Oracle At Helm Of 'Generational' Shift To Cloud

Cloud is not just a technical but a "generational" shift and Oracle is at the helm of it, Mark Hurd, chief executive of the company said in his keynote at the Oracle Openworld event in San Francisco. The shift is "generational" as along with cost reduction, cloud helps in driving innovation.

The logic is simple. Currently, over 80 per cent of the IT budget is being spent on maintenance but cloud will flip this equation. Businesses will now be able to focus on research and development (R&D) and 80 per cent of the budget is expected to be spent on innovation by 2025.

While the overall enterprise IT spending is flat, cloud investments are going up with the largest cloud providers growing at 44 per cent annually and generating about $30 billion in revenue of the trillion dollar market in IT. Companies like Oracle and Amazon Web Services are among the cloud providers which are growing at this rate, Hurd said.

Oracle is driving this innovation by increasing its R&D spend to $5.2 billion from $3.7 billion five years ago. The current R&D spend is 13 per cent of its revenue - one of the highest in the industry. Why is it high? "Because…as Larry said last night, we've rewritten all of our software, basically redone our entire portfolio for the purpose of going all in on the cloud," Hurd said.

Oracle's focus and growth in the cloud space is reflected in its just-announced Q1 (June-May) earnings where its software-as-a-service (SaaS) and platform-as-a-service (PaaS) revenue rose 82 per cent to $815 million taking its total cloud revenue to nearly $1 billion.

Oracle has opened more than 19 datacenters globally to deliver cloud and it is in the middle of rolling out some additional datacenter capability now.