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Sep 9, 2016

Oracle's Latest Strategic Move

In the news of technology and cloud computing, similar to other corporations such as Microsoft, IBM and SAP SE, Oracle has been making the move from their traditional business software making model toward a more lucrative cloud computing model and it looks like the move is paying off for them.  Although total revenue for Oracle fell by 1% in their fourth quarter ending May 31, 2016, the total revenue for their cloud computing software and platform service rose by an astounding 49.1 percent in the same quarter. 

As part of their recent shift away from selling installed software and moving toward offering cloud computing services, Oracle recently announced their alliance with Fujitsu Limited in Japan.  The goal of the alliance between Oracle, Fujitsu and Oracle Corporation Japan, is to provide enterprise-grade, world-class cloud services to clientage in Japan and throughout the world. 

Oracle hopes to work through Fujitsu's data centers in Japan and capitalize on Fujitsu's connections in the region to offer cloud services.  Fujitsu plans to install Oracle Cloud services in its data centers and link them to its own K5 cloud platform in order to provide enterprise-level cloud services.  Oracle also intends to install their Human Capital Management (HCM) Cloud application throughout Fujitsu's network of offices across the globe.  In addition, Oracle also recently acquired Opower.  Opower is one of the leading providers of cloud services to utility companies, focusing on the areas of customer engagement and energy efficiency.

Of course the objectives of such partnerships and acquisitions are to reduce costs, increase business growth and foster innovation and Oracle's recent strategic moves are no exception.  According to Yahoo! Finance, the President and CEO of Oracle Corporation Japan states, "We strongly believe this cloud alliance will support Japanese companies to drive digital transformation.  This will be a gateway for customers to achieve standardization, modernization, and globalization.  This initiative will differentiate us from other cloud providers by emphasizing real enterprise cloud solutions, while offering Japanese companies access to best of breed technology in the new Cloud era."

Oracle has a lot of room for growth with regard to potential revenues coming from their cloud app (SaaS) and cloud app platform (PaaS) sales, since current revenues from these areas only account for 7.7% of its total sales.  However, they have quite a bit of catching up to do if they hope to ever achieve the $6.7 billion in cloud revenue achieved by rival Salesforce.com.

For more information on the latest trends in cloud computing, please contact us.