Perfect storm brewing for Oracle Cloud

 Jasbir Singh, Vice President, Cloud Applications – ERP/SCM for Oracle Asia Pacific 

By Hiyal Biyagamage

In an exclusive interview with Daily FT, Jasbir Singh, Vice President, Cloud Applications – ERP/SCM for Oracle Asia Pacific said that three storms – millennial workforce, cloud apps with a low cost and mobility – have come together to form the ‘perfect storm’ for its cloud operations in Asia Pacific. 

“In Asia Pacific, there is a perfect storm brewing right now. Firstly, you got millennials coming as a workforce. They are the champions in new tech and they are very collaborative. They like to share. If you put a 1980s business application when you hire these guys; that will be a culture shock for them. That is why we had to undergo a total rebuilding process from the ground up to cater to this perfect storm of millennials.”

“Secondly, cost of accessing applications which could be hosted in a different place, has gone down significantly. Technology is there now so you don’t need a dedicated pipe for that. Accessibility, maturity and the cost to access internet has come down. Thirdly, the whole discussion around mobility; as long as someone could access internet, they can work from anywhere,” said Jasbir Singh with us.

He also discussed about how Oracle is shifting from a software selling company to a services company and how Sri Lanka could utilise Oracle technologies to be a champion in niche industries such as engineering constructions. 

Below is a full excerpt of his interview: 

Jasbir: There is a big shift in terms of how we develop our software and how we run our operations. Few years ago, cloud operations and optimised databases were not critical but suddenly, they became critical components from a technology perspective because if you don’t develop something which is optimised; guess who is going to incur the cost? We are investing into R&D for our customers and optimising the designs so that the cost of services will become cheaper. That is a shift in our DNA which is happening as we speak. 

Just in the Q4 2016, we added more than 1,600 new SaaS customers and more than 2,000 new PaaS customers. Today, Oracle has nearly 2,600 Fusion ERP (Enterprise Resource Planning) customers in the Oracle Public Cloud – that’s 10-times more cloud ERP customers than Workday. These companies pay Oracle an X amount of Dollars per annum, which is a recurring revenue. Companies nowadays look at how many customers you have on board right now and what is your recurring revenue; it is a projecting right now. 

That is why it is a shift in our business model, sales and how we serve our customers. It is a new approach and a new mentality. As a company, we are also being impacted by the digital disruption so we have to shift to meet the needs of our customers. 

From a business perspective, we are growing and accelerating. Oracle has a complete suite with 600 products and these could be converted into another 1000 types of services that you and your millennial workforce could consume, from anywhere anytime. In the cloud world, standardisation is very common which means you cannot customise an application but Oracle will provide our platform as a service (PaaS) and you will be able to extend your data. When you build something on Paas, you know that everything within the cloud such as security, single sign-on, auditability and many other features would come along because it has been built on the same platform.  

With the complete suite and the PaaS; you can consume some information from all these new cloud companies and bring that into your business process, using open standards. That is why we are seeing sudden growth because millennials and CIOs are also not looking for modern applications. The current buzz word right now is ‘modern business practice’. There is no more business process reengineering. Your buyer is still a buyer, same as for the purchase order. The ability to access these things has changed because of modern business practices. They allow you mobility and extract all your purchase orders and see where is your spending right now in real time. 

The Asia Pacific market is now matured and the three storms have formed the perfect storm which will keep Oracle busy for the next decade or so.

Q: Cloud computing has opened many avenues for larger companies as well as small businesses globally over the last decade. How do you analyse the business landscape change happened in the region with cloud?

A: Cloud is an enabler for companies to put in new types of strategies. 30 years ago before globalisation, if you wanted to sell a bottle of pickles to Singapore; imagine the amount of money you had to spend. Now, you could create your own website so easily, device a professional business plan and access a global community, thanks to cloud. Cloud will enable a business in any category to access a bigger market and expand your business. You don’t have much time to wait to consult a system integrator, a hardware supplier or an IT professional to set up a system. 

You have no time. You need to act fast to reap the benefits so that is where cloud will help your business to grow. It is no wonder that internet plays a huge part in driving modern businesses. For them to expand and grow, cloud technologies will play a key role. 

Large enterprises acquire new businesses when they are in the mood of expansion. For you to get them up and running on a system so that you could consolidate and make sure all the financials are under control; you have no time to do another business process reengineering. In that case, cloud will help enterprises to integrate acquisitions faster to their portfolio. Companies don’t want to spend extra millions of dollars to set up new data centres. They want to see how can I automate, bring modernisation and a complete solution from one single vendor fast. 

Q: You mentioned that Oracle now has more than 2,500 customers using its cloud ERP and almost 12,000 companies across its broad portfolio of SaaS. How do you see APAC businesses embracing these technologies?

A: We are seeing a huge interest in APAC companies. Even large enterprises are reconsidering because they are looking at transferring their non-mission critical applications into the cloud. If you take a bank, core banking is critical to them not the HR system. A bank would not spend extra money to invest in new hardware to implement their HR system. Many would prefer to put it on a secured cloud. It is great to see that many sectors showing interest towards cloud. 

Q: For many years, organisations considered that SaaS integration has been a rising obstacle. The complaint was that clouds were siloed and they were not interoperable with in-house cloud instances. Has this changed now?

A: To answer simply, yes. However, different industries are coming together and agreeing on a set of standards. You might remember the implementation of EDI (Electronic Data interchange) and then Airline Industry came together to set up a set of standards. Then came XML, HTML and other standards. Web service was the heart of all these A2A integrations.

We haven’t seen much change in cloud except for more improvements and advanced technologies or standards being established. Today, standards have evolved where you need mashup standards. For example, I need to do a B2B integration but I need to go and consume some information from Google Maps and bring that information to you with the intention of pushing that back to a customer. If you look at Oracle’s PaaS layer, it has adopted all these latest standards. 

The issue is how do you integrate something new to your on premise system which is old. It is not an industry issue but a very personalised issue. So, customers need to decide whether they need to use these old systems. That is the difference right now.

If a company still favours their old legacy system and cannot come out of it while other companies have already moved out to the cloud; they have to do a custom integration which will cost them a good fortune. You will be the only one in the village; everybody has moved to the city. I think companies will move to the cloud gradually but some critical systems would still remain within those old systems. It is not a question of ‘if’. It is a question of ‘when’. 

Q: Where does Sri Lanka stand in terms of cloud adoption and SaaS deployments in the region?

A: We have a lot of customers here. We are seeing a good interest towards our current e-Business Suite. Many of the companies are willing to reduce their cost by moving their data centre to the cloud.

There are other factors; not only IT or technology, but different factors which comes along which has actually triggered this thinking. I believe Sri Lanka is on an uptake right now. Let me take an example. A company in Sri Lanka forms a joint venture with a foreign company and build a tower. If you are going to build it, you need an ERP system for just three years to manage financials, project management components, procurement and what not. Would you set up a data centre and hire people to manage that? 

I took that as an example because engineering construction industry is a prime market for us because we got both Primavera in cloud and whole other project-based applications in the cloud as well. We provide them an end-to-end solution. I am seeing so many new construction projects around Colombo and I think Sri Lanka is prime time right now for selected industries such engineering construction and the country could achieve more with proper cloud integrations.

Q: Even though many local companies would love to embrace cloud; it is clearly not the panacea for every solution. And then you have experts who point out that a country should have a certain maturity level to play with cloud. What are your views on these ideas?

A: Let me tell you a true story. Puninar, an Indonesian logistics company chose Oracle Supply Chain Management Cloud to propel their business expansion. There are 16,000 islands in Indonesia. They all have internet access but the internet penetration is still quite low in the country. The perception about Indonesia could be low but my argument is that if you can access Gmail or Facebook, you can access Oracle cloud applications and run your business.

The question on maturity can be broken into multiple facets. One is the internet connectivity. If you have 3G, you can run businesses on cloud. 

Secondly, the workforce. Do you have people, the workforce that is ready to embrace cloud? I am sure Sri Lanka has. Thirdly, does the government put restrictions on new technologies? Governments will always say that they don’t want their financial data on the cloud. They may say that it is because of security reasons but I guess there might be several political reasons as well. Right now, there is a big question mark over maturity of a country though.

Q: Cloud creates agility. A good CIO will figure out a way to leverage cloud, especially SaaS to explore business options much more quickly. What are the biggest challenges that CIOs face when adapting SaaS in to their business models?

A: I guess it is not only related to the CIO but chief marketing officers (CMO) as well. You will have business-specific applications as SaaS and, CIOs are able to contribute in a board room right now on how to change a company’s IT game. You don’t need hire external consultants to decide what your IT department should do. CIOs nowadays can inject sense to his superiors on ditching CAPEX models and embracing OPEX models. For example, he could encourage the company to test out a cloud solution for three or four months and if it doesn’t work for them, the company could let it go.

Cloud is a fail-safe strategy with a low cost. They also bring new revenue streams for businesses such as e-commerce. Tech-savvy CIOs and CMO can now switch on something with a low cost and test out at ease. They don’t have to hire an army of employees to maintain a cloud system which makes their lives much easier.

We are at a point of a generation gap. You got millennials and you got people who are early adopters of technology. The guys who are in the boardroom presently are somewhat old school right? They are smart and strategic but they don’t have a comfort feeling of getting their company data out. Main reason for that is they don’t understand the security. 

Our job is to educate them and build that confidence. Telling them that 2,600 companies, which include a number of Fortune 500 companies, are running cloud ERPs within their organisations is one way to convince them (laughs). I think it is a cultural acceptance of things like cloud technologies. Poor understanding of something also creates that fear on making that emotional decision to transfer all company data into the cloud. 

Q: However, one of the concerning topics that surfaces with Cloud though, is that it would spell the demise of the CTO. What would be your answer? 

A: I think it is the demise of the CTO but the creation of CTO 2.0 (laughs). It is something like a moth coming out of a cocoon; old CTO will fade away and a new CTO will evolve. I think cloud technologies will make the life of a CTO much more interesting and more challenging I would say. 

Q: As Oracle enters its fiscal year 2017; CTO Larry Ellison has pointed out that the company is looking at growing the cloud business at double the rate of its competitors. How much of an impact would this have for APAC and its cloud-run businesses?

A: I think that is a very good statement. If you look at the way we are growing, we have a fighting chance to become the first company to do $ 10 billion on cloud. Like I mentioned earlier, three perfect storms are brewing. This also creates a path for new inventions. We keep on investing and the thing about SaaS is that costs will come down with more customers on boarding. It will bring benefits for companies to see that Oracle is not company who just puts services but keep enhancing them as well.

We keep on pushing new features and capabilities every six month because the demand of these new capabilities will be coming in. think about e-commerce. If your website cannot sustain more online hits, you would miss opportunities. In cloud, you get the elasticity. Cloud is a disruptor because it allows customers from this region to go and disrupt the global markets such as US and Europe. 

Q: Do you believe that Sri Lanka has the capability to extract real business value out of Oracle cloud solutions? 

A: This was my first time to Sri Lanka and I was amazed with the developments that are going on right now. The branding of Sri Lanka as a safe country is very vital. People are willing to invest in Sri Lanka which is a great sign. Now what local companies should be doing is establishing their brands outside Sri Lanka. With the boom of the IT industry, Sri Lanka could do much more to mark their presence in global markets. Even knowledge economy base could grow significantly. Right now, companies could leverage Oracle cloud technologies to start pushing their intellectual properties out as a service. I guess Sri Lanka has so many new avenues opened up. 

-Pix by Shehan Gunasekera