Software as a Service, popularly known as SaaS, is fast becoming a promising, sustainable alternative to the on-premise applications to augment the digital transformation drives of businesses today. Instead of going through the rut, pain and complexity of hosting applications on-premise and managing them to meet the dynamic needs of the users, CIOs and IT leaders have started to think of SaaS-based models.
According to Bain & Co. the adoption of SaaS-based applications will be growing in good double digit through the 2019. When a user doesn’t have to go through the ordeal of fixing and managing in-house storage, insane amount of software updates and innumerable patches, SaaS is an obvious choice. No wonder analyst firm Gartner has made a very bold prediction that by the end of 2019, the SaaS revenue will touch US$85 billion – a growth of around 18% over the year gone. According to the analyst firm, cloud application services (SaaS) remains the largest segment of the cloud market. Even IDC says that SaaS will account for roughly 60% of public cloud spending by 2020 – not too far to witness.
With the changes in demand patterns over the past couple of years, SaaS vendors have also re-looked at their product strategies and have very neatly incorporated the changes in their go-to-market approaches to avoid the risk of missing out on the promising opportunity. While SaaS adoption is on the rise, there still are quite a few apprehensions to be ironed out.
Users expect a lesser TCO and faster Return on Investment (ROI). With scale, there will obviously be complexities, how will they be addressed.
Data security and data sovereignty issues will still be a big question mark on SaaS adoption.
Who owns the SaaS cloud? Is it the technology domain, business owners or the provider?
Having said that, it still won’t be an exaggeration to say that the climate is right for enterprises (of all sizes) for slowly switching to SaaS-based models of data consumption and future-proof their technology investment and also bring predictability in the budget forecasts.
Recently dynamicCIO caught up with two very senior executives from Oracle Steve Miranda, Executive Vice President, Oracle Applications Product Development and Juergen Lindner, Senior Vice President, Product Marketing SaaS. The discussion was primarily around the growing influence of SaaS in corporate IT and how Oracle is addressing this space with its horizontally and vertically oriented solutions and technology development.
The speed at which both business processes and opportunities are changing, requires a radically different mechanism of redressal. The market, with a plethora of newbies and incumbents, are fighting for a larger share.
How does Oracle see the SaaS space?
“Computing has undergone four major shifts in last 25 years. Starting from mainframes, to green-screens, to client-server architecture to Internet. The fifth is cloud. In last five years, the move to cloud has been very rapid and convincing,” says Steve Miranda. “Applications today improve so much faster in the cloud. There’s no way we can iterate fast enough to improve features, to update technology in an on-premise environment as we can in the SaaS environment. From a customer’s perspective, they get a better product in SaaS,” he says.
Oracle’s cloud application portfolio (as part of overall cloud growth) is a fast growing segment for the company. Aimed at enabling business transformations, the company has created a differentiated products and services portfolio and have entered new markets and has responded well to the global demands promising lower cost of acquisition and less complexity to its customers.
“Oracle re-architected all of its ‘line of business’ applications about a decade ago to be fully cloud-ready. We didn’t take an easy route of just hosting on-premise legacy systems, but really re-architected from the ground-up to take advantage of emerging technologies as they become available. With that in mind, we have a complete suite of ‘line of business’ applications where the customers can literally pick any of it in their journey into SaaS,” explains Juergen Lindner.
Another big advantage that Oracle claims to have is that it is built on one technology stack. The applications sit on top of the IaaS platform, the Oracle database platform and the Oracle middleware platform. “It gives us tremendous advantage. With the promise of Oracle Gen-2 Cloud and infinite potential of the Oracle Autonomous Database, the innovations that Oracle leverages are unprecedented. Most other application companies don’t have that level of investment in the technology stack. Our completeness of the suite allows us to provide the best solutions to customers on a broad range of areas because we’ve already done a lot of the heavy lifting in terms of the infrastructure,” says Miranda.
While the balance will tilt in favour of cloud applications, many customers would still go with a hybrid approach. Both Miranda and Lindner are in concurrence with the opinion that a very vast majority of enterprises (Oracle customers including) will be on course to scripting a “cloud-only” story but the on-premise apps won’t die entirely. But the way innovations are applied to cloud apps, the promise of agility, speed and disruption will be lived up well.
How are new technologies innovations in AI/ML space being used to enrich the SaaS application portfolio?
Oracle, has made massive investment in new technologies including AI/ML and has planned to realise the value of the new technologies and through it is ready-to-go, AI-powered cloud apps. Machine learning is working behind the scenes to automate patching and backups and optimise the database query performance etc.
“We are using AI/Machine Learning to enrich the user interface (UI) too. A major part of the investment from the company is going into creating a “digital assistant” for all applications, starting with Human Capital Management (HCM).
“You now can go to a digital assistant and interact in a conversational UI through the applications which was not a possibility earlier. Conversational UI could be Siri, Slack, Alexa or anything. We’ve invested in B2B data through an acquisition called DataFox as well as in B2C data to help data drive machine learning. I have one digital assistant who is sort of my “Ask Oracle” for everything – be it CRM, supply chain, HR or finance. That’s the power of AI,” says Miranda.
Juergen Lindner substantiates Steve’s claim with an example of Bajaj Electricals as to how the company transformed its financial reporting by adopting Oracle cloud apps. “Bajaj Electricals consolidated its financial reporting in Oracle ERP/EPM cloud and gained 50% reduction in reporting time thus enabling greater scalability. IT also achieved better insights and controls to make decisions more confidently,” explains Lindner.
The company has now extended the AI capabilities to its ERP and Enterprise Performance Management Clouds as well. The ML-based innovations include an expense reporting assistant, project management digital assistant, advanced finance controls and project-driven supply chain management.
What’s the outlook for the Indian market?
With over 30 years of its presence in India, Oracle has got a dominant customer base for its database product and its subsequent upgrades. In the enterprise application portfolio it fought a battle with multiple strong players in different domains. But with a SaaS-based approach and having AI-centric business applications like ERP Cloud, SCM Cloud, HCM Cloud and CX Cloud, all based on a robust Generation 2 Cloud Infrastructure, the equation has become interesting.
“What we’re seeing is a lot of interest in cloud shown by both customers and prospects in India. Customers are starting their cloud journeys now. Since we have multiple deployment models for offer in public cloud, customers can take full advantage of it. We cater to almost any type of data sovereignty issues that might arise, so we are very bullish on the Indian market,” says Lindner.
As the company gears up to launch its first datacentre in India this year, the company is bullish on extending its leadership in the application business space.