December 11, 2015 | Lee Mashburn | Vice President, Marketing
I recently read an article written by Conner Forrest, entitled “What are Oracle and SAP’s vision of the future of enterprise apps?” Forrest noted the heavy investments that both SAP and Oracle are making in an attempt to move their clients to their specific cloud offerings. Facing considerable headwinds, both enterprise application Goliaths are deploying differing approaches to reach their cloud-laden visions. Paraphrasing some of Forrest’s key points:
- Once famously “anti-cloud,” Oracle now appears obsessed with harnessing the cloud – seeming to prefer that clients jump into the cloud in one fail swoop. Their strategy is to rebuild their on-premise back-office applications into cloud-ready applications that coexist with deep cloud-friendly technologies and databases. They definitely favor the public cloud. Contrary to what many have been led to believe, Oracle has converted just 1% of its $5b+ application maintenance (support) business to SaaS. A constant barrage of sales promotions and cloud license trades/giveaways is designed to drive cloud revenues sooner rather than later.
- SAP prefers to buy instead of rebuild, having already spent billions on cloud-native products like Ariba, Concur, and SuccessFactors. They heavily promote the growth of these acquired products, giving some the impression that HANA (the emerging centerpiece of their cloud story) is more ready for primetime than it might actually be. SAP prefers an incremental, hybrid, and more piecemeal approach for guiding customers to the cloud. This might help explain why SAP appears much more aggressive to defend its high-margin on-premise support business than is Oracle. Incremental or not, SAP executives have boldly forecasted that new cloud revenues will surpass new on-premise revenues in 2018.
Many organizations have a different vision and timeline in mind for their enterprise software applications than do the software publishers. For instance, a recent survey conducted by Spinnaker Support indicates that just 9% of Oracle EBS user respondents are certain they will eventually switch to Oracle’s cloud suite. The other 91% of respondents mentioned the unclear roadmap, uncertain value proposition, high switching costs, and/or ample satisfaction with their existing EBS system as cloud inhibitors. In another survey, this time targeting SAP users, just 17% of respondents plan to adopt S/4HANA within the next two years. 76% are either undecided or have no plans at all to migrate to S/4HANA during the next 6 years. The latter group cited lack of roadmap information, unclear license and support costs, loss of customizations, and industry-specific readiness as reasons to avoid or wait.
In the same surveys, both SAP and Oracle users alike expressed dissatisfaction with ongoing support being provided by the software publishers. Slowing responsiveness, a push to self-service model, and fading value proposition were listed as primary reasons for their dissatisfaction. (Click the image of the survey to link to the full results eBook)
It suffices to say that third-party support, as delivered by Spinnaker Support, is becoming a popular “safe harbor” for organizations waiting until cloud’s reality matches cloud’s promise.