Analyst R. "Ray" Wang of Altimeter Group counters that acquisitions are essential in this marketplace "because they provide a broad portfolio that balances out the ups and downs." He described Oracle's many acquisitions as part of a Sun Tzu art-of-war strategy adopted by CEO Larry Ellison. "By accumulating all that recurring revenue, he is in a power position to continue to squeeze everybody's margins or to continue to expand," he said.
SAP's statements this week focused on internal product innovations including SaaS as a growth driver, but venture capitalist Kevin Spain said it's very hard for on-premise software companies to do well in that market. "They are radically different in terms of product, sales, marketing, service and virtually everything else that you have to do as a business," said Spain, a principal at Emergence Capital.
Microsoft, Oracle, and SAP all have SaaS and cloud offerings, but Spain dismissed these initiatives as window dressing. "They're doing it because they feel they have to have a story around SaaS or cloud, but they don't have traction and their hearts fundamentally aren't in it," he said.
SAP has trouble enough communicating the value of its current on-premise software, noted Chambers of ASUG. "We sometimes see customers building applications and capabilities that are already available in enhancement packs," she said. "They have to do a better job of communicating and they have to make sure that new technology is digestible."
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