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Finance | June 27, 2018

Mark Hurd on Vertical Integration, Risk

By: Lynne Sampson

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Information technology is going through a massive generational shift. The pendulum between multiple and single vendor configurations is swinging back to favor a more vertically-integrated technology stack: the cloud. This transition offers customers of all sizes better security and more innovation all at a lower cost—and it’s inevitable.

Then Versus Now

At Modern Supply Chain Experience 2018, Oracle CEO Mark Hurd asserted that this shift “is generational—you are going to see a complete change in the way IT works.” Giving insight into the history of the IT industry, he described how movement in the 1980s from a single vendor to multiple vendors initially offered customers more options. The opportunity to purchase different components from different vendors provided cost savings but increased complexity, giving rise to systems integrators. This complexity created more burdens on security and forced businesses to spend more time and budget on maintenance, limiting capabilities for innovation. Describing the current state of IT in an interview with Forbes, Hurd remarked, “The environments you see today in companies are really very heterogeneous, very disparate, very difficult to manage—frankly difficult to secure—and old.”

A Return to Vertical Integration

In his Modern Supply Chain Experience keynote, Hurd explained how the cloud changes all of that—it costs less, provides innovative features faster, reduces maintenance through streamlined configurations, and is more secure. Customers don’t have to worry about integrating all these moving parts, which means that they are able to spend more time focusing on their business. “There’s clearly a pendulum swinging back to more vertically-optimized stacks,” said Hurd, and this pendulum offers competitive advantages in today’s modern business environment.

The shift to the cloud also provides better opportunities for risk management—an increasing concern for executives. The limited set of stack configurations in the cloud means these systems can patch more quickly, improving security and reducing time spent on maintenance. At Modern Finance Experience, Hurd asked the audience a simple question: “Do you want core competencies in patching databases? Or do you want core competencies in gaining market share?” For many businesses, it’s an easy decision.

Innovations in Finance: Automated Processes and Improved Risk Management

Within finance, moving to cloud applications means less time spent on security and compliance. Businesses get access to the latest technology and innovations faster, with cloud deployments incorporating new features like artificial intelligence to streamline workflow and augment existing processes. These advancements will allow for better reporting, minimize human error, and automate compliance. This new integrated model of financial systems has changed customer expectations, explains Hurd: “Executives will demand those AI-enhanced capabilities out of the box, built into their companies’ human capital management, enterprise resource planning, supply chain, and other cloud applications.”

Vertical integration in finance is changing how innovation, security, and maintenance will affect businesses moving forward. Learn more about how artificial intelligence is shaping the future of ERP.

Lynne has 25 years experience in writing, journalism and broadcasting. She spent the first 10 years of her career at the Canadian Broadcasting Corporation, covering major news events such as the Quebec referendum, two federal elections, and the crash of Swissair flight 111 - coverage of which won a Gemini award for “Best Live News Special.” Since then, Lynne has worked in marketing and corporate communications for high technology companies such as Whitehill Technologies and Skywire Software. She currently works at Oracle as managing editor of The Modern Finance Leader.

More about Lynne Sampson

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