Senior Oracle executives are confident of customer defections from SAP, despite the German giant’s granting of a stay of execution to its Enterprise Core Components (ECC) enterprise resource planning (ERP) system.
Just before and during Oracle’s Open World event in London last week, senior leaders at “Big Red” made attempts to seduce SAP applications customers to its own cloud applications ERP suite.
This is not new. Back in 2018, the late Mark Hurd, then co-CEO, told Computer Weekly that Oracle expected defections from SAP with the end of life of ECC6.
But SAP ERP customers are now grappling anew with the thorny issue of whether to continue with their ECC6 enterprise resource planning systems, move to SAP’s avowedly more modern S/4 Hana system based on SAP’s in-memory, columnar database Hana, or switch to another supplier. This aporia has been given new force by SAP’s granting of a stay of execution to ECC6.
Steve Miranda, executive vice-president of applications development at Oracle, told Computer Weekly the week before the supplier’s Open World event in London that there was “still no deadline on the move to the cloud” for Oracle applications.
Asked to comment on the extension of the deadline, from 2025 to 2027, for the end of support for SAP’s older ERP system, Miranda said: “We are extremely proud that for over 10 years now, we have had an unchanged policy of unlimited support for our applications, supporting our on-premise customers unlimitedly until they move to the cloud, and that when the time was right for them, we would show them the value of moving to SaaS [software as a service].
“I would say if we were to take an approach where we set a deadline, that forces choice onto our customers. I think when customers look at it, when they’re picking a long-term partner, hopefully they see the difference in approach [from SAP].
“First and foremost, customers are interested in if we can we solve their business problem,” he added. Oracle’s competitive advantage in doing that is, he said, that it runs a full suite of business applications on a full stack of SaaS, platform as a service [PaaS] and infrastructure as a service [IaaS].
“We have a more secure infrastructure than the other cloud vendors, including AWS [Amazon Web Services]. And if you look at some of our competitors which provide standalone machine learning tools, things like [IBM] Watson or some of the things that Google’s doing, that is ‘build your own’. We are taking the same machine learning techniques, but we’re building those techniques into an application,” said Miranda.
As for SAP, he characterises it as mainly on-premise. So, with respect to machine learning features, he said: “Because of the SaaS model, we can put features out every quarter. And all of our customers are on the same version, always on the latest version.
“And then versus our SaaS competitors, our ability to scale and leverage our cloud technology, with the Oracle database underneath, means we can provide machine learning capabilities so much faster and with more scale and security, so we differentiate [from them] that way.”
Customers want cloud
At Oracle Open World in London, Andrew Sutherland, senior vice-president of technology for Europe, the Middle East and Africa (EMEA) at the supplier, said he was seeing a shift in the popularity of cloud among enterprise customers.
“They are wanting cloud. I remember when it was a bit of a push model, but to some extent our competitors have educated the market,” he said.
“One of our customers has said to me, ‘We did learn that way [using cloud providers]. And it’s been very interesting. But now we see that we probably want to move to do some real stuff on to the cloud. And we need some adults to speak to about that.
“There is also a genuine ratcheting up by our customers’ customers. The more they demand digital services, the more of a need there is for cloud.”
Sutherland also put the case that for customers that were “not going to take that full step to SaaS, Oracle could “lift and shift the older applications” to its cloud infrastructure.
“That’s very attractive because those applications are running on an Oracle database,” he said. “It is low risk – the users come in the morning, it’s exactly the same [application] as they’ve ever seen, but it just seems to be working faster today. The chief financial officer is happy because it’s costing less now [the company’s] not paying for hardware maintenance.”
But while Miranda and Sutherland are Oracle veterans, with a quarter century or so of service each, Jürgen Lindner, senior vice-president of product marketing, SaaS, at Oracle, is an old SAP hand, having spent nine years at SAP America from 1997 to 2016.
When asked, also at the London Oracle Open World event, why Oracle would be a CIO’s first alternative to S/4 Hana when moving off ECC6, he said he was confident it would be the “preferred, but not the only choice” because of the whole stack cloud offer plus the Oracle database, “autonomous” when delivered over the cloud.
‘Little comfort’ in ECC6 extended support
Lindner said he would advise such a CIO to “avoid the cloud hairball” of stitching together a cloud applications suite from different suppliers. And he said SAP customers should draw little comfort from the extension to the life of ECC6.
“When we [Oracle] talk about cloud, we really make a conscious investment into software as a service, since that is its most puristic form. Whereas SAP has taken a slightly different approach, where it said, ‘Look, we try to keep the core stable for as long as we can, and acquire certain cloud entities around that core, such as Success Factors, Ariba, Concur, and so on in order to accelerate the customer journey in the cloud’.
“It didn’t have a cohesive strategy to unify those acquired assets from a data model perspective, from an investment and platform perspective. The most challenging piece, the core ERP system, was never redesigned completely from scratch to be a cloud-native construct.”
Lindner added that, in his view, SAP was still a couple of years out from having full ERP functionality on the Hana database on the cloud.
“So, it’s not surprising that SAP has extended the [ECC6] deadline. The new leadership team, with Christian [Klein] and Jennifer [Morgan], wants to establish trust with their customer base, to say they’re listening right now. The 2025 deadline always was a somewhat artificial construct,” he said.
Lindner confirmed that Oracle was seeing defections from the SAP customer database. “They’re [customers] presenting us with the business cases for moving to S/4 Hana in the future, but the costs are enormous. You have to re-implement. This is what currently plays certainly in our favour,” he said.
He added that when customers are adding technology from startups or early-stage companies to solve particular business problems, then Oracle would be interested in acquiring them.
“I don’t think you will find an all-Oracle red company or an all-SAP blue company,” he said. “There will always be complementary technologies that offer a competitively differentiating capability. But Oracle is an M&A machine, we do 10 to 12 acquisitions a year, typically. So, if we see customers gravitating towards a certain type of smaller, nimble startup, while we don’t acquire for the sake of acquisition, we will acquire and integrate to our own data platform.”
