Oracle CEO Mark Hurd Stresses Importance of Cloud in the Time of Tight IT Budgets

Oracle continued to hammer home its message on the value of cloud at its CloudWorld event for customers and partners at the Waldorf Astoria in New York City.

Cloud is critical to IT because of a confluence of trends, said Mark Hurd, Oracle CEO, in his keynote at the event, repeating a warning he has issued at past Oracle events.   

Oracle's Mark Hurd: Why Support for Cloud is Gaining

Revenue growth is stalled across the economy although earnings continue to grow through cost cutting. Worldwide IT spending has decelerated over the last 5 years, and there is an estimated 5.1% spending decline in 2015 alone, he noted. Observing that most CEOs last an average of 4 years on the job, he said they feel the pressure to drive earnings in a short time-frame.  “What CEOs care about is business agility and entering new markets, financial growth, and survival," he said. The combination of these factors form the backdrop for IT investments.

Mark HurdAlong with the imperative to increase earnings, there is also a demographic shift taking place. Fifty percent of the workforce will be Millennials in 2020. Sixty-eight percent of Millennials demand an integrated seamless experience regardless of channel and 90% say access to real time product availability information would influence their shopping choices. And, they expect easy to use mobile apps that just work.

Infrastructure is old, and old apps are running on that old infrastructure, resulting in 80% of IT budgets being spent on maintenance, leaving just 20% available for modernization and innovation. And, that 20% is increasingly squeezed by the burden of adding security to protect the aging infrastructure that houses precious company data. In short, the current on-premise IT operating model is unsustainable, said Hurd.

Looking ahead at the future, Hurd offered 5 cloud predictions:

Prediction 1:  By 2025, 80% of production apps will be in the cloud: public cloud SaaS is 24% of the applications market today and 85% of all new applications today are architected for SaaS, Hurd said.

Prediction 2: By 2015, Two suite providers Will have 80% of the SaaS Apps Market a full suite requires hundreds of applications including customer experience,  HR,  ERP, enterprise performance management, supply chain, and data with shared extensible schemas across suites significant reducing the cost and complexity of integration.

Prediction 3: 100% of new dev/test will be in the cloud in 2025: Dev/test is one of the last managed and governed areas in IT, and dev/test suites offering rich standards-based frameworks and languages will dominate the market. Dev/test is 30-40% of IT spending, making it an attractive cloud workload for cost savings, and there is no reason for that not to be in the cloud, said Hurd.

Prediction 4: By 2025, virtually all enterprise data will be stored in the cloud. More data is already stored in clouds than in traditional systems, tens of billions of IoT devices will generate massive amounts of new enterprise data using modern cloud based applications, and public cloud storage capacity will be sourced by service providers directly from component manufacturers, not existing storage vendor.

Prediction 5: By 2025, enterprise cloud will be the most secure IT environment, said Hurd, who noted that currently 74% of organizations take three months or more to apply a patch, and in 2014, 99.9% of the breach exploits had patches available for more than one year that could have prevented them. Oracle applications in the cloud are more secure than anything customers could have on premise, said Hurd.

A key differentiator for Oracle, said Hurd,  is that it allows organizations to coexist on-premise and cloud and interoperate those two environments seamlessly and manage it through a single pane of glass.

Oracle's Steve Miranda: Continued Commitment to Apps On-Premise as well as Cloud

Steve Miranda, OracleFollowing up on one of Hurd’s predictions about a certain percentage of applications running in the cloud by 2025, Steve Miranda, Oracle executive vice president of applications development, emphasized that as far as Oracle’s overall application strategy, “we expect that 100% of the applications that we run or that we build or we deliver to our customers will be run in a cloud environment by 100% of our customers. It is not a question of ‘if’ that is going to happen, it is simply a question of ‘when’ this is going to happen,” he said. “A hundred percent of what we deliver is going to be delivered in the cloud.”

Noting that many customers run existing on-premise applications, whether it be E-Business Suite, PeopleSoft, Siebel, Hyperion, and many others, Miranda said that the expectation about the inevitability of customers’ ultimate cloud migration, however, does not change Oracle’s commitment to support on-premise apps. “That does not change the fact that we are continuing and will continue our Applications Unlimited commitment to the customers, to deliver support and innovation to those on-premise products for as long as we choose to use them.”

But with the combination of the economic pressures outlined by Hurd, some of the compelling offerings that Oracle has brought out, the general movement to the cloud because of its benefits, even though Oracle will continue supporting those on-premise applications for an unlimited period of time, “we still believe all of our customers will move all the applications delivered to cloud,” said Miranda. Oracle has “set no timeline” for discontinuing that support, and he assured attendees that support for on-premise applications will continue for at least a decade, at least through “2025 and beyond.”

But Cloud is About More Than Cost Reduction

If it were simply cost, why would Oracle re-platform applications in the cloud, Miranda asked. If it were simply cost, organizations could take their existing, E-Business Suite, PeopleSoft - or SAP for that matter - or any other applications, go to a hosting provider put it on their data centers, use their DBAs, and they would be charged  by the month, or the quarter or the year, and could eliminate a bunch of costs that way, and that is certainly true in Oracle’s SaaS applications, said Miranda. But, he added, if one considers Hurd’s points about the Millennials, how business is changing, and the new workforce and consumer pressures coming to bear, the reality is that the speed and need to innovate with applications is much more pressing today. The reason Oracle built its SaaS applications was two-fold: “One is certainly to reduce costs. We can host them and host them at scale and configure them for our customers, but secondly, it is to increase the speed of our innovation.”

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