• September 25, 2012
  • By David Myron, Editorial Director, CRM and Speech Technology magazines and SmartCustomerService.com

A Look at Oracle's New Direction

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What's going on at Oracle? The company has made a slew of acquisitions, especially in the software-as-a-service (SaaS) and social media markets, during the past three years, leaving many in the industry to question its strategy and how it will integrate all of its newly acquired products.

The editors of CRM magazine were given the opportunity to investigate the issue when we were invited to interview Oracle President Mark Hurd at his New York City office this summer, one day after the company's Experience Revolution Special Event. Naturally, we jumped at the chance.

Hurd joined Oracle in 2010 from HP, where, during his five-year tenure as president and CEO, he helped to make the struggling PC and printer provider financially solvent. While Oracle didn't hire him for a similar rescue mission—the company was doing quite well, financially, when he joined—his role would be to help Oracle navigate a new course. In fact, one of our questions for him was about how the role of leaders in today's challenging business environment has changed, if at all.

In our exclusive interview with Hurd, which prompted our cover story "The Need for Change," he tells CRM magazine, "The CEO stuff is tough stuff. What CEOs work on are typically three things: Get the strategy right. Get the operating model around the strategy right. Get the people right. If you get those three things right, typically good things will happen."

For the cover story, our editors focus on the first part—Oracle's strategy. As for its newly acquired products and how Oracle plans to integrate them, his answer was the long-awaited Fusion Applications, which was announced at the Oracle OpenWorld conference last year.

Some industry experts are impressed with what they're seeing so far. "Their Fusion strategy has some real advantages," says Eric Pozil, president of consultancy CRM Northwest. "They've got the ability to market to any CRM scenario, whatever your industry, B2C, B2B, or a combination of both. They have different apps to accommodate your needs."

Already, Oracle has seven Fusion Applications available, some of which—including Fusion CRM and Fusion HCM (human capital management)—are available in the lower-cost SaaS model.

This represents a significant shift in the way Oracle does business. It's difficult for a company as large as Oracle, which has a long history steeped in on-premises software sales, to suddenly switch to the SaaS model. The revenue recognition in the SaaS model is vastly longer, which could drive sales of the $37 billion company to a crawl if it opted to build this revenue stream organically. Oracle's response—probably the only thing it could do—was to get into the SaaS game through acquisition.

And it did in a big way. In fact, Oracle executives already boast that its annual SaaS revenue is nearing $1 billion, which makes it the second largest SaaS provider. And, according to Hurd, this is only the beginning. "We will be the only one in the industry with a suite of products that are SaaS-ready," Hurd says. "I'm talking about a whole portfolio by the end of the calendar year. So by the time we get started our plan is to be number one; we're going to be number one in the world of SaaS."

Oracle has also been investing heavily in multichannel service, e-commerce, and a new branding initiative. When such a large and influential company has recently had so many significant developments, it will likely affect the CRM industry, which is why we dedicated our entire feature well to this special report. Read it to find out what's going on at Oracle.

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