Good day everyone, welcome to the Oracle Executive Access for Investors conference call. Today's call is being recorded. At this time, I'd like to turn the call over to Ken Bond, Vice President of Investor Relations. Please go ahead.
Thank you, Sam, hello everyone, thank you for joining us for today's Oracle Executive Access for Investors, an educational webcast series hosted by Oracle. Today is Tuesday, July 10, 2012. Joining us today is Thomas Kurian, Executive Vice President of Product Development, and Equity Research Analyst, Phil Winslow from Credit Suisse. Today, Thomas will discuss Oracle's Fusion applications and Oracle Cloud. Please note that Thomas will not be discussing any information today that is not already publicly available. At the conclusion of the presentation, we'll turn the webcast over to Phil, who will kick off the Q&A. You may submit a question at any time during the presentation by clicking on the Ask a Question tab above the slides. Please keep in mind that we will not comment on business in the current quarter.
As a reminder, the matters we will be discussing today may include forward-looking statements, and as such, are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically the most recent reports on Forms 10-K and 10-Q, which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements. You're also cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that we're not obligating ourselves to revise, update, or publicly release the results of any revisions of these forward-looking statements in light of new information or future events. Lastly, as noted earlier, unauthorized recording of this webcast is not permitted. With that, I'll turn the presentation over to Thomas.
Good morning, everyone. I want to give you a Strategy Update on Oracle Fusion Applications . What we're going to talk today about is what's the status with Fusion applications, how are customers uptaking Fusion applications, and why? What does that translate to in the business opportunity for Oracle? Secondly, what's our strategy behind the Oracle Cloud, and how does the Oracle Cloud complement Fusion applications? The most important points I want to make on Fusion applications are the following. Fusion applications is the broadest and most complete software-as-a-service solution available in the market today. There are seven product families, over 100 modules generally available to customers. It's seeing strong uptake by customers, and it's driven by three primary categories of benefits. Functional benefits, which means we're going to improve a critical business process within an organization.
Architectural benefits, which means that the software is more easily architected for certain important requirements, and cost of ownership benefits. Oracle has a strong capability to deliver and support Fusion applications, and we are significantly expanding that capability from a go-to-market perspective. We've got specialized sales, support, and service teams for Fusion, and we have a focused effort on continuing to drive and expand the partner ecosystem. The Oracle Cloud provides very strong complementary technology to Fusion applications. It offers customers a highly differentiated platform and social capability, and I will walk through a couple of examples to show you why those capabilities are being increasingly used by customers in concert with Fusion applications. The two products, that's the Oracle Cloud and Fusion, which is part of the Oracle Cloud, are very strong competitively.
We have strong differentiators in each product segment, and when combined together, they offer very unique capabilities. It's our view Oracle Cloud and Fusion will continue to drive growth both for our technology and applications businesses going forward. In a nutshell, this is the breadth of the suite that today we offer on the application side at software-as-a-service. ERP, which includes financials, procurement, sourcing, project management, governance, risk and compliance, and portions of supply chain, human capital management, talent management, sales and marketing, and customer experience or customer service. All of these modules are generally available and are being used by many customers today. Looking at Fusion applications themselves, today we have over 250 customers using Fusion applications alone. Each of the 100-plus modules of Fusion applications has at least 10 customers.
We had a critical mass across the suite and every piece of the suite is being used. The size distribution, they have a wide range of sizes of customers. Some of them are as small as 250 employees, and we also go all the way up to global multinationals. If you look at the median revenue of these organizations, they're on average $1 billion-$5 billion in annual revenue. Geographical distribution is being used in 17 countries by companies in 17 countries around the world. North America, 60%, Europe, 25%, Asia-Pacific, 15%. From an industry point of view, there are 15 industries represented in our Fusion applications customer base, with the top five being communications, retail, manufacturing, financial services, and consumer products.
Deployment profile, 57% of these customers are using the Oracle Fusion applications delivered by Oracle as software-as-a-service, meaning on a per-user, per-month basis through the Oracle Cloud. 38% of these are on-premise, and 5% are using it through a business process outsourcing or hosting model. Here is a subset of the customers for Fusion applications today. These are all customers of Fusion applications. They're using various modules, and I'll talk about some of them as we go forward. In addition to Fusion applications, if you look at our software-as-a-service portfolio, you can add in RightNow and ATG for CRM. RightNow being our customer experience module set, and ATG being our commerce and personalization product suite, both of which we can deliver in a software-as-a-service model. Taleo, which we added for talent management and recruiting.
If you look across Fusion, RightNow, ATG, and Taleo, just on the application side, we have a large set of customers, highly diversified product portfolio, and growing critical mass in terms of both the customer base, the breadth of our offerings, and our go-to-market capability. Now, we at Oracle are also live using Fusion. We're using three important capabilities. We're live using Fusion CRM as our worldwide sales force automation system, supporting 60,000 users, close to 540,000-plus customer, and a million-plus opportunities. Financials. We're also live using Fusion Financials as our financial consolidation and statutory reporting instance. There's over 1,000 people in our finance department who use it. We've got about 3,000 lines of business, over 3,000 internal lines of business, and we've consolidated from 37 different charts of accounts to one global chart of accounts, which significantly improves both our management reporting and our financial close.
Finally, we also use Fusion for compensation, talent management, and a number of human capital management capabilities for our over 100,000 employees in 100-plus countries around the world. We at Oracle have moved our internal systems, CRM, financials, human capital compensation, talent management, over to Fusion. These are obviously very large-scale systems, very sophisticated requirements, and Fusion applications are able to handle these requirements and support our internal processes on a seven-by-24 basis. Okay? Let's now look at why customers are adopting Fusion. It's really for three important reasons: functional benefits, architectural benefits, and cost of ownership benefits. Functional benefits means improving critical business processes within an organization. Architectural benefits means that it's easier to deliver certain capabilities, like integrated with on-premise systems and other things, because it's designed on a modern service-oriented architecture.
Cost of ownership benefits is really because we can do much faster implementations, much lower cost upgrades, and we also have choice in deployment and upgrade, which I'll explain in a minute. Let's look at these in a little bit more detail, and I'm just giving you a flavor of some of the most important functional benefits that we offer in the product. There are hundreds and hundreds of these. I'm touching on some of the more important ones. Financials. The biggest value proposition for Fusion applications for financial customers is it gives them a much faster financial consolidation, statutory, and management reporting solution. Customers like Red Robin, Keppel Energy, were attracted to Fusion because it gave them that much faster consolidation and internal and external management reporting on a consistent basis than they have with other products in the market. Human capital management.
Fusion has the ability to manage a global workforce in over 100 countries with a very flexible model for how you onboard employees, how you manage global policies that are tied to compensation practices in different parts of the world, how you handle global talent management practices, which also are different in different parts of the world. That capability is very attractive to a number of our customers. Principal Financial Group, Brocade, are examples of customers who have global presence who moved to Fusion because of this global requirement they have. Supply chain management. One of the important things that's happened in supply chains is that the mechanism through which you place orders, what's called order capture, fragmented from being largely a single system.
Driven by e-commerce, it is now you can get orders through an internal sales ordering system, you can get it through your call center, you can get it through e-commerce. It was very difficult to manage the process of orchestrating orders from different order capture systems prior to Fusion. Fusion offers a capability to capture orders from multiple channels and then drive an auto orchestration process. Eaton Corporation and Boeing are two examples of customers who are implementing Fusion for this capability. Procurement and sourcing. If you have many different business units in different parts of the world, and you want to consolidate how you are buying things on behalf of all of these organizations globally and centralize sourcing and procurement, Fusion really has a very sophisticated global sourcing and procurement capability.
The Professional Golfers' Association of America, the Pacific Northwest National Laboratory, which is a federal laboratory out of Washington State, these are examples of customers who have implemented procurement and sourcing of Fusion. Project and portfolio management, the ability to many organizations do work largely managing projects. Just the example I gave you, Pacific Northwest National Laboratory, federal agency, manages projects. All of its costs have to be aligned to projects they are executing for various departments of the federal government. Our project accounting, management, and execution solution is much more sophisticated in Fusion than in other products in the market. They chose to move to that capability and find it very attractive. Then finally, CRM. Territory planning, sales execution, multi-channel marketing, these are all important things that customers have wanted. No CRM system gives them that entire breadth of capability in a single product set. Fusion offers this.
This is a reason why the world's largest consumer electronics company and the world's most valuable company, period, are customers of Fusion CRM. The first reason people pick Fusion applications is there is a real pain point that they have, and functionally, they couldn't solve that pain point without some of the capabilities in Fusion, so they chose to go to Fusion for these functional benefits. The second set is architectural benefits. Your user base wants to use tablets, smartphones, and not just PCs. Fusion gives you that capability. The teams that you have in finance or sales, CRM or customer service, they want to use social and collaboration capabilities to work together using modern social networking tools. We provide that embedded inside of Fusion applications.
You want to get better business intelligence rather than having to build a custom data warehouse, load your data by yourself, and bear all of that cost. Fusion integrates over 10,000 key performance indicators where the suite is pre-instrumented, and there are pre-packaged dashboards that deliver that capability, lowering the cost and improving the time through which you can get better business intelligence. We have got these important capabilities called business process and application configurability. What this is really two very simple things. We provide a set of browser-based tools to allow business users to go and tailor the functionality of the applications without writing custom code. Okay? It is a visual drag-and-drop kind of interface through which they can customize every aspect of the application, from the data model to the user interface to the business process.
The value for our customers is we're enabling and empowering business users to control the functionality in the application. It also makes us much easier to upgrade because when you use these composers, you define the configurability through metadata and not in code, and as a result, you can upgrade these systems much more easily, allowing people to get value in the latest functionality. The third category of benefits is really about cost of ownership. Cost of ownership is really about four things. How fast can you do implementations? Our typical implementation time is between four to six weeks. Some customers have taken longer. Some customers have taken as little as four weeks. For large enterprise ERP implementations, that's very fast. That's very fast.
For example, at Oracle, when we implemented CRM, financials, and human capital management, no implementation took longer than four months for a company of Oracle's scale, which tells you, obviously, that these implementations can be done very quickly. That's part one. Because of the architecture of Fusion, where we've defined that customizations are not customizations anymore, they're configurations of metadata. It allows us to do upgrades very frequently and very quickly and easily. As an example, the entire fleet of SaaS customers, which are well over 100, have been through four major quarterly upgrades already. Flexible deployment options.
Fusion is the only product suite in the market which has a single code base that allows our customers to choose whether they want to go on-premise, whether they want to go hosted, or whether they want to go with a cloud or SaaS model. Take the Professional Golfers' Association of America. When they started the project that they had with Fusion about a year ago, they initially didn't have the IT skills to manage Fusion on their premise. They started with our software as a service model. They got well down the path of implementation, then they trained up their IT staff. They wanted to have an on-premise solution. We simply moved the data to their system, and they were up and running, and they're live now, and happy live for quite a while with Fusion.
No other vendor in the market gives you this single code base to allow you to start with SaaS and go on-premise or vice versa, and that flexibility makes it very attractive for customers. Finally, Fusion can be adopted in a very flexible way. It does not require our customers to rip and replace their entire application's footprint in order to uptake it. There are two important ways that we can help people adopt Fusion. What we call Fusion coexist pillars. This, for example, is what Alcoa is doing. Alcoa runs Oracle E-Business Suite for financials and supply chain management but wanted to pick up Fusion for human capital management.
At the pillar level, you can say, "I'm going to keep my ERP on E-Business Suite or PeopleSoft, but I'm going to implement Fusion for human capital management." That's one way of uptaking it. The second way of uptaking it is just at the module level. You can say, "I've got PeopleSoft human capital management. I want to just get started with Fusion. I don't need to buy the entire suite. I'm just going to pick up talent management, or I'm just going to pick up a module like compensation of benefits." There are a number of customers, for example, Principal Financial Group, who initially started with just compensation, who have now broadened to take a much larger footprint of Fusion.
This ability to incrementally adopt has also driven the attractiveness of Fusion into more customers because it's not such a big step to think about ripping and replacing in order to pick up Fusion. Competitively, we feel we are very well-positioned for large enterprise as well as mid-market SaaS. If you look at ERP, we offer a full range of capabilities on both an on-premise capability with Fusion ERP as well as a software-as-a-service capability. That differentiates us from competitors in the marketplace and makes us attractive to new customers who may not have been Oracle customers to date. Second, similarly, in human capital management, we have a much broader and better-integrated suite than the competitors in the market, and you'll see that we're gaining momentum in competitive wins head-to-head against some of the other players in the market.
Similarly, in CRM, today, when customers use CRM systems, they have to use a highly fragmented set of CRM systems. They have to use one system for sales force automation. They have to go somewhere else for incentive compensation, yet another place to do multi-channel marketing, a third place to do lead generation and lead qualification. Fusion gives them a fully integrated solution, and this, for example, in the world's most valuable company, was one of the factors that drove their decision to go to Fusion. How does then the Oracle Cloud complement what we're doing strategically with Fusion applications? The Oracle Cloud offers a broad range of integrated software services. It includes platform technology, applications, and what we call social capability. The Oracle Cloud is generally available now and has strong early interest.
We still are ramping up data center capacity and hardware capacity to meet the demand from these customers. As an example, there's over 8,000 customers waiting to trial our Java and database platform-as-a-service capability alone. We are generally ramping up our delivery capability, but at least early on, there's a lot of interest in the product offering that we offer. Oracle Cloud's platform-as-a-service capability is highly differentiated. It's differentiated in three important ways: the breadth of the offering, the depth of the capability, and the degree of integration between the different pieces of the platform-as-a-service capability. When used with Fusion applications, the Oracle Cloud's platform-as-a-service capability are very highly differentiated. The applications, for example, bring customers to the platform, and the platform differentiates our applications, and that's a very important thing.
Unlike other vendors who offer technology on the cloud who do not have applications, our cloud combines both applications and platform. The applications bring a lot of customers to the platform. The platform differentiates the applications technically. Similarly, Oracle's social capabilities are highly differentiated with Fusion. They help us drive unique differentiation against some of the other competitors in the marketplace. It's this combination of platform, applications, and social, in our view, that customers find very compelling because of the breadth of the solution, the depth of the capability, and degree of integration. Let's quickly look at that. As we've said, as our CEO, Mr. Ellison, introduced the cloud, it's really these three capabilities built in a common infrastructure platform.
On the platform side, we have a lot of different capabilities so that if you want to just use our database in the cloud and not have to run it on your premise, you can do that. Java, using our leading Fusion Middleware product. If you want to build applications in Java, you can do that. If you want developers to collaborate, we've got a developer capability. There's another range of them, web programming in PHP, Ruby, mobile, document-oriented collaboration, the ability to build rich media sites, and finally, to do analysis and reporting. There's a broad range of capability. It's all based on the Oracle technology that customers love. As a result, these technologies are highly differentiated from those that are available through other public cloud providers. Okay? The platform services have early interest from a number of customers.
Here are just a small set of the 8,000 or so who are waiting in line. These guys are actually using the system, and we've had very good, positive feedback from early usage of the system. Similarly, on the social side, the social products really span these four important capabilities. I have people within my organization, and I've got, for example, customer service reps talking to customers. I want them to network together. We do that using the Oracle Social Network. Second, I want to feed that data in to collect some information about what are people using the system for. That's where the Social Data Platform comes in, which allows us to understand what people are doing and how do we convert social data into things like qualified leads. Social marketing is what we did with our Vitrue acquisition.
It gives us the ability to use social relationships and social media as a target for us to drive marketing programs for both consumer products and business-to-business products. We've seen very strong early interest from customers who are customers of our CRM products, ATG Commerce, for example, who are interested in using Vitrue to drive a social relationship management capability. Finally, social intelligence, the ability to actually collect data off of social media sites, translate them through a social analytics platform, is what we did with our Collective Intellect acquisition. The combination of these four products give us both breadth and depth in the needs that customers have for social. Here are some of the early customers we have for social.
Many of these are very well-recognized brand names, and we will obviously continue to strengthen our presence in the market as we take this into our broader Oracle install base. Let me give you two examples of how the Fusion applications plus cloud together really offer enormous value. The first one is an example in B2C CRM, business-to-consumer CRM. People want to go on the web and do social marketing, which is a marketing department wants to build a marketing campaign so that you place products on social pages, on Facebook, and also do outbound marketing through Twitter. You can use our Vitrue product to do that. That's the first box. From there, you want to capture qualified leads and pass them to sales teams. We have the capability to pass that information into Fusion CRM, which is a sales force automation system.
You want to monitor customer feedback because some of these guys may actually be complaining about the products and not be happy about the product. They may not be leads. They may actually be customers you want customer service to interact with. The social intelligence piece allows us to monitor what customers are talking about on social media. If they're unhappy, for example, you can pass them into customer service to enable our customer service teams to respond to these events, meaning people are unhappy. That would then come in through our RightNow customer service product. Finally, as sales teams in sales force automation and customer service teams in customer service engage jointly with either happy customers or unhappy customers, they can internally collaborate using the Oracle Social Network.
The three pieces in white are capabilities that come through the Oracle Cloud, and the two pieces in red, sales force automation and customer service, are our SaaS applications portfolio. We are the only ones who can offer this breadth of capability across the product suite today. Okay? A second example in human capital management. Think about an organization that's got attrition, meaning they're losing people. They want to replace those people. The first thing they want to do is market to candidates, meaning to hire candidates on social networks. It's called candidate sourcing. You can use our Vitrue product not just to market consumer products, but you can also use it to market your company to candidates. That's step one. Second is you feed those leads into the Taleo recruiting product, where you can manage the candidate recruiting process.
Once the candidate accepts or as part of the interview process, you've got your human resource teams, you've got the hiring manager, and you've got the candidate themselves. They need to collaborate, both to set up interviews and to manage the whole benefits, compensation, and other process. The Oracle Social Network gives you that. Once the employee is hired, they can be managed in Fusion Human Capital Management. Finally, if you want to do analysis Let me take a look at how the time it takes from the time I hire a person, meaning place a job post, to the time I fill up that empty position, and am I making headroom against attrition or not? You can do that using our analytics cloud offering. Again, the breadth of these capabilities, the white boxes come from the Oracle Cloud.
The red boxes are our applications, which are part of the Oracle Cloud. The combined breadth only Oracle can offer to our customers. The combination of these products also architecturally, they run on our Exadata and Exalogic hardware, which gives it great performance and reliability. We've got a virtualized tenancy architecture, and what that means is you get the benefits of virtualization, which means you don't have a lot of idle CPU. You have the ability to operationally manage these instances with very low operational costs, meaning administrative costs. At the same time, it also gives us the ability to offer flexible upgrade schedules to customers. Customers can choose to upgrade when they want to and not be forced by the SaaS vendor to meet an upgrade schedule. We do have global data center presence. Today, we have it in North America and Europe.
We're adding a facility in continental Europe, and in Singapore during the month of July of this year. We're also broadening in Asia Pacific, in Australia, and in other locations in Asia Pacific, and in Latin America as we go forward. We'll have broad delivery capability by the fall. How we are strengthening our go-to-market capability. First and foremost, we specialized our sales teams around enterprise resource planning, human capital, customer relationship management, enterprise performance management. There are dedicated specialists in each of these, complemented with an inside sales and telesales group to cross-sell, up-sell and do renewals. We are adding significant growth in sales capacity in all geographies. There are specialized training and implementation teams to go in and do rapid implementations. You've seen our implementation time being as short as four to six weeks.
It's largely because we've trained people who can do that, and we've streamlined a lot of things around self-service ordering so that customers can order and set up their own instances, et cetera. Second, we're also broadening our system integration partner reach. Today, we have a broad number of system integration partners trained on Fusion applications. Here's a subset of them. We continue to broaden that as we expand our reach into the marketplace. There's plenty of resources today available for a customer who says, "Hey, I want to go to Fusion. Is there a trained partner who can help me implement?" Finally, there's also a set of ISVs who offer complementary products to a, for example, in CRM, if you use our sales force automation system, but you want to use Fliptop, for example, to do inside sales, we've got that capability.
There's a number of partners, this is a representative list, working with us on product integration, which also neutralizes some of the statements that competitors make about Fusion not having a broad ecosystem. Because of the combination of these, we've started winning against competitors in the marketplace. Here's a short list of just some of our wins. To wrap up, our software delivery team has taken on a very big project. Fusion took us a lot of people, many years to write, but we did it because we saw a fundamental shift happening with enterprise applications. People wanted to get applications that could be delivered on a software-as-a-service model and solve some of the functional problems that they've encountered over the years, things like order capture becoming fragmented. Fusion applications is now generally available and is the broadest and most complete SaaS offering in the market.
Competitors who have spent a lot of time saying that Oracle was wasting its time writing Fusion, today have a very difficult problem ahead of them because they don't have an offering that can be delivered in an effective software-as-a-service model. It'll take them a long time to write such an application starting from scratch today. Fusion apps is seeing strong uptake by customers. The Oracle Cloud provides a strong complement to Fusion. Together, the Oracle Cloud and Fusion strengthen Oracle competitively, we are investing aggressively to strengthen our go-to-market presence. We believe that together, Oracle Cloud and Fusion will continue to drive growth for Oracle in the years ahead. With that, Ken, I'll turn it back to you.
Great. Thank you, Thomas. Before I turn the call over to Phil for the Q&A portion of the call, please let me remind everyone that you can submit a question any time by clicking on "Ask a Question" on your screen. With that, let me turn it over to Phil.
Great. Thanks, Ken, and thank you, Thomas, for taking the time today for this webcast. Today, as you all know on this call, we published a 67-page deep dive report on Fusion applications. From doing both the research for this report and then Thomas, listening to your presentation today, one of the unique features of Fusion applications that really struck me is the fact that the suite is architected on a single code base, for on-demand, both single and multi-tenant, as well as on-premise deployments. The real question here is, what do you view as the benefits being to the customer from this model and for that matter of fact, to Oracle?
The benefits, Phil, are pretty simple. There's two important benefits. Number one is, in order to deploy the software as a service model, we had to make architectural changes in the product set to allow the software to be configured, for example, by business users without having to write a lot of custom code. Right? On-premise customers have always wanted that because it makes the process of upgrading much easier. The example of what we've done to enable software as a service is now also available to on-premise customers. The first benefit is that the features that you traditionally define for software as a service, which in general is a higher bar than on-premise software. Now those same capabilities are available to on-premise customers. The second one is that it gives customers choice.
I gave you the example earlier, for example, of the Professional Golfers' Association of America. One of the advantages that having this flexibility allows us to do is to go to a broad range of customers, both in the United States as well as overseas, and say, "Hey, do you like the functionality of Fusion?" A customer may say, "I love it, but I don't have the skill set today to run Fusion. Would you operate it for me on a software-as-a-service basis? Then I'm going to ask my CIO to build up this skill set, and then maybe in six months or a year, I can take it back on-premise if I want to." Alternatively, they could start with on-premise.
They may say, "Today, I want to go and implement Fusion on-premise." In the years ahead, they may decide for a variety of reasons, IT, budget pressure, other reasons, that they want to move this software to run in the cloud. They can do that. So it gives people a safe investment path by decoupling the deployment model that they want to go for the software from the decision to use the software.
Got it.
Okay.
Now, let's spend a minute just extending that on customizations, extensions, and personalizations. I really feel like Oracle is somewhat under-marketed. Its end-user tools that are part of Fusion applications, and especially versus what you hear from Salesforce.com and Workday. Could you discuss how MDS and the Oracle Composer runtime editing tools enable business users to create and update customizations to Fusion apps, whether they be in the cloud or on-premise? How do you really believe that these tools and just the Fusion architecture compare with competitors?
One very important thing that we did when we implemented Fusion was to design the software on a common, what we call, metadata-driven architecture. When you look at the applications, the user interface of the application, the data model of the application, the business processes within the application, the rules, they're all described in data that we call metadata because it describes data. The value of that is the following. Let's take a very specific example. Green Mountain Coffee Roasters. They are a customer of Fusion CRM. They wanted to have a different definition of customer or order than we did, meaning they wanted to change the definition of customer by adding their own attributes. In the past, you would have to bring out a custom tool and write custom code in order to do that, which made the upgrade very difficult.
Secondly, it also required a professional programmer or system integrator to do the implementation of that so-called customization. In Fusion, you don't do that. In Fusion, what you do is, you go into a thin client in the browser, meaning a browser is a webpage, and you say, "I want to add four attributes to customer.
When you add those attributes, you can say, "I want that to also show up in the user interface because I've got to enter the data for those attributes." The data model, the user interface, the workflow, business intelligence, they all work through this common metadata management system, which allows people to then configure their application and tailor it to their needs. Competitively, there are two important things that we do that competitors find difficult to do. The first one is the system was written on a much more modern stack, and metadata management is today much more sophisticated than when some of our competitors wrote the code. Most of them don't have the same kind of capabilities and require to program in custom scripting tools, which has a set of problems that drive complexity and upgrades and so on.
Secondly, we also have some patented technology that allows us to do what we call layered customization. What we mean by layered customization in Green Mountain Coffee Roasters, as an example, is we understand what parts of the metadata was defined by Oracle and what part Green Mountain made changes to. When we go from one release to the next, we can upgrade our own metadata without breaking what Green Mountain did, which makes upgrades much quicker and easier, and frankly, gives customers a higher degree of comfort that if they choose to use this capability, they can continue to upgrade newer releases without worrying that every time we go through an upgrade, it's going to break them. I think architecturally, these capabilities are very important.
They span the entire suite. They were possible because they were written on a very modern technology stack that some of our competitors do not have.
Got it. Just taking that question a step further here. One of the questions that I get is, can Oracle's single-tenant cloud model for Fusion applications actually scale? I'd really call your model virtualized tenancy is really single tenancy makes investors flashback to those failed ASP models. That said, from my standpoint, multi-tenancy really emerged to solve two problems with hosted client-server apps in that ASP model. The first being just low hardware utilization, and the second being the high cost of management of the application itself in terms of customizations, updates, and so on. The question for you is, could you discuss how Oracle's use of a single line of code and that metadata-driven architecture that you just discussed, combined with the use of virtualization and the Exa series products in the Oracle Cloud, can actually drive a profitable scale for Oracle?
Okay. Multi-tenancy emerged in the late 1990s as a solution to lower the cost of delivering software as a service. It was done for two reasons. First of all, hardware utilization. If you had lots of separate instances running around, you ended up having very low hardware utilization. It would cost the vendor a lot of money. The second was people used to take these applications and then customize them by writing customized code, and when you had lots of separate instances, you ended up with the problem with hundreds and hundreds of these instances running on old versions that could never be upgraded. Fusion was written much later than competitive products, right? We wrote it after technologies like metadata management and virtualization emerged. How do we solve these two problems?
The first one is, how did we solve the problem of low hardware utilization? There are two realities there. First and foremost, low hardware utilization. If you think of on-premise customers who have hundreds of instances, the way that today, if you ask an on-premise customer, how do you consolidate instances? They'd say, "We're using hypervisors and virtualization to consolidate." All we do in our cloud is use the modern technology called virtualization to consolidate a number of instances on a dense footprint that allows us to then. There's no concern, therefore, from a hardware and resource utilization point of view. Additionally, because these run on Exadata and Exalogic, which are incredibly fast, you also find that you can drive the CPU on these boxes higher than you could on a commodity hardware box.
Because in a commodity hardware box, often you're stuck around I/O bandwidth or network bandwidth, which don't affect Exalogic and Exadata. Those two, the fact that we're used to built on virtualization, allowing us to consolidate many instances on a much denser hardware footprint, and the fact that we're running on Exadata and Exalogic, solve the problem of cost of the hardware infrastructure and delivery infrastructure. Okay? The second issue was, how do we protect people from doing customizations on many different instances that then means they can't upgrade? That's back to the discussion we just had on the architecture of Fusion is designed on a metadata-driven model. It is really state-of-the-art in terms of how you can configure the application to meet your data modeling requirements, your reporting requirements, meaning build custom business intelligence, build and configure business processes, but you're not writing custom code.
We solved that second problem of being able to do upgrades very quickly and easily because we've eliminated customizations. It's that combination. What we took was a different approach. What we felt was instead of trying to say that Technology continues to evolve, right? Two or three new technologies emerged: virtualization, much better-engineered systems, and metadata management. We chose to implement a system called Fusion Applications on top of those to give you the cost characteristics and flexible characteristics of what traditional software SaaS vendors have said you only can do with multi-tenancy while getting you some additional benefits that we can talk about. I hope that answered the question, Phil.
Oh, that's perfect. Just as a follow-on to that, one of the things that Oracle's been very vocal about is the benefits of database-level security from a virtualized tenancy model. The question I have is, what are the other benefits of a virtualized tenancy model in Oracle Cloud to the customer versus a multi-tenant model?
There's a number of benefits. I'll just touch on three just to give people examples, okay? The first one is really about upgrades. When you're running a virtualized tenancy model, we have enormous flexibility to offer customers the ability to upgrade when they want to on their schedule. Okay? That's a very important buying decision, particularly in large enterprises, because they want to have that flexibility to choose an upgrade window. Take as an example, no matter which holiday you pick in the U.S., whether it's July the 4th or Thanksgiving, retailers don't want to be upgraded that weekend because that's the busiest time of the year for them.
There are other customers for whom the fiscal year in ERP, for example, does not end on a particular date, and they don't want somebody dictating to them that you will upgrade at the end of this month because it might be the end of their financial year. One is this notion of flexible upgrade. The second is the area around this flexibility to move back and forth between on-premise and the cloud. If you have data in a virtualized instance, for example, when the Professional Golf Association wanted to take it literally took us just a couple of hours to snapshot their environment and let them take it, because we had their own isolated data with own isolated virtual hypervisor. We could simply say, "Do an export of those," and they can take it to their on-premise system and vice versa.
The third important factor is that there are some significant differences and benefits between high availability and security, and I'll explain just a couple of them. High availability, okay? In a virtualized environment that we have, if a particular app user, let's say one company, says, "I'm going to run a massive customer import this week." They don't have to tell us about it. We can monitor the system, and we've got the ability to dynamically adjust capacity on demand, meaning they will need more CPU resources, so we simply allocate it to them. In a multi-tenant world, the challenge people have there is resource management in terms of CPU, for example, gets very challenging and more importantly, memory. Because even CPU, you could isolate using operating system tricks.
Memory, one customer can hog up all the memory on the system and step on what other people are trying to access. The general notion of availability of the application for the user, meaning, do I get a reasonably performant application when I go on the system independent of what all the other people in all the other companies that might be using it are doing? That's one thing you get with resource management. It's a lot more flexible in our model than in the other multi-tenant solutions in the market. Finally, we also have the ability to do much higher grade of security. Not only do we have isolation of one company's data from another company on the storage disk, it is also isolated on the database. It is isolated in the middle tier.
It's isolated on the network, all the way out to the browser of the customer. We've got complete isolation, which for companies in financial services, for example, or public sector institutions, is a very, very important requirement. There's a number of these benefits: flexible upgrades, better resource management, the ability to handle the better security on the system, the ability to go back and forth between an on-premise world and the cloud, all of which we're early in, right? Many customers are beginning to understand these benefits because Oracle's pretty much the only vendor that offers this. As they begin to understand it and request it more and more, I think you'll see other SaaS vendors feeling the need to also adapt to these requirements. They are quite difficult to do because it takes quite a bit of software engineering work to get done.
Perfect. As Larry once said, "If you're going to innovate, be prepared for people to call you nuts." You definitely are innovating with the single-tenancy model or the virtualized tenancy model. Just onto the next question. We've talked a lot about the applications layer. Integration is always one of the top obstacles highlighted by enterprises in terms of adopting SaaS applications. Could you highlight some of the key advantages of having both on-premise and on-demand deployments of Fusion applications actually having been built on Fusion Middleware?
Yes. Great. This is one of the places integrating the software to my enterprise system. Let's hypothetically say you're deploying Fusion applications for talent management and you have PeopleSoft as your HR system, or I'm deploying Fusion CRM as my customer relationship management system, All my customer records happen to sit inside Oracle E-Business Suite or SAP. The one big advantage we have is that Oracle Middleware, meaning Oracle Fusion Middleware, is a major middleware product in the market. It's a very leading middleware product in the market. Using the service-oriented architecture capabilities in Fusion Middleware and the data integration tools in Fusion Middleware, customers can very easily integrate their on-premise system with the Oracle Fusion applications, whether that's Fusion applications themselves running on their premise or in our cloud.
We have a number of prepackaged technical capabilities to connect E-Business Suite, PeopleSoft, SAP, and other systems into Fusion, whether Fusion's running on-premise or in the cloud.
Perfect. Just one final question here before wrapping it up. Could you discuss Oracle's mobile strategy for Fusion apps and this including what we heard back at last Oracle OpenWorld about Fusion Tap and just how you compare this mobile strategy with what we've been hearing from some of your competitors like SAP?
Our mobile strategy is pretty simple. We see three types of devices or 4 types of devices as you go forward, and we support all of them, and they're all generally available, including Oracle Fusion Tap, okay? Device number 1 is what people used to historically call the primary client, which is a PC with a browser running on it, and we support a variety of different browsers, IE, Internet Explorer, Firefox, Chrome, and Safari from Apple. That market, that client we certainly support and have got capability for. The second is the smartphone. On smartphones, we support both iPhone and Android devices. We also have an early solution available on Windows smartphones.
These are things like if you're a salesperson and you want to create an opportunity because you just had a meeting with somebody, you can simply tap on your iPhone, pop up a little application to go to your calendar, pick the time window from the calendar, pick your contacts from your contacts system on your iPhone, and we will automatically enter the data in the back-end system. That's case number 2. We do this both on Android as well as an iPhone. The third place that we deliver mobile clients is on the tablet. Tablets, today we do iPad. We're also going to be introducing support for the Android tablet shortly. The general model on these tablets are that we support 2 modes.
We've got a native application mode, which means it runs natively on the tablet, and that's used for certain applications that people want a very high interactivity. We also deliver on the browser on those tablets, so that if you've got an application like business intelligence reports and you want to see them alongside other data from the applications, you can access them from these tablets. We've also got for people who live, eat, breathe, sleep in email, like for example, salespeople who entire time is spent in email, we've got integration with mobile email clients like Mobile Outlook or Outlook Express, so that you can create your opportunities, submit your contacts, modify your opportunity stage, look at your sales forecast, all of that from within Outlook or Lotus Notes without having to go into even a native application to do that.
Our general model is that these client form factors, smartphones, tablets, and PCs, they're emerging and widely deployed. We optimize the kind of software we deliver on these devices because people want to do different things on these different devices. People are not looking at your financial results for the quarter on an iPhone because it's very small in screen size. They may do that on an iPad, which is a much larger screen size. We've got a mobile framework that's part of our middleware. Our applications are built on top of that mobile framework, and that mobile framework provides the ability to grow cross-platform across phones and tablets and across Android and iOS. It also allows us to build with 1 code stack from smartphone up to tablet, up to PC, without having to use different technologies and all these different stacks. Okay?
That continues to be our focus going forward. You'll see more and more of these mobile clients coming out from Oracle for more and more of our applications. All the Fusion mobile clients are generally available. Frankly, Oracle ourselves, our 60,000-odd sales and consulting people are using Fusion Tap to access Fusion CRM.
Well, great. Well, we're at the top of the hour, thank you for the time today, Thomas. With that, I'll turn it back to Ken.
Thanks, Phil, thank you, Thomas. To wrap up, we'd like to thank you all for joining us today, a special thanks, of course, to Phil for leading the Q&A, addressing most of the questions posed most often by investors. If you have any follow-up questions, please contact the investor relations team here at Oracle, this concludes our call. Thank you very much.
Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program, you may all disconnect. Everyone, have a great day.