Oracle is observing a substantial y-o-y growth in its Software as a Service (SaaS) revenues, making India one of the significant contributors to the Asia Pacific (APAC) revenues for Oracle.
By Srinath Srinivasan
Oracle is on its way to become the world’s largest business applications company. The application revenues grew 11% y-o-y in fiscal 2018, up from 6% growth in fiscal 2017. Oracle is observing a substantial y-o-y growth in its Software as a Service (SaaS) revenues, making India one of the significant contributors to the Asia Pacific (APAC) revenues for Oracle. Prasad Rai, head and VP, SaaS, Oracle India, talks to FE’s Srinath Srinivasan on Oracle’s SaaS business in India, future of SaaS, acquisitions and more. Excerpts:
How is SaaS evolving as an industry? Where is the market today?
Industry is at a very interesting junction. We are moving to an entirely different place, primarily driven by Cloud and other emerging technologies like machine learning (ML), artificial intelligence (AI) , blockchain and mobility. Most importantly, corporations and enterprises, irrespective of the size, are willing to learn, adopt and experiment with these solutions today more than ever which is also driving technology companies like us to experiment with emerging technologies. Companies will look at incorporating these technologies with a business outlook and impact. Technology decisions were made by IT people in the past. Today, globally, business is deeply involved in these decisions because companies have realised how technology can improve their efficiency, increase cost effectiveness and deliver faster results. Companies are trying to simplify their IT infrastructure. They want to spend more time on business and lesser time on technology. Therefore, they expect the technology more as a service, with easy deployment and quick value delivery; in short, companies want to make a direct connection between technology and their business output. This ‘renaissance’ opens up lots of opportunities for companies like us. India and Asia are on par with western economies, just as quick as them in making these decisions.
How is Oracle positioned in the market to take advantage of this ‘renaissance’ — relative to India and competition?
Oracle globally and in India has two key areas — SaaS and autonomous database. When it comes to SaaS, we built a strong portfolio of products internally developed and supplemented by market leading products acquired by us. We bring an integrated, comprehensive suite of solution spanning across ERP on Cloud, enterprise performance management (EPM), human capital management and customer experience focused on the entire business cycle. In India, the acceptance for this is high mainly because it is easy and quick to deploy. We have seen customers rolling out complex applications in a matter of 6-8 weeks. For some applications, we are also embedding context specific AI solutions. For instance, Indian Oil has our marketing Cloud solutions deployed, TATA Steel has our EPM Cloud solution deployed and Hindalco and Wipro have our HR solutions deployed. All of these are businesses of high scale and spread across sectors. Earlier, services industry adopted our solutions readily but today, manufacturing industry is also adopting these solutions enthusiastically. Cloud market has matured and is growing rapidly. While the market is growing at 30% y-o-y, our enterprise resource planning (ERP) Cloud business grew well above 50% y-o-y as of first half of FY19, taking market share away from our competitors. India has also been the largest contributor out of the APAC and Japanese markets for the SaaS base of our business.
Why is the path of acquiring companies seem to be working for you? Why not bank on an ecosystem of partners?
We do have an ecosystem of partners and encourage innovative ideas. The companies we have acquired are the ones who have gained momentum and have become popular. They make our suite comprehensive. For us to develop a solution and to take it to the market, it will take a little more time than taking the solutions developed by these companies who are already in the market. Our partners help in implementing our solutions and importantly, adding additional functionalities that may be customer or industry specific. It makes the solution much more relevant for our customers. On the other side, we are continuously enhancing our products. We have two to three releases of our products every year. We bring incremental value with these releases, enabling our customers to take advantage of these features. We also aim at scaling these solutions collectively due to our wide presence across the country and globe.
As a business, where is Oracle SaaS headed to?
I think we are still in the early times. To give an idea, only 21% of global ERP is on the Cloud today. The headroom for growth is enormous. According to Gartner, SaaS is roughly a $75-billion market, globally. It is 46% of the total applications market. This is growing at a CAGR of 29%. At least in the foreseeable future, there will be continued growth and adoption of our Cloud-based solution. Seeing the opportunities ahead, in 2018, Oracle invested over $6 billion in R&D. A vast majority of that was on Cloud and it is delivering value now. Based on that investment, the robustness of our solutions has improved and new technologies are coming up with our offerings. Customer acceptance has also increased and therefore, the best days are actually ahead. They will want a simpler ecosystem from which they can get an integrated and a comprehensive suite of solutions. Also because of technological evolution, investments in R&D are important and only a very few large companies like us can do that.