Oracle cloud: Generating value with AI

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When Oracle first launched its cloud strategy in 2012, founder and CTO Larry Ellison talked about how few IT businesses “cross the chasm” to new technologies. The inference was that Oracle was bold and brave, prepared to embrace change quickly, but in reality Oracle had already been flirting with SaaS for a couple of years by then, in a rapidly evolving cloud-driven market.

Fast forward 12 years and Oracle is setting its stall out again, this time with generative AI (GenAI). Less of a chasm to cross, more of a gentle river valley perhaps, but the thinking looks the same – offer customers a one-stop shop of the latest marquee technology, so they don’t have to go outside of the box to rival services.

In a statement back in January, Oracle’s Greg Pavlik, senior vice-president of AI and data management for Oracle Cloud Infrastructure, said as much. He noted that artifical intelligence (AI) is being embedded all layers of the tech stack, with GenAI integrated into all applications and databases.

“Instead of providing a tool kit that requires assembling, we are offering a powerful suite of pre-built generative AI services and features that work together to help customers solve business problems smarter and faster,” he said.

However, pinning hopes on GenAI does feel a little premature, especially in large software installations, according to Forrester vice-president principal analyst Liz Herbert, who said that “GenAI remains early for all”. While both Oracle and SAP boast some early deployments, the “market for GenAI in ERP is still in its infancy across the board”, she added.

Clearly, Oracle’s strategy is to create an end-to-end to problem solver for organisations uncertain of where to turn given the rising competition in infrastructure as a service (IaaS) vendors and the growing interest in AI capabilities, as well as multicloud solutions. On this front, Oracle claims it is “the only technology vendor that offers both a full suite of cloud applications and a next-generation cloud infrastructure specifically designed to run them.”

For Rob Cottrill, technology director at digital transformation specialist ANS, Oracle’s move to embrace GenAI could prove to “reduce the barrier of entry to using the software”, with users replacing previously complicated commands with short written prompts. 

“This new interface layer will have significant benefits to all Oracle software, specifically for its Fusion product which has a focus on business operations,” said Cottrill. “Not only will it allow for the software to be cleaner, less cluttered and outcome focused, it can also use the GenAI aspect as a selling point on useability.”

Cottrill added that this puts Oracle Fusion on a par with other software vendors, such as Microsoft and its Copilot. In short, it could be good for Fusion.

Gateway to GenAI

Certainly, Oracle continues to post strong financials – it finished 2023 strongly, with Fusion Cloud ERP revenue up 21% to $0.8bn for Q2 – while it was also named a leader in Gartner’s Magic Quadrant for Cloud ERP for Service-Centric Enterprises.

Maintaining growth through 2024, during a project go-slow (most consultancy firms will no doubt support this notion) will demand more reasons to invest and GenAI is one of those new must-haves for enterprise that could tip the balance when it comes to decision-making time.

For Mickey North Rizza, group vice-president, enterprise software at IDC, Oracle’s GenAI strategy makes a lot of sense. She said that she finds using “simpler lower level intelligence and automation to enhance current offerings, at no charge, behind the scenes, [is] a great pathway for Oracle to pursue immediately.” If anything, it removes the need for enterprise customers to look elsewhere when it comes to GenAI functionality.

“Secondarily, they can then create a premium tier of GenAI add-ons modules and capabilities that they can charge for,” adds North Rizza. “Our data has shown the business would be willing to pay 10-25% more for these capabilities.”

As Deloitte predicted in a recent report, for most enterprises, the ‘gateway to GenAI’ will likely be through broad enterprise productivity software suites, enterprise software tools or engineering, design, and software development tools, where “GenAI features are embedded in existing software, often going unnoticed by users”.

From this perspective, as well as that of North Rizza, Oracle’s GenAI drive makes sense, but will it be enough to attract stubborn on-premise users to Fusion or indeed stave off competition from IaaS vendors?

Under pressure

It’s not as if Fusion has had a smooth ride. Although it can boast an impressive list of customers – the Home Office, Heathrow Airport and ITV, for example – it has had its problems. The thorn in its reputation is Birmingham City Council, which last year revealed its struggles with an Oracle ERP upgrade project, which towards the end of the year was cited as a key factor in the council’s well-publicised financial problems. It doesn’t help the Oracle cause much, although public sector ERP project woes are not confined to Oracle. 

Herbert at Forrester said that while Oracle has been “seriously pushing to cloud since about 2011, for those who have not yet modernised, they are not facing any particular pressure to do so now”. It’s a different feel to SAP on that score, but – as Herbert adds – for many organisations, cloud is not necessarily a key purchasing factor.

“Customers shifting to modern SaaS ERP aim to get better user experience, more agility and greater innovation, including AI,” she said. “In several cases, there is no choice or very limited choice of the underlying cloud. While multicloud is a prominent theme in IT architectures, it is not generally a theme for an ERP purchase specifically.

“We usually see customers deploying ERP on a single cloud – or the default SaaS infrastructure offered by the vendor, as there is sometimes no choice at all. Cost matters, but the bigger factor is ROI [return on investment] to the business rather than just IT and systems costs.”

That ROI is key here, especially when you consider Oracle’s inclusion of GenAI capabilities. But is it enough? Iain Saunderson, CTO at Spinnaker Support is not so sure.

“GenAI is a great addition, but the general feedback we are getting on Fusion is that it is still not ready for prime time, and lacks the functionality and flexibility most customers need in an ERP,” said Saunderson. “So, while the bells and whistles – like GenAI – are great to add on, if the engine isn’t performant, the bells and whistles have little value.”

It could be a case of horses for courses but Oracle’s recent wins (The State of North Carolina, Riyadh Air and London Stock Exchange Group) are perhaps an illustration of Fusion’s broad appeal.

Sumber: www.computerweekly.com

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