Oracle reported both fiscal 2016 fourth quarter and full year financial performance with executives indicating they were thrilled by the results as well as the current momentum of this enterprise technology provider. Oracle CEO Safra Katz indicated her optimism that the company is working to position Oracle as a customer strategic partner for the Cloud.

In its fiscal fourth quarter, Oracle reported $10.6 billion in total revenues, down 1 percent in U.S. dollars and flat in constant currency. Of that total number, Cloud based revenue in the quarter was $859 million, up 51 percent from last year. Total on premise software revenues were $7.6 billion with software updates and product support revenues at $4.8 billion, up 4 percent from last year. Operating income for the fourth quarter was $4 billion and net income was reported as $2.8 million. Operating margin in the fiscal fourth quarter was 37 percent.

For the full fiscal year, total software and cloud revenues for Oracle totaled $37 billion, representing a growth rate of 2 percent in constant currency. Cloud, SaaS and PaaS segment revenues were reported as $2.2 billion, growing 52 percent. Cloud infrastructure as a service was $646 million, growing 11 percent. On-premise software grew slightly in constant currency to $26.1 billion, as continued growth in software support offset could-related declines in new software licenses.

Co-CEO Mark Hurd indicated that Oracle currently has nearly 2600 Fusion ERP customers operating on the Oracle Public Cloud, with more than 2000 new PaaS added in Q4 alone.

Oracle further raised its financial guidance for the current Q1-FY17 quarter

From an overall strategic growth perspective, Oracle Founder, Executive Chairmen and CTO Larry Ellison outlined two specific longer-term strategies. The first is to continue to accelerate the enterprise technology provider’s SaaS and PaaS ongoing growth rates with a goal to at least double the growth rate of the company’s closest competitors. He indicated to analysts that Oracle has a fighting chance to be the first SaaS company to make it to $10 billion in revenue and to dominate this market segment. He felt Oracle was a major player in ERP, HCM and CRM, along with Service Management and almost the only player in supply chain and manufacturing.

That latter observation is one that Supply Chain Matters shared in our coverage of Oracle Open World last fall, our belief that Oracle is currently the only enterprise technology provider offering a full suite of supply chain and manufacturing applications available on a public or private cloud platform. Once more, Oracle can provide added options for infrastructure and database hosting needs, either private or public. This can be especially attractive to up and coming industry disruptors or mid-marker manufacturers and services providers looking to gain advanced technology at lower cost.

The second major point of focus outlined by Ellison is that of infrastructure as a service (IaaS) data centers that are now being converted to next generation technology providing broader compute power and efficiencies at lower cost. Ellison observed that a huge amount of interest and demand related to IaaS stems from existing and new SaaS customers and even larger amounts of customer interest and demand originating from Oracle database customers looking for opportunities for decreased operating costs and higher efficiencies. In the financial performance briefing he noted:

Our database customers want to move their application into our cloud putting their database on to our platform as a service and then their applications, so a lot of custom applications on to our infrastructure as a service, these two things go together.

For supply chain functional and line-of-business teams, this is indication that IT teams continue to seek broader cost reduction and service enhancement opportunities in managing data management and reporting needs. With Oracle databases so prevalent across supply chain and product management applications areas, this is an important trend to monitor.  From our lens, Oracle’s efforts are now clearly focused on moving existing and future customers to Cloud based applications and computing, a core strength of this enterprise technology provider.

It further represents an indication that Oracle will counter SAP’s HANA efforts with additional options to allow Oracle database platforms the ability to support applications and analytics needs in Cloud based environments.

No doubt, during Oracle’s upcoming annual Open World customer conference being held in September, there will be more information regarding Oracle’s efforts to accelerate its march to the Cloud.

Bob Ferrari

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