Admit it. It’s 2016 and you still haven’t transitioned your finance applications to the cloud.
Don’t worry, you’ve got plenty of company. Most businesses and organizations—for a myriad of reasons—have yet to move away from on-premise enterprise resource planning (ERP) implementations.
But this hesitation isn’t enough to defy the inevitable pull of innovations in technology. A study from the American Productivity & Quality Center found that 76 percent of business leaders say their current ERP solution was unacceptable.
Hear that? Unacceptable.
The way Hurd sees it, there is a simple solution. He believes it isn’t a question of if you’ll eventually move your ERP solutions to the cloud, but when.
By 2025, the “irresistible force” of the cloud—as Hurd described it—will be the rule, given the current business reality where IT spending has been declining. During the next nine years, he predicts exponential growth in businesses moving their applications to the cloud in the following five ways, which are important for CFOs and finance teams:
Moving multiple functions to the cloud doesn’t just yield immediate cost savings, Hurd says; it also results in increases in innovation and frees up resources.
Given the gift of time, CFOs and their teams have the opportunity to do what they do best: innovate and lead. This has been borne out by companies that have moved their finance applications to the cloud: as they gain higher levels of automation, they free up more time for their finance teams to analyze, strategize, predict, and thus provide guidance to the business.
“I think budgets for the next several years aren’t going to go up. You’ve got to do more with less. How do I innovate at the same time as I spend less? There are very few things, as you go through your business career, where you can reduce your expenses and innovate at the same time,” Hurd noted.
There is absolutely no question in Hurd’s mind that the vast majority of enterprise applications will be in the cloud by 2025. In fact, he even called out that his own prediction of 80 percent migration to the cloud by 2025 may be low. While virtually all enterprise apps will be in the cloud in the future, the stragglers will come from two categories.
“I predict all that's left on-premise will be those applications that are so old there isn't a commercial alternative for them; or they're so unique in what they do in terms of differentiation—the payment system for a credit card company—that you keep them on-premise.
“Everything else will move,” Hurd predicts.
In terms of consolidation, Hurd predicts the shift will be seismic. A Wall Street Journal writer told Hurd, at an event, that there’s going to be 500 cloud application companies and all of these companies are going to buy from separate best of breed product companies. However, Hurd believes that by 2025, only two companies will capture 80 percent of the market.
“I think you will see people looking for simplicity, not complexity,” he said. “I think you will see applications actually built together. I think suites will win.
“Two companies—in the end—will have 80 percent of this SaaS market segment, which will be—at a minimum—80 percent of the entire applications market. You will see suite providers take the lead in this space. I volunteer us to be one of the two—and I’m unclear of who the other will be right now.”
So where can finance come up with a bigger piece of the pie for innovation? Hurd singled out development testing (Dev/Test) as one area where the cloud offers enormous potential for saving.
Dev/Test currently amounts to 30 percent of global IT spending. When done on-premise, Dev/Test requires a server, operating system, database, and development languages to do their work; it’s easy to see how expenses can add up.
Companies must ask themselves how they’re currently doing Dev/Test and why it isn’t done in the Oracle public cloud to achieve cost savings. Once they do, Hurd said, Oracle’s cloud solution will seem like a no-brainer: “Guess who owns the server? Guess who owns the operating system? Guess who owns the database? Guess who owns the tools? Guess how much computing you need to buy?”
The answer to each query, of course, is “Oracle”; it’s all available in the cloud.
More data is already stored in the cloud than in traditional storage systems. By 2025, Hurd predicts, less than 20 percent of data will be stored on-premise. In fact, Hurd believes his 20 percent prediction might even be too high numerically: “I actually believe you could wind up with that being 5 percent, 3 percent, 2 percent.”
Considering that, in the next decade, analysts predict that tens of billions of devices will generate massive amounts of data via the Internet of Things, there will be a staggering amount of data residing in the cloud.
In terms of security? That issue is an absolute no-brainer. In the simplest terms, Oracle has invested exponentially more to secure the Oracle cloud than a customer ever would.
Noting that the earliest Oracle customers included the CIA and NSA, Hurd humbly suggested that Oracle is well ahead of any customer in terms of securing all financial and personal data. That’s why he finds it so surprising when security issues arise.
“A board member would say, ‘I really want to know, is the data as secure in the cloud as it is on our premise?’
“My answer is, that's a joke of a question. It is more secure in the cloud than it is on your premise.”
Hurd could barely hide his enthusiasm as he looked to the future of cloud computing and the role Oracle is playing. Although he concedes the process may be a gradual one, he asserts Oracle is the provider that can connect applications in the cloud to on-premise if necessary. There may be some on-premise/cloud hybrids or even a la carte adoption of one or more cloud-based applications.
The real future, though, is in adopting and embracing a full-service cloud suite. With a captive audience of CFOs and finance team leaders listening, Hurd set out his vision for the very near future:
“[With cloud], the cost goes down. The amount of resources and innovation goes up. And that's why, I tell you, this is an irresistible force. This is not just about a new, cool technology. This is about strategy. This is about a business model.
“Our strategy is to lead this transition to the cloud. To not only be the suite provider, but also to be best of breed in each individual app and to have a suite of apps that work together.”
You’re going to move to the cloud…it’s irresistible. So, why not get moving today? For advice on where to start, we invite you to read our CFO Guidebook, “Best Practices for ERP Cloud Migrations.”
Statements relating to Oracle’s future plans, expectations, beliefs, intentions, and prospects are “forward-looking statements” and are subject to material risks and uncertainties. Many factors could affect Oracle’s current expectations and actual results, and could cause actual results to differ materially. A discussion of such factors and other risks that affect Oracle’s business is contained in Oracle’s Securities and Exchange Commission (SEC) filings, including Oracle’s most recent reports on Form 10-K and Form 10-Q under the heading “Risk Factors.” These filings are available on the SEC’s website or on Oracle’s website at http://www.oracle.com/investor. All information in this article is current as of June 15, 2016. Oracle undertakes no duty to update any statement in light of new information or future events.