Oracle Corporation’s CEO made several bold predictions for the next 10 years at his OracleWorld keynote Monday morning in San Francisco, but given the pace of change he describes, it’s hard for anyone to say whether he will be right or not.
Mark Hurd made the predictions after providing a backdrop of how Oracle, other business leaders and industry analysts see the state of IT: Most CEOs are thinking about surviving in the here and now with the current period’s performance being their main driver, he said. “There is very little room for error. Many don’t have the luxury of looking ahead a few years.”
Hurd trotted out a slide deck showing that bottom line growth for S&P 500 companies from 2008 until this year has been a meager five per cent with revenue growth stalled at one per cent. He attributed this performance to a focus on cutting costs. “Some of it has come out of IT,” Hurd said, which has seen a decline in spending.
And large, “traditional” IT vendors are feeling the impact, with some seeing double-digit declines in growth as Oracle has enjoyed an uptick of approximately seven per cent. “These are massive changes in the industry.”
Software-as-a-Service (SaaS) companies are enjoying growth in the 15 per cent range, said Hurd, but the applications deployed in many enterprises are old – in fact, their average age is 20 years. This makes them pre-cloud, pre-social, pre-mobile, and if they are old enough, pre-search and pre-Internet.
As Oracle chairman and CTO Larry Ellison noted in his Sunday keynote, there is lots of money going into compliance and security, Hurd said, but he questioned whether either were innovation. “This is a thoroughly difficult environment,” he said. “There is pressure within IT do things that are not innovation.”
Hurd said the reason the cloud is now such a big deal is because it is the way out of IT’s current dire predicament, and not because of better CAPEX and OPEX; it allows organizations to innovate at the pace that’s required and rapidly deploy applications as well as services to customers. He sees this transition lasting a decade.
This means organizations will have hybrid environments for the foreseeable future, said Hurd, with applications on-premise and in the cloud. Oracle has prepared for this by re-writing all of its on-premise applications so they can be delivered through cloud as well, he said.
So how bold are Hurd’s predictions? He thought them bold enough to warn the audience that Oracle’s general counsel may suddenly cut the audio mid-speech. Oracle’s “Vision 2025” is that 80 per cent of all production application will be in the cloud, with two suite providers owning 80 per cent of the market for SaaS applications. One of those will be Oracle, and the other will not be an on-premise software make. While Hurd wouldn’t commit to predicting who the other company might be, Ellison sees Amazon as its main competitor now. Whoever it is, said Hurd, it will have to be a company that has started now to build its own cloud applications or otherwise it will need to do a great deal of mergers and acquisitions to get there.
Hurd also anticipates that 100 per cent of development testing will be done in the cloud, noting that roughly 30 to 40 per cent of IT is development testing. He expects all enterprise data to be held in the cloud, and that it will be the most secure environment available.
Oracle’s CEO said all of this will come to happen against the current backdrop of challenges and financial constraints IT organizations are facing.
GE is one of the enterprises already looking to make the transformation as it shifts the company back to its roots to an industrial company, said GE’s CIO Jim Fowler, which he describes as GE’s most important biggest transformation in its 130-year history.
This industrial GE will also be digital, he said. The company is already seeing as much as a 90 per cent reduction in cost by taking an on-premise application and putting it in the cloud. It allows the company to make changes much faster, he said.
GE often has the “build vs. buy” discussion, said Fowler, based on how it can differentiate services to customers. It buys innovation, scalability, and security from partners such as Oracle to free up resources to build its unique services, he said.
AIG’s CTO, Mike Brady, said the company aspires to enter long-term alliances with a handful of technology providers with which it can it invest time and research and development. He shared Hurd’s view that the cloud is essential to development testing, noting many enterprises are moving to a more agile approach which, combined with the cloud, minimizes downtime.
Brady sees legacy systems that are indeed “very brittle,” but at the same time the cloud is democratizing technology for the various lines of business, which makes IT an essential part of business. He said the company is able to quickly connect existing sources of business data together through SaaS and Platform-as-a-Service.
Pulling together disparate data sets together at OpenWorld with a new offering: in addition to several updates to existing products, Oracle announced its new Oracle Data Visualization Cloud Service, which allows a user in an organization to combine and analyze data, whether enterprise, personal or big data. This data can be pulled from Oracle and other SaaS applications, as well as on-premise systems and external sources.
