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At its Oracle OpenWorld the multibillion technology provider showcased the breadth and depth of its cloud computing applications and platform. Chairman Larry Ellison proclaimed it the only unified and open approach in the industry. He criticized other large application vendors that use multiple platforms to support their applications, use a proprietary layer that is not fully extensible, provide only a portion of applications needed to run the business or run on Oracle’s database technology. These technical merits may not be relevant to the decision-making processes of business but can be critical for CIO and IT. But the strength of the Oracle Cloud Computing portfolio, which includes infrastructure, platform, tools and applications, is so impressive that our firm awarded Oracle the Technology Innovation Award in Cloud Computing for 2014. This builds from my analysis earlier in the year on the overall efforts of Oracle for cloud computing.
Oracle’s cloud application portfolio spans many areas of business, including human capital management, which my colleague Stephan Millard has analyzed. Its sales application portfolio also has reached a high level of maturity. Its efforts for sales organizations go beyond sales force automation (SFA) for sales reps and managers to other applications for those roles and sales operations and executives as well. In the years since its acquisition of Siebel Systems, Oracle’s position in this market slipped as nemesis salesforce.com became a major player. Now it not only has climbed back into a competitive position but has a more complete sales portfolio than salesforce at a more affordable price.
At Oracle OpenWorld it announced highlights of its advancements in sales. Oracle Sales Cloud version 9 advances sales force automation, partner relationship management and sales performance management along with adding support for mobile and social collaboration technology and sales analytics for roles from executives to front-line sales teams. The greatest changes as I see it are in the sophistication and usability of the sales applications and the embedding of analytics and collaboration that make them faster and easier to use. Oracle has ensured that the new versions are backward-compatible with previous iterations and integrated them with on-premises legacy systems such as Siebel and its own Oracle E-Business Suite to help customers that have mixed environments operate now and will migrate in the future.
Oracle has redesigned its approach to sales to focus on productivity enhancements in tasks related to meeting customers and updating information in more user-centric ways than most SFA systems have. For example, a new mobile application yet to be released, Oracle Sales Cloud Call Report App, enables smartphone users to review and update sales opportunities quickly and easily and to immediately see the impact of changes to forecasts and quotas. In a second area, collaborative selling, Oracle Sales Cloud Mobile is easy to use on smartphones and tablets, but still could improve in being more task and workflow based and be more optimized for touch gestures. In another area, however, Oracle has advanced beyond others: Oracle Voice users can interact verbally with the application to engage in sales at any time and place, even while driving. To reach this unique position Oracle partners with Nuance, as was announced earlier this year. It works on Apple iOS platform to enable a range of tasks to be conducted through voice operations.
Oracle knows that sales prospecting requires robust information that often exists outside the enterprise and across the Internet. To make it easier to get data from partners such as Dun & Bradstreet, the company announced Oracle Data as a Service (DaaS) for Sales, which enriches data with more than 150 attributes about organizations and 100 attributes about individuals. This product takes advantage of Oracle’s acquisition of BlueKai, which provides a marketplace for organizations to share and license data for use within their business. Oracle Data as a Service is a significant component of Oracle’s cloud computing platform and will be valuable for sales organizations.
In recent years sales organizations have become able to automate configuring products and quoting prices by adopting configure price quote (CPQ) software and integrating it with SFA to support interactions with customer prospects. Oracle’s acquisition of Big Machines complements the Oracle Sales Cloud by eliminating the need for a separate application that might not be integrated into the sales process. The company does market Oracle CPQ Cloud as a separate offering, but it is clearly part of the sales portfolio. The next step for Oracle in this area should be to enhance its portfolio for contract automation, which is a challenge that causes sales people and operations to spend significant time in creating a process and workflow of documents that legally define purchases, deliveries and invoicing.
Another key component is Oracle Sales Cloud Sales Performance Management. It uses analytics to manage and improve sales performance with applications designed for coaching and territory optimization. It also has a new mobile application for monitoring sales contests among teams in which progress toward quotas and goals can easily be seen and reviewed. Our firm takes a broad view of sales performance management to include operations, tasks and all sales processes; Oracle’s application is limited to gaining knowledge from analytics on sales activities. For other users seeking to manage sales compensation in general and the unique elements of incentive compensation the vendor has advanced from Oracle E-Business Suite Talent Management to Oracle Workforce Rewards, which includes compensation, benefits and payroll management as part of the Oracle Human Capital Management Cloud. Our benchmark research finds that the process of sales compensation continues to be an issue for almost two-thirds (65%) of organizations; it affects sales operations and executives along with individual sales reps, and for many it is a priority to improve.
Oracle has also expanded its analytics offerings for business. A relevant one here is Oracle Transactional BI Enterprise (OTBIE) for CRM, which provides a portfolio of analytics for forecasts, the pipeline and accounts and helps users understand past performance and predict the future. Analytics of the sales forecast and pipeline is another priority for sales; our research shows that scattered and inconsistent information are the top two impediments that drive about half of organizations to invest further in sales management systems. Oracle’s analytics build on its experience in providing operational reporting capabilities in Oracle Transactional BI Standard, which can present a range of metrics for insights on activities. New advances in sales analytics are evident in Oracle Mobilytics, which provides a sophisticated view of sales activities that can become interactive through visualization. There is also Oracle Sales Cloud Sales Predictor, which helps guide sales people on which products are most likely to be purchased. Overall Oracle has advanced the analytics in its cloud platform significantly this year. Recently it announced Oracle Analytics Cloud, which enhances its tools and the ability to access and embed them in Oracle applications.
As Oracle continues to advance its Sales Cloud, the products are less of a challenge than recognition of the company by customers as a leader in these sales applications. To be competitive in the market will require further investments in marketing and sales to gain momentum and customer adoption but also to continue to expanding the application portfolio. For the Sales Cloud Oracle currently charges $100 per user per month and considering the breadth of applications and analytics, this could be seen as very competitive; salesforce.com starts at $65 per user per month for the basic SFA, but the recently announced Salesforce Analytics Cloud will cost $125 per user per month of which both are significantly more costly. Others major application providers like SAP are also advancing similarly to Oracle for SFA and sales performance management but still have not been able to fulfill on the larger portfolio of application needs for sales operations and executives.
Oracle is a serious player in the market for sales applications and very price advantageous and innovative in its portfolio; we advise organizations to evaluate the company as one of the few that offers more than just SFA and operates in the cloud and mobile technology environment. If you are looking for an integrated suite of sales applications that can help everyone involved in sales, Oracle should be on your list for optimizing operations and maximizing sales performance.
CEO and Chief Research Officer,
In recent years line-of-business applications including accounting, human resources, manufacturing, sales and customer service have appeared in the cloud. Cloud -based software as a service (SaaS) has replaced on-premises applications that were previously part of ERP and CRM environments. They have helped companies become more efficient but have also introduced interoperability challenges between business processes. Their advantage is that cloud software can be rented, configured and used within a day or week. The disadvantage is that they don’t always connect with one another seamlessly, as they used to and when managed by a third party there is limited connectivity to integrate them.
Smooth interoperation is critical for business processes that use ERP. The hybrid computing approach to ERP was assessed by my colleague Robert Kugel, who identified the challenges in these early approaches to ERP in the cloud. As on-premises ERP, these applications were fully connected and integrated with process and data integration wired together through additional technologies. This configurability of ERP has been a large challenge and has led to failed implementations, as Robert noted. Understanding the complexities of ERP today is key to coming up with a solution.
One of the most fundamental business processes in organizations is tracking an order to fulfillment. That needs to be connected without manual intervention for transactional efficiency and to ensure data, analytics and planning are available. In fact our next generation of finance analytics benchmark research finds that ERP is the second-most important source of data being analyzed, after spreadsheets, and is the first-ranked source in almost one-third (32%) of organizations. In the transition to cloud computing this has become more complex. Applications that support the order-to-fulfillment process, for example, are increasingly being used individually in cloud computing, and many are being mingled with on-premises applications that require integration and automation to avoid manual intervention.
To start, orders are created by sales. Sales opportunities are created and closed with products and services purchased by contract or electronically. These must be placed in an order management system through which the record can be used by a multitude of systems and processes. Purchasing and fulfillment details are moved into an invoice as part of a billing application, then entered into accounting and accounts receivable where it is managed to payment. Finance takes orders and consolidates them into reports, typically in a financial performance management system. The order is then provided to manufacturing or fulfillment applications which build and deliver products, then fulfilled through warehouse and distribution management. The customer name and order number is also placed into an application that handles support calls or deploys services.
This is the reality of business today. Many departments and individuals, with different applications, are needed to support orders, fulfillment and service. If these applications are not connected organizations have to perform manual intervention, re-enter data, or copy and paste, which not only wastes time and resources but can introduce errors. Half (56%) of organizations do the integration through spreadsheets or exporting data, with custom coding being second-most popular (for 39%), according to our business data in the cloud research. (I will leave HR applications and the supporting people component out of this process though they play a critical role as an enterprise resource to support the order-to-fulfillment process and are part of many ERP deployments.) In addition performing any level of business planning is not simple as data is needed to determine past performance and plan for the future.
There is no simple way to make all this efficient. It has historically been managed by ERP, usually through a single vendor’s application suite. Now businesses want it done in the cloud, either on-premises or through other cloud applications. Proper attention must be paid to the needs and competencies of the departments and business processes involved. Thus migration and transition to ERP are not simple, nor is building an application architecture that supports process and data efficiently. Assessment and planning are necessary to ensure that risks are addressed. Switching to a new ERP system in the cloud will still require an application architecture to maintain proper operations across departments and existing applications, whether they are on-premises, in a private cloud, in the public cloud or in a hybrid combination. This integration among sales force automation, customer service and other systems is outside the scope of most cloud ERP deployments who have not provided the most robust integration points for the applications and data.
Robert Kugel writes that ERP must take a giant leap in order to operate in the cloud. I agree. Our firm often gets requests for assistance in finding the right approach to ERP and business process. While midsize companies find ERP in the cloud increasingly attractive, there are significant challenges to adapting and integrating such applications as part of business processes, which many customers overlook in their desire for a cloud-based solution. The majority of cloud ERP vendors have not provided integration and workflow of information from their applications to others in an open and seamless manner, complicating deployments and adding unexpected costs for customers.
ERP suppliers moving from on-premises to cloud computing have acknowledged the complexities. Many of the legacy ERP vendors have struggled to enable application interoperability and the differing management requirements of IT and business. This struggle has resulted in a lack of confidence by organizations wishing to migrate to ERP in the cloud and makes them wonder whether to look at alternative approaches with individual applications using integration across them and data to support business processes. Automation is another major concern. The lack of it across business processes has impeded finance groups in closing the books efficiently; our research on the fast, clean close shows many organizations losing four or more days.
In the meantime technological advances in integration technologies that operate in the cloud computing environment can interconnect with on-premises systems. The ability to simultaneously distribute transactions and data across systems makes the ability to architect business processes and workflows a reality. For some organizations the use of business process management and other integration technology approaches are being adopted. The new technologies are able to blend into many applications, so that users do not know they are working on applications from different vendors, nor do they need to know. These advances enable application architecture to interoperate and automate the flow of data from on-premises and cloud computing environments, providing new opportunities to interoperate from ERP or other applications. Many organizations are doing this today, and more than one-third of companies are planning or need to move data from cloud to cloud, cloud to on-premises or on-premises to cloud, data according our business data in the cloud research.
No matter whether a company is in manufacturing or services, they must address the integration complexities to gain efficiency and support growth without adding more resources. While many new ERP providers in the cloud are taking simpler approaches from the applications interface to how it processes transactions, most have not learned the importance of integration to other systems and the need for accessing and integrating data for transactions and analytics. Having consistency of data across applications and systems is a major obstacle in more than one-fifth (21%) of organizations and a minor obstacle in two-fifths (43%), and they find similar difficulties in the complexities of accessing data, according to our business data in the cloud research. In addition they lack effective planning (which of course is the P in ERP), and reporting is less than sufficient and often must be complemented by third-party tools.
All this introduces yet more complexity for business and IT in determining how they can move forward with ERP in the cloud, adapting existing and new applications to interoperate. The outlook for ERP in the cloud is thus uncertain. If these vendors do not adapt to the reality of what their customers want (as opposed to what they want their customers to do), it will remain cloudy. Responding to pressure to take an open approach that is easy to integrate, however, ERP providers could see a sunny forecast.
CEO & Chief Research Officer