2 things you care about when you're sailing upwind or downwind, the direction you're going and how fast you're going.
And the combination and you're never sailing directly for the mark. Again, the marks are set do upwind and do downwind. So you can't the sailboat cannot sail directly into the wind, so you're sailing at an angle. And like the best monohull in the world can probably sail at a 30, 32 degrees off the wind. So the mark is there, you're sailing like this 30 degrees off the wind.
Catamarans sail 40 degrees, 42 degrees off the wind, but much faster. We decided to sail at 45 degrees off the wind, not going sailing what's called lower, but much faster going upwind and the boat started foiling. We figured out how to get the boat to foil upwind. And once we did that, we went from being about 50 seconds slower on the upwind leg with them to being by yesterday where we became dominant. We weren't dominant until yesterday.
It was really tough racing in terms of equality of boat speed until yesterday and yesterday in the second race yesterday. I guess that would be the day before. So the second to last race, we finally had it dialed in where we were probably 50 seconds faster than they were upwind. And they had made huge improvements too. So they had gone from the Louis Vuitton Cup to the Americas Cup.
They had to speed it up by about a minute on that upland leg. And so when they came out, we thought we were at the same speed that they were a minute faster on that leg. We improved that leg for us by 2 minutes. So we went from behind on the upwind leg almost a minute to in front by almost a minute. And it really was a combination of a lot of observing them, taking a lot of data points and really analyzing how they were sailing and what they were doing differently than we were doing, doing a lot of analysis, applying it to our boat, then how we had to make physical changes to our boats.
So the guys were up all night, every night making physical change to the boat. And then the boys had to literally go out and test it that morning for an hour before the race and see if it worked. And eventually, we just made improvement after improvement in a very fast rate. And it was enough to win, but not by much. Down 8 to 1 facing sudden death for over a week was emotionally very stressful for everybody, especially me.
And your question, how does it apply to Oracle? Well, I think to be seriously, we have a limit. The America's Cup is really a combination of engineering and athleticism. And you got to get both right. With Oracle, it's a combination of engineering and salesmanship.
You've got to great build great products and you've got to explain to people why they're great products and how they solve very specific problems. And I think that we have always been able to look at what competitors are doing and learn what competitors are doing. And if they're doing a better job than we are rather than simply saying, well, that's ridiculous. This is nonsense. We kind of go to school on them and try to figure out how to do what they're doing better than they're doing it.
And I think we've done that across a series of IT generations. I think we're pretty good at learning from the competition and then going them one better. So we think we can do it off the water as well as on the water.
Thank you, Kash Rangan and Marilyn Shuck. I'll add my congratulations along with Rick as well. My question was with MERICA's Cup out of the way. What are you going to be really focused on from a development perspective? And also your thoughts on the in memory database, it seemed like a couple of years back it was not going to be mainstream, SAP was making noises with HANA.
Where do you stand with your perspective on this being a big mainstream market, the in memory option particularly? Thank you.
I've said a lot of things that maybe I didn't say clearly enough. I know some people said I said that the cloud was ridiculous. What I said was the term cloud was subject to a lot of hype. Haso Plotner would have you believe I think that in memory databases were ridiculous, because I said they were taking drugs if they're going into the in memory database business against us. Let me be very clear what I meant by that.
I think SAP choosing to compete with us in the arena of database as opposed to the arena of business applications is a huge mistake. We've been in this database business a very, very long time. We think we're very good at it. We've had the dominant in memory database technology for a decade. It's called times 10.
So I absolutely believe and have always believed in in memory databases. I always I've always believed it's like saying, I don't believe in Flash that Flash will to some degree displace disk. Of course, I believe that Flash will to some degree displace disk. And we'll be among the first to take advantage of that. Of course, I believe that DRAM is getting cheaper and more and more of your database will be in memory and there are all sorts of new algorithms and techniques we can use to make the database run faster, analytics run faster by using this technology.
Of course, we're going to be the best at that. We're the best at database in the world and we're going to be the best at in memory database in the world. I don't think there's any question of that. My point about SAP was they I think are making have made an enormous mistake to focus on HANA rather than getting their business applications to the cloud. I mean it's really kind of stunning.
They tried this before with something called NetWeaver where they decided to compete with us in middleware. At the time, IBM was the number one player and we were and SAP was nowhere and we were below IBM. But now we're the number one player in middleware and I don't think anyone even considers them a middleware supplier. But years ago, I mean, I don't know how long ago was it 5 years ago, more, yes, 8 years ago, they were talking about NetWeaver and how great NetWeaver was and how they're going to be a major supplier of middleware to the industry. And they said it over and over again, they're a big credible company.
A lot of people bought into that, but I just think that's not where I think their core competency is. Their core competency is in ERP and supply chain and things like that. So I think this NetWeaver thing was a huge distraction 6, 7 years 8 years ago. I think this HANA thing is going to be a huge distraction for them. They have no chance whatsoever competing with us on in memory databases.
It's absurd. It's absolutely absurd. There are millions of programmers that use the Oracle database. How many programmers know how to use HANA? We have a multimillion programmer advantage.
There are millions of applications that run on the Oracle database. And when you put the new version of 12c on, those applications automatically take advantage of our in memory technology with no changes whatsoever. So we'll have millions of in memory optimized applications running on the Oracle on Oracle 12c. No application changes, no retraining of people, no rewriting of it. You have to rewrite your application for HANA to make it work.
Okay, SAP will rewrite a few of their applications. So you buy an application from SAP, it will run MRP application, let's say, it will run faster on HANA. God bless. Great. But most of the antenna applications are going to be written by SAP.
Customers might write a few, but we have a multimillion application lead. We have a multimillion programmer lead. The new version of Oracle has much better, but let's say it was equal in memory technology. I'm saying it's much better in memory technology, but you don't have to believe me. It's equal.
Let me tell you how you use it. You run your you turn it on and you're done. You throw a switch and you're done. So let me set that aside. So I think it's just I'm thrilled that they're doing that.
But I never said in memory was crazy. I said they were crazy to compete with us in this particular arena just like but it's the same mistake over again, the same exact mistake they made with NetWeaver. And they're doing it again because Haso loves to mess around with technology. He doesn't think supply chain is cool. He thinks database is cool.
And if you ever if you want to see the best way to understand him is watch this video on their website called Haso on Haso. Haso interviews himself. I'm not making this up. Please watch it. Haso interviews himself.
And basically, one Haso says, My God, you're a genius. Then the other Haso says, Yes, I am. And you really can't be a genius in general ledger. But you can be a genius in memory databases. And so anyway, vanity is a very dangerous thing if you don't recognize it.
I think we I think all of us in this room, certainly me, all of us have been tripped up by vanity at one time or another in our lives. But you hate to take the whole company with you. So now what are they doing with this other little side business other than their big middleware business, their big database business? What are they doing with this little business they have on the side called ERP, where they're the world leader? Nothing, nothing.
They criticized us for rebuilding our applications and building these fusion applications for the cloud, which has taken us 8 years. It's taken us 8 years to so we in other words, we started 8 years ago. And by the way, we had to make great improvements to our middleware to do that. And to make it really multi tenant, we had to change our database to make our database multi tenant to get it ready for so all of our applications will be multi tenant. We took a very different approach to multi tenancy.
We put it in the underlying technology rather than the application layer. There's a lot of reasons for that. I mean, I won't mention Salesforce, I'll mention NetSuite, which is a company I own half of and I started and was the 1st cloud company in the world. Back when they built their application and they built a multi tenant application, they had no choice but to build multi tenancy in the at the application layer because you couldn't get it at the database layer. You could get it through virtualization, but back then VMware was not well known.
So you can get it in 3 layers. You get it at the application layer, get it the platform layer, multi tenancy, NetSuite, salesforce.com, 15 year old companies put it at the application layer. Most people do it at the application layer. We did it at the database layer. Other people do it at the virtual machine layer.
I mean, some people don't call that multi tenancy, just separate VMs. But the problem with putting your multi tenancy at the application layer is a lot of features of your underlying database don't work. I know that because we're in that business. So when you start building multi tenancy at the application layer, you make certain compromises with being able to use certain database features like some of the security features. A lot of them just don't just stop working.
I mean you can do it, but either a compromise as you may. Now they had no choice 15 years ago. That was their only avenue. I'm not saying that that was a stupid mistake. That's the only avenue they had 15 years ago.
Things have changed. So SAP has done what they bought Ariba, they bought a yes, yes, SuccessFactors and that's their move into the cloud. But what are they doing with supply chain, accounting, payables, receivables, inventory MRP? What are they doing? That's 99% of their business.
They say they're really into the cloud. They advertise HANA's for the cloud. What are you kidding me? HANA's for the let's say DRAM is for the cloud. What does that mean HANA's for the cloud?
You can run-in the cloud. Yes, you can run anything in the cloud. I mean, obviously, salesforce.com runs Oracle in the cloud. NetSuite runs Oracle in cloud. We run Oracle in the cloud.
You can put any technology. Can use Dell servers, you say Dell servers. Dell has this incredible new idea, selling Intel servers for the cloud. Totally different than selling the same exact box not for the cloud. So I don't people say these things that are that I think are intended to deceive others.
I think sometimes they end up deceiving themselves. So we're a great believer in the memory technology. We think it's a very, very big deal. We're the number one database player in the world. And we got to get millions of applications and millions of trained developers and we're going to make it very easy to adopt that technology.
In fact, it's just going to just turn it on. It arrives with the next version of Oracle, turn it on, you're done. You're done. So that's the in memory side. I think there's another part of your question.
You've got to have worn you out. Okay. Let's see over here. Gentleman with a red badge. They both have red badge.
I'm a little tired. The gentleman with the red badge. Yes, there will be all the gentlemen.
What's the matter?
Hey, Larry. It's John DiFucci from JPMorgan. Most believe that one of the most important determinants of Oracle's early success was your strategy for the Oracle database to work on essentially all platforms. Your current strategy, how it was explained to us today by several people up here is to finely tune your software with your hardware to work together. I guess, what in the market today makes you believe that this sort of it seems like a strategy shift.
What in the world today makes you think that way other than the fact that you bought a hardware company?
That's a very fair question and I got a really easy answer. Yes, we used to run on data general and digital and Wang. We ran on lots and lots of different computers. We probably ran on 30 boroughs that controlled data. Now what caused us to change our strategy?
Because we don't run on any of those computers anymore. Honeywell, Bull, we don't we just stopped we decided to not run on those things anymore. No one's well, they're gone. There are very few computers left. They're almost all gone.
What's left? I mean, some people would say I mean, some data centers say there's only 1 computer in the world. That's a 2 processor Intel machine running VMware and Red Hat Linux. That is what's called a computer and there are no other kinds of computers. I mean that's how extreme it's gotten.
But we still support HP UX and still support IBM AIX and we support obviously support Solaris. There are a few left, but very few left, almost none left. Okay. That's one half of the answer. So it's not the strategy that's changed.
The world has changed. There are very few computers left. Such a huge majority of Intel machines and 2 processor Intel machines just dominate computing running Linux. Okay. So when we say that we're just going to run on our hardware, that's a little what we're really doing is configuring we would say, okay, we just run on the Burrows operating system or the we still run on HP operating system.
Exadata just runs Linux. We run Linux. We run on Red Hat Linux. We run on R Linux. That's not what makes Exadata magic that we think our Linux is better than Red Hat's, but that's not the major deal.
The major deal is we built our hardware with very fast InfiniBand networking that other people don't use. We've written a special protocol, direct to wire protocol to take advantage of InfiniBand networking. We fill our PCI slots with flash memory. So we don't go to disk very often. So we can do 1,000,000 IOs per second.
So it's a different world. We configure the storage, the disk, the flash, the network, the CPU, the operating system, the VM, the database, we put all those pieces together. It's kind of like configuring the boat. It's not any one thing. You put all the pieces together.
Now the way the world historically has data centers, they pick all going to buy disk from EMC and I'm going to buy a network from 3 Com or Cisco or you name it And the data centers put all these pieces together. You can still do that. We're still in the component business. You want to buy our database, you can go run it on what you want. And you want to buy EMC disk or NetApp disk, God bless you, you can do it.
But we give you we'll give you a choice in addition to that. We run on all the popular computers. There are very few left, but we run on all the popular computers and all the popular operating systems. But we give you an interesting engineered system isn't an alternative to that exactly. It's an alternative to buying a lot of pieces and putting them together yourself, no instructions included and getting a pre configured system storage, networking and processing with all the hardware and all the software engineered and tested to work together.
So when you buy an Exadata, you know that everyone else who's running Exadata has tested this configuration for you. We test it and all the configuration is the same, same storage, same disk, same flash, same network, same software. It's all the same. So all so it's much more like buying a car than it is buying pistons and catalytic converters and building your own car. And I've always been critical of the computer industry in that people buy lots and lots of parts and put them together themselves.
No wonder it's expensive and no wonder it's unreliable. And we think it's an interesting alternative that by these complete configurations that where we've done all the engineering and all the testing. And when you get a new version, think about it if you do it yourself. I mean, EMC has updates to their software and Cisco has updates to their software. IBM AIX updates to their software.
You're running a database. We have updates to our software. So not only do you have to get it installed and running the first time, every time you're taking these updates, you have to retest the new configuration. When we update in Exadata, we send you one file. It fixes your disk microcode.
It fixes the VM. It fixes the RVM. It fixes the Linux operating system. It patches the database, it patches all the networking slot. It does it all and we've pretested it.
Now you decide which is a better approach, people buying lots of separate pieces and putting them together themselves and testing it themselves or letting us do that work for you. Now we give you a choice, but you so you decide. By the way, when we configure these things ourselves, we said as long as we're doing this, we might as well make it run fast because we can balance the IO. We can do a lot of things to make it run fast. So we do that.
And that's why Exadata runs fast. That's what you but almost more important than it runs fast, it's way cheaper to do it that way than just buying lots and lots of parts and doing it all yourself. It's cheaper. It's easier to use. It's much more reliable because not only do we do the testing, you know that the thousands of companies that bought Exadata, if they have a bug in that Exadata and we fix that, we fix it across all the Exadata because everyone's configuration is the same, very different than in a data center with a unique compute configuration.
You got to you'll have bugs that no one else on the planet has except for you because your configuration is unique. So we think the old model is not very economical, not very reliable, and we're giving you a choice with engineered systems. And we'll see and so far it's working pretty well.
Just a quick add on, by the way, congrats, because I think Oracle Team USA simply became Team USA over the last week.
Thank you very much. It's very proud to be racing for the USA. It's really exciting. Gentlemen back here.
Hi. Over the past year or so, you've spent a lot of money on comms companies. I'd just love to hear your sort of view on your opportunity to help your comms customers run better businesses. How broad is that view? And really where are the opportunities to add value there?
I think you said you bought a lot of cloud companies.
Comms.
Comms, comms meaning not telecoms, right, comms meaning telecoms, not that's what threw me off, again I'm a little tired, like Acme Packet and guys like that. Well, we are very focused on industries. So we have a lot of products that are horizontal like our database or like our general ledger, though our general ledger has features for banks like average daily balance and things like that. But we have a lot of horizontal products. Certainly Exadata is a horizontal product.
Our database is horizontal. Some of our applications like HR are horizontal. But we've also are deeply into applications that are unique to a particular industry, telecoms, billing, service provisioning, provisioning the network automatically, letting people get online and buy a combination of mobile telephony, voice service, data service and TV service all together and automating all of those pieces. So we've been a primary supplier to the telecoms industry for some time and we think we're we've been very successful in that particular industry. And now we think we're just going to broaden our footprint.
So we think we can move from the IT side. Again, there's already a convergence in telecoms between IT and the network. They're coming together. And we want to be active as a technology supplier both on the IT side and on the network side and basically bridge the gap. So we'd have systems on the IT side that actually that run the network.
And so we wanted to again sell components on both side of that, integrate those components and become the most important technology provider to the telecommunications industry. It's a big ask because I mean right now that's probably we got competitors that are very specialized like a Cisco or a Huawei, but they do very different things. They're coming primarily from the network side of the business and if you will the hardware side of the business. So it's very interesting. I don't consider Cisco a hardware company.
I consider them a software company. My best friend Steve Jobs never considered Apple a hardware company, considered them a software company that built pretty packages for their software. So most of the 21st century hardware companies are really EMC. EMC is a software company. Now most of them what they're really selling.
It's very funny when we bought Sun and said, what does Oracle know about hardware? Oracle is going to the hardware business with Sun. So this is Sun is 90% software. It was Java and Solaris and all of those pieces. They were a software company and they were also a silicon design company with a spark chip.
But the actual building of the compute designing of the computer is was a minority of the small fairly small minority of the total engineers when we bought Sun. Sun was primarily a software company. So we are focusing on a number of industries. Telecom is extremely important to us. We want to be in the network side as well as the IT side.
You'll see continuing us increasing our focus in other industries like banking. You'll see we're doing extremely well in retail and some other industries. So you're going to see be seeing a big push for Oracle to expand its footprint, its software footprint and hardware footprint in telecoms, it's software and hardware footprint in specific industries that are very important to us. Let's pull way in the back.
Both.
Okay. Thanks. Larry, Steve Koenig from Wedbush. I wanted to ask about the data that's not viable enough to fly in the fighter jet.
What's the I'm sorry, I couldn't hear what you were saying.
Okay. I want to talk about Is it on? Hello. Thanks.
I want to talk about
the data that is not valuable enough to fly in the fighter jet that is the Oracle database. And in particular, what I'm wondering about is
You mean like videos of cats, cat uploading and tumbling around the cat videos.
Or maybe Haso interviews Haso.
Well, no, I think autonomy was the big was a database that actually positioned itself as we handle unstructured data, Oracle handles the structured data. So we'd say, yes, absolutely. We handle things like banking balances and payroll information and accounting information and customer data. They handle cat videos, photographs of your kids, they handle all that stuff. So, yes, I got it structured versus unstructured data.
By the way, we handle cat videos and photographs of your kids too, but it's not a huge moneymaker for us. It's interesting how much people are willing to pay to store their cat videos. It's just way less than they're willing to pay to store, let's say, all their network configuration data at AT and T. It's interesting. I don't know why, but it just seems to be that way.
And I'm kind of a libertarian market oriented kind of guy. So okay, whatever. We'll respond to that. You had a question probably.
Yes, I did. Thank you. Thank you. So we're seeing some initiatives from Oracle around a Hadoop distribution. We see the big data appliance.
I learned today about big data functionality within your HCM application having to do with recruiting and looking at job postings. Is that what we should we expect more of these kinds of initiatives scattered throughout your product lines or a more holistic approach to dealing with cat videos or other the other 95% of data that doesn't go on?
Well, Hadoop does not deal with cat videos very well either. Let me be very, very clear. As much as we love Hadoop and I think it's an important piece of technology, it doesn't handle cat videos worth a darn. Hadoop is a batch program. It's a batch approach basically to sorting data.
It's called it's a technique called MapReduce. And when people say big data, they mean 2 things. Lots of data is one thing they mean and the other thing they mean is Hadoop, anything that's Hadoop. And those are but the term big data pretty much came from Hadoop because it could sort through vast amounts of data. It was a it's a parallel processing system, this MapReduce technology could use lots and lots of computers, gang them together and basically sort through lots and lots of data.
But it was a batch again, but it's a batch system. It's a batch system. It was first developed at Google and then Yahoo! Made a version of it and Yahoo! Version was now became Hadoop, became open source and became Hadoop.
I mean, it's an interesting technology. It's good for some things. It is not in any way shape or form can a batch system like Hadoop do network provisioning at AT and T or any kind of real time system. It's just a very different kind of it's kind of it's an interesting analytics system. It's an analytics system that works on lots and lots of data and after a period of time gives you results.
But very different, I mean it's not a transaction processing system. So it doesn't replay, it doesn't do OLTP at all. So OLTP databases are safe. It doesn't give you an answer and then let you ask a follow-up answer right away because it's a batch system that runs over a period of time and you have to wait for it to complete. So but it's an important new interesting piece of technology and we think people use Hadoop in conjunction with the Oracle database quite a bit.
Though Hadoop, by the way, is very difficult to use. I mean, where it slowed down recently, there's been a number of articles about the adoption of Hadoop is slow because it's very complicated. You have to train a lot of people. It's not a simple system to use. But there are a lot of bright people out there and they're getting the hang of it.
And people use Hadoop and Oracle in concert. They use them together. And we think it was important for us to have our own machine that ran Hadoop that was with an InfiniBand interconnect that they could connect to Exadata. And the combination of those 2 would solve some interesting problems. But again, I don't think it's a again, these are not at all competitive products.
Just like MySQL, I mean, a lot of people used to talk about MySQL. And we now as we bought Sun, we got MySQL. So MySQL, which is a relational database, gee, that's going to really kill Oracle. I mean, they're very, very different. They're both relational databases.
They both use the SQL language, But they're in no way shape or form are they competitive. I mean they're complementary and we use people use them for different things. Same as Hadoop. Yes. Gentleman here.
Yes. Dan Ives, FBR. Could you just give some thoughts on consolidation within the tech sector? How do you think it's going to play out over the next few years and maybe how Oracle plays into that? Thanks.
Consolidation in the tech sector. There are so many different parts of that. There are so few I mean in the quote, the old tech sector is so consolidated that we could talk about old tech. I mean, how many PC server manufacturers are there left? There used to be a lot, there aren't many.
How many PC manufacturers are left? There aren't many. But they're being replaced by a whole new collection of startups with kind of cloud applications, which is very low cost entry, very highly specialized cloud applications, everything from paying your paying expenses to I know to making reservations at conferences. And so there are lots of these very interesting new companies that are starting up. So but that's always been the way it is in our industry.
There's always been we've always gone through this explosive phase of I remember there used to be like I think Michael Dell told me there were 500 PC companies in the United States at one time, 500. It's just crazy. So we always go through this very explosive phase, supported bunch of entrepreneurs go out and start companies. It turns out very few of them have a very long half life. They either they fail or they get acquired.
And but some are very successful and they do some acquiring. But we're going to do what we always do, which is develop a lot of stuff for the cloud ourselves, where we're not developing, we're going to go out and buy stuff for the cloud. So we're going to be an early we are an early consolidator of this new generation of cloud application technology. So that consolidation you could argue we bought Taleo. We bought RightNow.
We bought Eloqua. There are other I can make a long list of others. So the consolidation is just while there are lots of new companies starting up, if you will, the consolidation is kind of in the early phases now and we think we're one of the consolidators because our strategy has always been to have a complete and integrated portfolio of applications. We'll call it when Microsoft was a great company, they're still a great company, but when they back in 1995 where they were kind of the dominant tech company on earth, What had made them so successful is when they replaced WordPerfect and they replaced Lotus 1, 2, 3. They're all of these separate players, all these individual application players.
There are a few people in the audience are nodding. A bunch of people are looking at me like the younger people looking like, what the hell is he talking about? Word what? Perfect word? My God, he's old.
The 1995 I was at Harvard in 1995. What's he talking about? The anyway, the industry always works the same way. Lots and lots of startups, lots of interesting things, individual strong players in a very narrow niche. So you had to work the word perfect.
So you could have, let's say, a sales force doing well in sales automation, you could have a workday doing well on HCM. Now that remains to be seen that they're off to a good start. You could have all of these niche players. That is not our strategy. Our strategy, we might buy some of those not Salesforce, not Workday.
We might buy some of those. We are buying some of those. But our strategy is to have a complete portfolio of cloud applications. So we're going to have HCM and we're going to have sales automation and service automation and marketing automation and we're going to deliver all of those as an integrated suite. And integrated suites historically in our industry have always won, whether it's Microsoft Office or SAP.
When there used to be accounts payable, accounts receivable, general ledger, you bought all these things separately. And eventually, you had this notion of ERP, this collection, this suite of business applications you could buy. And our strategy has always been, because we're a big company, that we need to be a suite provider. We can build part of the suite. We can buy part of the suite.
But we need to be different than these small companies. We need to use size to our advantage. So cloud consolidation is in its early phases, but we're one of the early consolidators. Our strategy is to deliver a complete and integrated suite at the application layer, but also a complete and integrated suite at the platform layer, that's a database, Java middleware, a login service, single sign on. I can go on and on and on, all of these things at the platform level.
And then also infrastructure, a VM, a Linux operating system, a Solaris operating system to provide all of this technology at all three layers of the cloud infrastructure, platform and applications and have complete and integrated suites across all of those layers. And as far as I know, we're the only player. We're the only player to be in all three layers of the cloud. I mean typically you talk about a salesforce.com, who's very strong in a particular application, we used called SaaS before we knew it was called the cloud, used to be called an Internet application before we knew it was called SaaS. The so you got someone who's very strong in one part and in one silo of 1 layer of the cloud.
We're playing and they got Amazon who's very, very strong at the infrastructure layer, VM with Elastic Compute Cloud and Elastic Storage, you get that from Amazon. So we have that too, but we want to be differentiated. That's not the only thing we want to sell. You can argue what Amazon is selling is not unlike selling an undifferentiated PC with Linux operating system and a VM as infrastructure. There's nothing wrong with selling an undifferentiated commodity service.
Electricity is an undifferentiated commodity service. You can make a lot of money. Oil is an under you can make a lot of money in a commodity service. It's not a bad business. That is not the business we've ever wanted to be in.
We want to be in the value added business and the value add is twofold. Yes, we sell infrastructure, but we sell the most popular database and the most popular programming language on top of it. I mean Oracle is by far the most popular database in the world. Java is by far the most popular programming language in the world. And we're very successful in applications.
We're the number 2 application player in the world. And we're going to play it at all three layers. We don't want to just be an undifferentiated commodity infrastructure as a service supplier. That again, it's always been our strategy to sell highly valued, highly differentiated products and services with a very large Oracle intellectual property content. That's what we do.
We build technology. Sometimes we buy technology. But that's our approach as distinct from let's say a salesforce.com very strong in one silo at one layer or an Amazon very, very strong at the commodity layer. Gentleman here.
Thanks. Colin Wong from MAU Investment. Larry in the past 3 decades, you've made some pretty big bets with Oracle on various technologies such as relational database, Oracle 7, network computing, integrated suite, you name it. Maybe you can talk about how you determine what to bet on and more specifically when to bet on it? That's probably more important.
Well, interesting and very interesting question. We try to be at the leading edge, but not bleeding edge of technology. So, and let me be very specific. So, we got into flash storage in the form of our Exadata machine fairly early on, but not but we weren't the first. I mean there were other flash companies out there before us.
So we tend to be fairly early with technology in memory database. So I think we're fairly early. We're not the first, but we're fairly early in memory database. Same thing. We did object databases.
We've done a whole bunch of things. I mean, Oracle is a relational database. Oracle is a database. Does it has an object store and it has XML store. We have lots and lots of different data types supported in the Oracle database.
We watch very closely this is back to LaSallebo. We watch very closely what Team New Zealand is doing. I mean we watch HANA very closely. But that's not the only thing. All of this there are lots and lots of publications on in memory database going on for a long time.
Columnar databases, a lot of that work was done by Michael Stonebraker. So we we have a lot of bright guys at Oracle. We read the university research. We watch what competitors are doing. We believe we have to if the technology is interesting enough, in other words, we think it's valuable enough that our customers will benefit significantly from it.
Or if said another way, if we don't do it, we'll be putting ourselves at a competitive disadvantage. We decide then to put together a program to integrate that technology into the Oracle database with one important difference. Once it's in the Oracle database, it has to be totally transparent to all the existing applications, has to be Upwork compatible. They can't be, oh darn, we put this in memory technology in the Oracle database. Now a few of your applications don't work anymore.
No. No. People get very upset about that. Or yes, we put this new technology in the Oracle database, but you're going to have to change your programs to take advantage of it. No.
So we work very hard to when we introduce the new technology that it doesn't disrupt. You can uptake it with 0 disruption and get the benefits through the flick of a switch. We think that and that means we're probably not going to be 1st. It's going to take us, it's a little harder task than if you're just building just a pure brand new in memory database. Plus we have to worry about all sorts of security issues and recovery issues and they expect our database to work all the time every time.
And we're doing a quasi experimental new database and just for people to try just on certain query processing. You don't have that rigorous set of tests you have to pass before you can actually deliver that technology to your customer base. So that's what I mean by we watch this stuff very closely. Once we determine it's important, we then adopt a technology program to integrate it with our existing database or existing we've done a bunch of extensions and changes and improvements to Java. One of the first things we did when we got Java and there are cool new languages out.
I'm talking about the database and the memory database, but there's Ruby. Ruby became very, very popular in programming languages and people are talking about Java being old. And there was actually the Java community process made it very difficult to get changes through Java. I'm not going to go into the politics of doing it. But we decided 2 things when we acquired Sun is that we had there are a bunch of things we need to add to Java to keep it at the forefront of technology or people will be using Ruby more than we would like.
It's not just Ruby, there are other things. And we had to do it in a graceful way to make it we had to streamline the Java community process because there are some people that were just blocking for the sake of blocking, just politics is like that. And Thomas Kurian and his team did a great job on both streamlining the community process and making pretty much everyone happy. I mean IBM is a big supporter, but IBM's got a huge investment. I think SAP is a big supporter in Java.
So we all have huge investments in Java. We all want the language to continue to evolve and improve. Even if you're our competitors, we're in terms of Java, we're all in this together. So we watch what's going on with other languages, make improvements to Java to make sure it stays modern and competitive. So that's just a routine process inside of Oracle.
But there are always going to be innovations. There are bright people all over the place doing interesting things. Some things will be invented at Oracle. It's not so important that they're invented at Oracle. What's important is if they're invented that Oracle knows about it, Oracle evaluates it and Oracle is in a position to deliver that technology to its customers in an easily consumable way.
All the
way in the back, all the way in the back on that side. So yes, and then the gentleman right in front.
Hi, Larry. Jason Maynard with Wells Fargo. In your keynote on Wednesday night, you really outlined where Oracle this was at the
end of your keynote in
the future of the data center. You outlined where Oracle fits in?
Sunday night. Sunday night, I think Wednesday night, I was out in the water. But it was actually Tuesday afternoon, I think, where I played hooking. So by the way, that's the only presentation I've missed in 25 years. There was a lot of there were a lot of tweets that were not good.
I'm really sorry. I mean, I wish I could have I showed up I got off the water, showed up Sunday night for my keynote, I would have had we lost the 1st race, I don't know, would I have showed up, have we lost the 1st race on Tuesday? I don't know. I've probably been a little bit depressed, but I think I would have showed up. But I hope people in time will forgive me.
It was a long week for all of
us.
I apologize.
You then made a point
though on Sunday about how the core of the data center was going to be these 2 socket Intel servers. And you've kind of touched on it a little bit, but I'm curious what do you think happens in that market? You think Amazon with AWS takes the share? Do you think OpenStack makes a play as a real viable alternative? Do you think VMware wins?
And ultimately, is there a
move for Oracle to, if
you will monetize at some layer in this whole commodity data center opportunity?
Well, I mean, recently we announced our virtual compute appliance, which is our kind of version of the 2 socket core, bunch of 2 socket machines with RVM, our Linux distribution, interconnected within Finne Band. Admittedly, that's new. And then obviously, the popular thing is Red Hat Linux, VMware and 2 socket machines from I guess the leading 2 socket server supplier now is Dell. I'm not even sure. Is Dell number 1 on servers?
I don't know. Is Mark heard here? Okay. He would know. But even, okay.
They're tied for okay, they're tied for first. But so what does it look like? Does it go to Amazon? Amazon is tiny. I know they're growing fast and that's great.
But I don't think it's going to be all the cloud or all inside of JPMorgan Chase or all I think you're going to have a combination of both. Let me tell you our strategy vis a vis does it go to OpenStack? Does it go to just VMware? What I think customers want from talking to customers is they would like their cloud to be identical to the data center. In other words, they'd like to have the same software in their data center that they could and same infrastructure, same configuration, same APIs, same controls as in a cloud.
And think about how advantageous that would be. You could build an application in your data center, ship it over and run it in the cloud, change your mind, bring it back to your data center. You got a new project, you could start it in the cloud. Halfway through, you can move it to your data center by pressing a button. Wouldn't it be nice to have the cloud and your data center be transparent and interchangeable?
In other words, we used to call this industry standards, some kind of industry standards. Now a lot of we haven't got to industry standards in the cloud yet. I mean, there's a beginning of you can open stack kind of an attempt at a standard. So our strategy is to offer our customers infrastructure platform, infrastructure operating system, VM, platform database, Java, applications if you will that run identically in our cloud to how they run-in their data center. So they don't have to decide, oh, I'm going to build this in the cloud.
I'm going to put this in my data center. It makes no difference. Change your mind every day. Move it back and forth. You can be running an application database in the data center, back it up in the cloud.
The machine breaks in the data center, use a machine in the cloud to take it to be its disaster recovery center because they're all the same. It all looks the same from the point of view of the programmer and the application program and the database administrator, they're all using they can't distinguish between the cloud and the data center. We think that has huge utility and huge implications. So that's exactly what our strategy is, to sell customer stuff that run-in the cloud, run-in the data center and you never have to decide versus Salesforce, bless their hearts, very successful company. Let me tell you where you can run the salesforce.comapplication.
Pay them or run a different application. So our approach again is very different. Our approach is including with the application, Fusion applications by the way, not only run multi tenant in the cloud, if you want to, you could run if you're JPMorgan Chase and you want to run general ledger payables or Bank of America or whomever HSBC and you don't want to use the cloud for whatever reason, you can then run the exact same application on your computers. And then you can change or you can do all your development in the cloud and then run production on your computers. So we're the only ones that are really trying to kind of bridge the gap, not saying, hey, it's either the cloud is going to be everything.
Everything is going to run the cloud, everything. Only the dinosaur, there's still IBM mainframes around running a lot of these banks. So we don't think it's going to be all black or all white. We think people want to be able to have standards where they can develop using standards like Java and the Oracle database like they're doing today. And then I'd like to be able to run those applications in the cloud or not.
That's very different than saying, hey, build your application for Amazon. So our approach is what we've learned over the years, which we think industry standards are important. Choice is important. It's not all black. It's not all white.
Don't get too excited that big companies are going to not going to close all their data centers and go to the cloud, but they're going to use the cloud and they should. And on Sunday night, I offered we introduced our new backup appliance, full name backup logging recovery appliance. And we also announced a cloud service, backup logging and recovery cloud service. So you can buy that machine and put it in your data center and backup all your databases or you can get that the identical service in the cloud. You could start with that service in the cloud and after a while say, hey, this would be cheaper to do in house or for whatever security or legal reasons, I want the backups in house or I want the backups in a different country that Oracle doesn't support in their data centers.
You can do that. You can choose that. It's the same exact service, whether it's on premise or in the cloud. And it's all multi tenant. It's all just push a button you decide which way to go.
So that's what we're doing. When you use the Oracle database, the way you use it in the cloud and the way you use it on premise is identical. You can't distinguish 1 or the other. You build an application in one place, it runs both places. So that's a very different approach to what other people how other people are attacking the problem.
We're at all three layers to the cloud, infrastructure, platform, Oracle and Java, and applications. And we're saying that we'll help you build a cloud identical to a private cloud, identical to our public cloud. Let me be clear, private cloud is used for, hey, just a computer in your data center sometimes. Everything's a private cloud. You think public cloud was a misused term.
Private cloud is the ultimate misused term because basically this, oh, you had a data center? Yes, we'll call that a private cloud. So we have nothing but public clouds and private clouds immediately after the speech, everything is the cloud. But people are saying that. I mean, I mean, it's still getting in trouble.
Big companies are getting in trouble for describing their cloud business as being huge all of a sudden. We all know who I'm talking about. We have a huge cloud business. Well, what's that? Well, we've met it for 30 years.
Gigantic, really. If we did that, we'd be in a lot more trouble than they are, but they're in a little bit of trouble. So you got to be a little bit careful. So when we talk about a private cloud, we're talking about the identical software we're running in our public cloud. You run-in your data center and then you can do all this movement back and forth.
You can decide to add capacity in your data center if that makes sense or you can purchase excess capacity in our public cloud. We think that makes sense. And we're the only ones doing that too. So we're doing things differently, because we want to have a differentiated set of products and services. We think that way we can add more value and compete more effectively in the marketplace and customers will be willing will choose us rather than somebody else.
Am I done? One last question. Safford, do you want to ask about that? Okay. Gentleman right here, sorry.
The gentleman with the red badge.
And number 1. Ryan Molinscher from Barclays. Just sorry for the last question, just bringing back to the sailing. If I look at both the amount of sensor data you got out of them, you were probably a poster child for the Internet of Things. Talk a little bit about how much do you think is the high power outage reality?
And how is Oracle going to kind of benefit here? Thank you.
Well, that's a great question. I came very close to doing a keynote, probably a keynote I would have missed. On the Internet of Things, I was looking at what I wanted to talk about and I try I'm always tempted to talk about the future rather than what we're delivering today. And so and that's kind of good for me, but maybe not so good for the company. But the Internet of Things, we think, is a huge opportunity for us, Oracle opportunity and we think it's a very, very big deal.
Right now, no one is providing kind of an end to end development all the way through deployment of Internet of Things, again, development and runtime environment. And we're going to do that. We are doing that. And we think we have the right pieces in Java and the Oracle database. And there are some there are versions of Java that run on a card.
I think it's called very creatively Java card. And the so we think we're very we have the right technology to put software way out into the Internet of Things and very small, very inexpensive devices. Maybe I think any question on Lanai, I guess all those questions went to sailing this time. So I usually get a lot of questions about the island of Lanai in Hawaii. We are actually doing and this is related to the Internet of Things.
We're actually doing a two way electric grid over there. It's strange I own the water company. I know a lot of the utilities in lanai, it's very strange. But we are doing desalination and irrigation on lanai to bring back commercial agriculture. And we have sensors at every drip irrigation spot.
So we would know when to open and close. The water is so precious because it's all reclaimed from the sea from seawater. It's all photovoltaic driven desalination from an Israeli company called IDE. And then there's an Israeli irrigation company, But we have sensors out there, Internet of Things. So we know how when to open and close the valves on individual sensors to get just the right amount of moisture in the soil.
We're centering the moist moisture content in the soil, opening and closing valves, doing all sorts of interesting things. So you can make in the two way grid, we also have a lot of people want to put solar cells on their roof. We can figure out exactly how to collect that power. What I mean by a two way grid, when we send we don't just send electricity to your home, we also can collect electricity from the home your home if you happen to have it'd be generating some either with a windmill or photovoltaic cells or there are a variety of different ways you can do it. So we have the appropriate sensor technology.
We know whether just to redistribute that on the grid to meet immediate demand or actually use it to pump water from 1 reservoir up the hill from a low reservoir into a high reservoir, which is the way rather than using batteries, which is the way we store energy on Lanai. If you pump it from a low reservoir to the high reservoir, you can then at night let it run down from the high reservoir to the low reservoir and collect hydroelectric power. Anyway, we're building a huge Internet of Things on the island of Lanai as a laboratory. We're seeing this all over the place. We're seeing lots of examples where intelligence a little bit of intelligence in the periphery of the networks, whether it's keeping track of products and where they are.
There are lots and lots of examples, where the Internet of Things is going to change everything. Everything is going to be smart. Your clothes dryer, your dishwasher, the box, the box that your computer comes in. Of course, your computer is smart. Now the box your computer comes in will also be smart and you'll be able to figure out exactly where it is and then figure out when you should receive it.
So we think there are going to be a lot of things. Everything is going to be on the Internet. Everything is going to be fairly smart. And our job at technology is the right is better positioned than any other competing technology to go after this new whole new generation of applications. Thank you very much.