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2/2/2015
11:00 AM
Doug Henschen
Doug Henschen
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Oracle, NetSuite Report Cloud ERP Progress

Oracle, NetSuite report strong adoption of SaaS-based ERP as SAP prepares S4 announcement. Is mission-critical ERP next into the cloud?

Cloud ERP: 9 Emerging Options
Cloud ERP: 9 Emerging Options
(Click image for larger view and slideshow.)

Oracle announced Friday that more than 600 companies worldwide have selected Oracle ERP Cloud and Oracle Enterprise Performance Management (EPM) Cloud apps, with 80% growth in the last quarter alone. That report arrived just one day after software-as-a-service (SaaS) ERP vendor NetSuite reported a 34% year-over-year revenue increase for fiscal year 2014.

"The fourth quarter of 2014 was our seventh consecutive quarter of more than 30% year-over-year recurring revenue growth," said NetSuite CEO Zach Nelson in company statement. "In addition, fiscal year 2014 represents a fifth consecutive year of accelerating recurring revenue growth."

[ Want more on Oracle's cloud push? Read Oracle Details Cloud Cost-Cut Plan. ]

Are Oracle and NetSuite results a sign that ERP is following in the footsteps of CRM and HR apps into the cloud? That question will be raised this week as SAP, the ERP market leader, is set to announce a new, cloud-delivered S4 ERP suite on Tuesday. Earlier this month, SAP CEO Bill McDermott said his company expects to reach a tipping point by 2018 whereby it will see more revenue from cloud apps than from on-premises software.

But new ERP deals shouldn't be confused with all deployments, a universe still dominated by on-premises ERP. What's more, cloud ERP continues to find favor mostly among small and midsized businesses. Like NetSuite, cloud-ERP pure-play vendors Kenandy, Plex Systems, and QAD have focused almost entirely on midsized companies or divisions of larger companies. Epicor and Microsoft Dynamics have spun out SaaS-based versions of their flagship ERP software, but these, too, are predominantly aimed at midsized companies and business units of larger firms.

Conventional wisdom has it that large enterprises will be slower to move their expansive ERP deployments into the cloud. SAP and Infor, the No. 1 and No. 3 ERP vendors, respectively, have up to now added edge applications like CRM, HR, and EPM as SaaS, but their core ERP cloud offerings are conventional software deployments delivered as managed services.

SAP CEO Bill McDermott is set to announce SAP's next-generation ERP suite, dubbed S4, on Tuesday. Questions will focus on cloud delivery options.
SAP CEO Bill McDermott is set to announce SAP's next-generation ERP suite, dubbed S4, on Tuesday. Questions will focus on cloud delivery options.

Oracle and Workday have been the most aggressive vendors pushing SaaS ERP at scale. Oracle on Friday cited 90,000-employee real estate firm RE/MAX as a new cloud customer. Workday lists insurance and benefits firm UNUM and real estate management firm Cushman & Wakefield among its Fortune 500 financial ERP customers. Oracle and Workday are alike in the ERP cloud in focusing on the financial-management and people-management aspects of resource planning (often replacing PeopleSoft legacy deployments). You simply don't see Fortune 100 companies or many manufacturing-and-supply-chain-oriented Fortune 500 companies running SaaS-based ERP today.

All eyes will be on SAP this week as it unveils S4, which CEO McDermott recently described as a simplified, fourth-generation version of the vendor's venerable Business Suite. Will S4 apps run as SaaS or as managed services? If it's SaaS, will S4 scale to meet the needs of the many giant companies that have run for years, if not decades, on SAP's Business Suite?

Answers on SAP's specifics will emerge this week. But the progress of high-scale ERP deployments into the cloud will likely emerge in slow motion, with progress measured year-by-year through the end of the decade.

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Doug Henschen is Executive Editor of InformationWeek, where he covers the intersection of enterprise applications with information management, business intelligence, big data and analytics. He previously served as editor in chief of Intelligent Enterprise, editor in chief of ... View Full Bio
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anon9450472077
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anon9450472077,
User Rank: Apprentice
2/17/2015 | 10:42:59 PM
Cloud ERP is mostly in the SMB space.
It's extremely rare that NetSuite hooks a large company like this but the fact that it's happening is definitely progress. I work with BizAutomation.com ERP and they seem to be taking all of NetSuite's discarded small business customers (not the official position but I'll let you read between the lines) but only in the SMB space. Even larger small businesses still want to "leverage their network and server assets" not to mention the IT employees they can't seem to realize shouldn't be in charge of picking ERP systems (hint - there's a self interest that may tarnish the process).
fscavo926
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fscavo926,
User Rank: Apprentice
2/10/2015 | 1:52:39 PM
QAD
Doug, FYI, QAD is not a "pure play cloud vendor."  They do offer a hosted version of their system and have done quite well with it, but tHey have been around for decades.
TechYogJosh
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TechYogJosh,
User Rank: Black Belt
2/3/2015 | 7:57:26 AM
Oracle cloud ...
I would like to know how many of these customers are SaaS-based customers (much like Salesforce.com has). Oracle has this bad habit of combing everything all and sundry (e.g., Fusion platform) under cloud. Are these over 600 cloud-ERP clients, leveraging a SaaS-based version (multi-tenant) or are also Private-SaaS clients (SaaS-type ERP but hosted in a one-to-one model by Oracle for the client)
Li Tan
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Li Tan,
User Rank: Ninja
2/3/2015 | 2:50:20 AM
Re: Oracle's math is a little mushy.
Well, I think those numbers just give a sense of the scale - it indicates the booming of cloud based ERP solutions. The cloud computing is achieving its mature stage now and it's becoming more and more popular. As long as it's easy to use with low cost and necessary security measure, I believe it will have a bright feature.
D. Henschen
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D. Henschen,
User Rank: Author
2/2/2015 | 1:11:18 PM
Oracle's math is a little mushy.
I find Oracle's reports a little confusing because at Oracle OpenWorld 2013 it claimed to have 150 ERP Cloud customers (with 50 in production). At Oracle OpenWorld 2014 it said it had landed another 263 ERP and Enterprise Performance Management (EPM) customers over the previous 12 months, bringing the total to 413 or so. In Friday's report, Oracle said it landed 250 new Oracle ERP and EPM customers in the most recent quarter -- 150 of which were net new and replaced legacy solutions with Oracle cloud."

That totals more than 663 by my math, so I'm wondering why the company isn't reporting "more than 650 cloud ERP and EPM customers." I also would have thought the addition of EPM into the ERP count would have sent those numbers higher? I guess Oracle's cloud equivalent of Hyperion EPM in the cloud is relatively new and doesn't have huge numbers just yet.

Can somebody from Oracle break out ERP and EPM and clarify at bit? 

http://www.informationweek.com/applications/oracles-cloud-whats-really-new/d/d-id/1111668
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