Expenses master Oracle CEO Mark Hurd warned hacks at Oracle Media Day that overall growth in the U.S. and global economies is not translating directly to increases in B2B spending.
He said that midmarket businesses were seeing an infusion of capital in the current environment, which has supercharged Oracle’s NetSuite business.
As the IT market is upended by the cloud, and Software-as-a-Service absorbs traditional budgets for data centre infrastructure, Oracle has its sights set on seizing market share in an imminent wave of massive business software consolidation, Hurd said.
“When you get to over three percent growth in GDP, generally tech should benefit. I do think most of what tech has benefited from has been in consumer tech as opposed to business-to-business tech”, Hurd said.
Hurd said that business-to-business tech was still focused on trying to do a better job, taking care of technical debt that has built up over not just years but decades—trying to clean up its back-office systems so they talk to each other, and trying to clean up their front-office systems so they talk to the customer and do it seamlessly and deliver services.
“It’s a better economic environment. I don’t think we necessarily would take that GDP increase in growth and translate it necessarily into an exciting increase in B2B spending”, he said.
Hurd thinks that changing SaaS dynamics will help Oracle seize B2B market share
“We’ve got an applications market. Business-to business applications is roughly $125 billion. About 70 percent of that is back office, 30 percent of that is front office. Both are relatively fragmented. On-premises support revenue is the bulk of both categories. There’s some emergent SaaS,” he said.
As these application markets move to SaaS, there is a problem that the SaaS market absorbs hardware, absorbs database, absorbs middleware. So that market grows exponentially by just simply having the nature of it being an inclusive market.
Examining his crystal balls, Hurd claimed that SaaS will drive a wave of consolidation across the industry.
He said that the biggest player in the back-office market has only 24 percent share in on-premises. That market will consolidate as the market moves more and more to SaaS.
“Most of the companies beneath the top two, none of them really have more than 3 percent market share. Most of them don’t have the R&D to invest in getting to true SaaS—true cloud, true features. I think we’re seeing it consolidate. I think, by the time we’re done … there will be a long tail there … there will only be a couple big SaaS suite providers”, he said.
Apparently there are “incredible levels of interest” in getting out of these old legacy systems and getting into these modern SaaS systems with all the bells and whistles.
