Oracle in Focus: The Industry Analysts’ View

Michael Krigsman: Oracle is a $40 billion company, almost $40 billion in revenue! Oracle has been in business; it was founded in 1977, so it's been in business for 40 years. It's one of the major technology corporations in the world. Today, on Episode #261 of CxOTalk, we are speaking with three of the top analysts in the world; and we are talking about Oracle Corporation.

I'm Michael Krigsman. I'm an industry analyst and the host of CxOTalk. I'd like say a quick thank you to Livestream for being a great streaming provider. If you go to Livestream.com/CxOTalk, they'll give you a discount on their plans.

Without further ado, let's begin our show talking about Oracle Corporation, looking at their technology, looking at their business, looking at how they've evolved over lo these many, many years. To begin, I'd like to introduce Liz Herbert, who is an industry analyst with Forrester Research. Hey, Liz. How are you?

Liz Herbert: Hi, Michael. Thanks for having me on today's show. As mentioned, I'm Liz Herbert. I'm one of the analysts here at Forrester Research on the applications team. I've been with Forrester since 2002, so I just had my 15-year anniversary. In that time, I've had the opportunity to track many of the development that's going on in applications, as well as application services. Of course, one of the big shifts, which I'm sure we'll be talking about today, has been the shift to the cloud. Thanks again for having me, and welcome to everybody.

Michael Krigsman: Well, Liz, thanks so much. This is your second appearance on CxOTalk.

Liz Herbert: Yes.

Michael Krigsman: It's great to have you back. You and I bump into each other at conferences all the time, so it's good to chat with you here.

Now our second industry analyst is Neil Ward-Dutton. Hey, Neil. How are you? Welcome. This is your first time on CxOTalk, so welcome.

Neil Ward-Dutton: This is my first time, Michael. Thank you very much. It's a real pleasure to be here. Yeah, my name is Neil Ward-Dutton. I'm the research director at MWD Advisors. We've been in business about 12 years now, since 2005, and we now have a community of about 7,500 kind of IT and business managers and doers, people like architects. Our focus, for anyone who doesn't know us, is how digital technology changes work. It's a hugely exciting area to be involved in. Yeah, that's really what I'm focused on, and I'm really pleased to be here, so thanks a lot.

Michael Krigsman: Great! Fantastic! How digital technology changes work: I suspect that is going to be one of the topics that we touch on today.

Neil Ward-Dutton: I hope so.

Michael Krigsman: Last, but not least, I'd like to welcome another analyst who has been on CxOTalk before, Mike Fauscette, who is currently with G2 Crowd. Hey, Mike, and welcome back to CxOTalk.

Mike Fauscette: Hey, Michael. Thanks. Nice to be back. I think this might be my third or fourth time now. I don't know. You keep asking me, so I guess I did okay. Yeah, G2 Crowd, I'm the chief research officer, and I've been here almost two years now. I came from IDC before that. I ran the enterprise applications there for about ten years. Also, while I was at IDC, I was the lead analyst from the firm for Oracle, so I'd worked with them quite a bit through the years.

Michael Krigsman: Fantastic! Now, as I mentioned during the opening, Oracle is a very large organization. It's been in business for 40 years now. Any company that has been around for so long has evolved, gone through changes.

To begin, let's try to place Oracle in context. Mike, I'll ask you to say a few words. What's going on with Oracle today and, over the last number of years, where has the company, how has the company evolved?

Mike Fauscette: Michael, the industry itself has changed quite a bit over the last 20 years, really; but in the 2000s when we started to see a lot of consolidation, Oracle was one of the companies that really led that charge of bringing other application companies in and expanding their application portfolio so that it became really quite broad. Then, at some point, they started on this transition path building out solutions that would work on the cloud, all the way from the infrastructure and up the stack, all the way to applications.

I'd say, for the last several years, they have been really focused on changing the relationship, changing the way they do business to do this ongoing subscription-based business around almost all the products, product lines anyway, that they sell. Certainly, they still have a lot of legacy customers, and they have older applications that are on premises still, but the bulk of what they're selling new now is cloud-based, and that runs from the database up through the application layer. It was definitely a company that's been in transition, and they are pretty far down the path now.

Michael Krigsman: Other analysts, Liz, your thoughts? You focus on services and also applications. What are you seeing in the market with respect to Oracle today?

Liz Herbert: Sure. One of the things we've seen is that, like you said, they're one of the largest technology suppliers out there, and sometimes that means they're not the fastest. They don't necessarily take risks the way that some smaller and more startup-type companies do. For example, it's well known that Oracle was a bit late to the overall cloud competition that we see looming large in today's applications market, as well as platforms and infrastructure.

That said, when they invest, they go big. One of the things that's been notable about Oracle is that, where they're jumping into a new area of customer demand, they're able to put a significant amount of investment behind it. In fact, there's something very unique about the company, which we haven't really talked much about yet, but because Larry Ellison owns such a substantial part of the overall company, they're able to take decisions in a way that many other public companies of their size would not be able to. That's had a strong influence on where they invest. Cloud is an area where, though they were a bit late, they're clearly making significant investments. You can see that in the way they treat their salespeople, in the evolution of roles like customer success, as well as of course in the products where those investments are heading.

Then, similarly, we're all seeing there's yet another wave of technology looming. This is the wave of, I'll call it, digital technologies; but what I mean is artificial intelligence and machine learning, automation, and Internet of Things. You see that if you look at what Oracle has been investing in more recently. They as well are jumping on that wave. Again, they weren't the first, but they've certainly got some deep pockets, and we're seeing them put a lot of muscle behind that now.

Michael Krigsman: Neil, another component of this is not just database, not just enterprise applications like ERP or CRM, but also all kinds of infrastructure and platform as a service. What do you think about that? What are you observing there?

Neil Ward-Dutton: All the stuff that kind of sits between; the filling in the sandwich. Well, it's a pretty crucial part, although often it doesn't really grab the headlines in the same way the other parts of Oracle's business do. My sense, I'd really agree with the other guys here and place a slight twist on it.

A few years back, I think Oracle and Larry Ellison was famous, wasn't he, for saying that cloud was kind of lunacy and complete craziness. It was clear to see at OpenWorld that all the executives kind of precess onto the stage one by one and really proclaim this kind of cloud conversion. It's really kind of an about face. Like Liz said, huge, hugely kind of radical shift for the company over a pretty short space of time.

Now on the platform side of things, fundamentally, my view is that Oracle's strategy is kind of defensive, but that's not necessarily a bad thing, nor is it surprising. Its position and its strategy is fundamentally about realizing that the center of gravity for the foreseeable future for new investments is going to be cloud. It's all about being there when customers want them to be there, to kind of minimize opportunities for customers to go anywhere else, to make sure that they always have something that they can offer customers when customers go to town and want to do things.

Fundamentally, a defensive strategy, but actually one that makes a lot of sense when you think that Oracle has, what, 400,000 or 500,000 customers. It can actually do very a healthy business by just making sure that it takes its customers on the journey to cloud, and it provides the services they need as they take that journey.

I think the other thing to just round this out is to point out that Oracle has, for a long time, really been about pitching to mainstream, slightly conservative buyers. When Oracle talks about 6 Journeys to the Cloud, what it's really saying is no matter how fast or how slow you want to go, we'll be there for you, and we'll hold your hand. This is fundamentally a trust and a safety message that they're playing here.

Michael Krigsman: I think, just to kind of link two of the threads here, it is quite amazing how Oracle has embraced the cloud and the speed and the focus with which they have done that. I think it was to Liz's point; unlike other companies that are more concensus driven, which has a good side and a bad side, Oracle has a clear leadership, a clear leader at the top in Larry Ellison. The company lines up behind that vision and that mandate. As a result, I think that's a big part of the reason that it's been able to embrace the cloud so rapidly. Any thoughts on that? Mike, you've been watching Oracle for years. What do you think about that?

Mike Fauscette: Sure. Well, it's a good point. I think that they do have a nimble focused leadership team. Larry Ellison certainly is savvy enough from a business perspective. I used to laugh when I would go to the investor days and have Larry stand up and really throw rocks at all the cloud players. I know one meeting the quote was, "I love this cloud stuff. I told my marking people to put cloud on everything." In that day, he was doing what any good business person would do. He was selling and growing the business he had. But behind the scenes, he was building out and working on technology that would actually stand up five, six years after that and be a cloud offering.

Now, of course, they also acquired a lot of solutions on the way, too. But they have a broad cloud portfolio, and don't think that that was accidental. Some people think maybe it was, but I never thought it was. If you look at Larry Ellison's investments--

Neil Ward-Dutton: [Laughter]

Mike Fauscette: Netsuite and Salesforce, and very early on both, by the way. He didn't miss this. I never thought he did. I think that the company moved slowly because they do have a conservative set of customers. But they moved at a pace that is now showing itself to have worked out well. There are a lot of large companies that are investing and buying Oracle applications in the cloud and talking about Oracle as a partner, which, let's be honest; there were times when that language would not have been perhaps used.

They're definitely shifting the way that they interact with customers and the way they sell their products. Somebody said the sales force shifted quickly. Yeah. Sales forces shift when you pay them, and they pay them handily to focus on cloud and, guess what; the focus on cloud.

Michael Krigsman: Hey, Liz. You talk with a lot of customers, and you're focused on services. What about this notion of Oracle kind of moving closer to the customer, becoming more responsive to customers? They've hired a chief customer office. What do you think about that?

Liz Herbert: Sure. Like it was said earlier, I think that's a huge shift. I, as well as others, had noticed the big shift this year at the Oracle OpenWorld event really featuring different elements, really putting that customer success story front and center, and that's notable. We see that more and more companies realize that the whole shift to the cloud has really meant partnering with strategic members because, when you buy the cloud, you're not really buying features and functions. You're buying a long-term partnership where you trust that they're going to be making investments in the features and functions that you're going to need in two years, three years, or four years. That's a big shift from when you would do a big RFP and buy a large package software and then use it for the next number of years, maybe doing some upgrades here and there.

Now, I love that they put more of a focus there, as well as I think they've done a good job showing how they are starting to change that culture now from a culture that made a lot of money selling sometimes tens of millions of dollars in software packages to one that now wants to be in the business of subscription-based pricing or pay-as-you-go, depending on what product you're talking about. To do that, we've all seen the numbers with other firms who are pure cloud. You need to be able to renew deals, and you're not going to do that if you're not going to be more of a partner. That's a market shift that we're seeing in not only their culture, but also in the types of roles that they're prioritizing.

Michael Krigsman: Neil, your thoughts on this with respect to cloud as infrastructure as opposed to software as a service?

Neil Ward-Dutton: Well, I think something that's really, really important to remember, like you said at the beginning, Michael, Oracle has been around for 40 years. What was happening at that time? What was it that gave birth to Oracle? Well, it was the client server revolution, right? It was the shift from mainframe and midrange computers to land-based, client-server-based computing.

I think Oracle really deeply understands the power of these huge, periodic shifts, kind of episodic shifts in platform, and we're obviously in the middle of another one right now. To me, it was always a bit absurd when we heard execs from Oracle a few years back saying this is all crap, basically. It makes complete sense now that they're finally really properly getting to grips.

Again, echoing Liz and Mike's comments, I think it's really, really important to see that Oracle is changing its culture and focusing more on customer relationships and maintaining those close relationships with customers because, yeah, unless you have those high renewal rates, you're really going to stuff yourself, fundamentally, in the long-term. Oracle has always fundamentally been trying to maintain long-term relationships, so it's needed to make that shift.

I think, again, I'm going to probably spend a lot of time saying, "Oh, yes, like the others said," but again, like the others said, like Liz said particularly, we're seeing now a new wave of technologies kind of enter people's consciousness in leadership positions around AI, around robotics, around machine learning, all those things. Another thing that was really interesting to see in the context of that platform business at OpenWorld was, Oracle is not holding back. You might think that, given I said a little while ago that it's fundamentally pursuing a defensive strategy.

We might think it's really just doing good enough, but I do believe that actually Oracle is pushing further than that. It's actually trying to go further than just good enough. Certainly when you look at what it's doing around chat bot based channels, when you look at what it's doing around AI frameworks, machine learning, and even blockchain, it's not just putting stickers on bits of paper. It's actually pursuing these quite seriously and with quite a lot of thought. To me, that's a really encouraging sign. It's not just doing good enough because I think that would be very dangerous.

Michael Krigsman: What's really interesting to me, hearing the three of you talk, is if we would have gone back in time, say, even three years ago. I think the tone would have been less positive. This is a very positive tone, right, Neil? I mean the things you're saying.

Neil Ward-Dutton: Well, okay. [Laughter] Let me fix that.

Michael Krigsman: [Laughter]

Neil Ward-Dutton: I do think there's a lot to be positive about. I think the challenge that Oracle still has is fundamentally a challenge that lots of companies that have been around for 30, 40 years have, which is, how do they convince the broader marketplace that they are partners of the future, as well as partners of the past? Right? Focusing properly, and executing properly, around things like blockchain, chat bots, AI, and ML, all that kind of good stuff, that's really important. But, fundamentally, it's also not enough.

It seems to me, the real challenge for Oracle is, how does it engage with the people who are building new businesses and the people who are building businesses within businesses, those entrepreneurs who are now driving digital transformations and so on? How does it convince those people that it is actually there for them, as well as the people who invested 10, 15 years ago in Oracle's e-business suite; in some of its CRM technology; or 20, 30 years [ago] in its database?

I do think it's not all like a rose garden. There's still a lot of work that Oracle has to do. That's not about actually fundamentally building product; it's about telling stories in a way that makes sense to the people who are now driving the agenda. I don't think it's quite got that right yet, but I'd love to know what the others think as well.

Michael Krigsman: Yeah.

Liz Herbert: I'll add something, Neil. I love what you said earlier about the path to the cloud, how it really gives any kind of a company options in terms of their level of being conservative, being willing to take more risks. Some of those factors are economic or also to do with the competitive set that they're in.  If you're a financial services company, there's so much pressure on you from fin-techs and everywhere else that really have to change boldly.

On the other hand, if you're in one of these resources industries or some of the utilities areas, and I'm talking about really oil and gas more than utilities, they've got some financial issues going on. There's been a lot of volatility in the pricing. While they may want to be disruptors and think ahead to a digital business, they've got a lot of stark realities about living in that kind of cost constrained environment.

Listening to what you said earlier about the path to the cloud, I fully agree with you. That's something that's a real asset for Oracle to be able to market. It's exactly true what you said where you've got these customers. They could be running e-business suite or PeopleSoft.

We are all industry analysts, and we're in the business of looking at where is the market going. Of course all of us day-to-day are talking to end users who are deploying these technologies. Many of them, for whatever reason--and some that are probably not the right reasons, but some that are--they just can't jump ahead that quickly. I think that's exactly right. That's the real power of some brand like Oracle that can keep a foot in the old and keep a safe path for customers who have the desire to do so, while also trying to push this vision of the future and make that as easy of a path as possible through various different channels they've got.

Michael Krigsman: Mike Fauscette, your thoughts on keeping a foot in the future and, in the past, coming out of the past.

Mike Fauscette: I think it's an interesting point to say that customers and business, in general, change. We know, and you hear people talk about digital transformation. We think about platforms, and we think about this new way technology plays in business. It's much more into a competitive differentiator, a competitive advantage. It's something that companies that jump ahead can really leapfrog competition by using technology and people in the right sort of combinations.

Fundamentally, the way that companies think of what they want from the technology has started to shift. Now there's the conservative middle that'll follow that isn't out on the edge yet. You think about companies like Oracle, Salesforce, and others that have to be able to work in that environment. They have a business they have to maintain and, at the same time, they want to start to help those customers shift, move in the directions, and have the things available that can help them do that.

You saw it. We mentioned artificial intelligent, IoT, or blockchain. Those technologies are out there, and you are seeing companies start to use them, but they aren't a thing that stand by themselves. They're embedded inside a platform, and they become a part of this digital infrastructure and platform and fiber of this new company, as they move forward.  Having that available is really important. They may not use it yet, completely. They may not go there all the way yet, but they need to see that if they partner with a company like Oracle, Salesforce, or the others, that they've got a partner that is investing now and going to continue to invest and evolve because we all know that that technology and the use of that technology is going to evolve.

What's the end state for a digital business? I have no idea. I know that it's a journey. It's a long journey, and it's something that a lot of businesses are still going through. They want a partner to go through that, and I heard that more this year than I've ever heard from Oracle customers--the ones that I talked to and interacted with--that Oracle was stepping up and being that technology partner as a part of this whole cultural and technical shift that they were going through.

Michael Krigsman: Yeah, and I also, as I was at OpenWorld talking with customers. You have a stronger sense, or one has a stronger sense, of cooperation that's taking place. It's too much of a stretch to say that we now have a much kinder, gentler Oracle. [Laughter]

Mike Fauscette: Yes. [Laughter]

Michael Krigsman: But there is something going on. We have a question from Twitter, from Arsalan Khan, on an aspect of this, who asks about Oracle's willingness to share data, talk to other software, things like that. Anybody want to make a comment on that? I think, when you look at APIs, and you look at data exchange and interoperability, that's a sort of technology reflection of the openness state of mind, so to speak. Any thoughts on that, anybody?

Mike Fauscette: I think it's a reality, Michael. I think that the days of the proprietary stack, I mean they like that. They have things that can be proprietary, but the idea that you can stand alone and not be integrated, not be open enough to integrate across mixed environment. The IT shops in the Fortune 5000 are all hybrid right now, and they have all sorts of combinations of cloud and legacy. If they can't operate in that environment, I think that they simply can't serve the customers that they're trying to sell to.

Michael Krigsman: Neil, you look like you were going to say something as well.

Neil Ward-Dutton: No, that's fine. Really, I suppose, to echo Mike's point as well, we see through surveys that time and time again CIOs and other kind of people driving technology investments tell us very, very clearly that when they're looking to make investments, openness and flexibility are more important than the feature lists. Right? Whereas, if you go back 10, 15 years ago, it would have been very much more about, okay, does this product, as a thing with kind of hard edges around it, a set number of things that I need it to do?

More and more, we see tech leaders prioritizing, okay, how open and flexible is this platform? I think if Oracle were to ignore that trend, it would be toast. It would be completely left behind.

You can see it as part of the paths strategy. You look at support for what many people would refer to kind of polyglot environments. If you go back five, ten years, Oracle would say, "Well, you know what? You've got Java. You've got some Java frameworks in there that we built. They're kind of proprietary. If you want to do anything else, well, good luck."

Now they're saying, "Yeah. Yeah, you can do that. But also you can do Ruby. You can do PHP. You can do all kinds of stuff, and that's all cool." I think when you marry that to, like you said, Michael, what's happening around APIs, what's happening with things like the Oracle integration cloud service, is that these things are all absolutely fundamental to the proposition that Oracle has to make now.

Something else just occurred to me as you were talking. One of the things that really stuck in my mind from OpenWorld was--I can't remember who it was now--[someone] said, "The Oracle cloud is the only cloud you will need to run your business," which to me is pretty stark and interesting kind of marketing statement, right?

The immediate thing that came to my mind when I heard that was, "Well, what about the cloud you might need if you want to change your business, not if you just want to run it?" Well, if Oracle is to have any chance of playing that game, openness and flexibility have to be at the heart of what they're offering. In today's environment you can't have a change agenda which isn't fundamentally based around open standards, open protocols, open programming language, open programming models, and even openness to different venues for hosting: on premise, private cloud, public cloud, somebody else's cloud. These are all parts of the game that they have to play.

Liz Herbert: I'll add something to that. I think you've made some great points, both of you, Mike and Neil, about the open architecture, the open standards, and how Oracle has shifted as far as that goes. What else I've seen is they've just become more open, generally. I'm talking about culturally they've become more transparent, more open. They're more happy to share a customer reference. They're more happy to discuss who are their logos for some of these new products that they want to talk about. To me that's another part. You both raised a great point that when companies are selecting technology partners, they're going to look to see if they are open in terms of the technology, but they're equally looking to see if they're open in terms of their culture, and that's something others and I have personally noticed watching Oracle over the last few years.

Michael Krigsman: Now, I just want to remind our audience that you're watching CxOTalk. We're talking about Oracle Corporation, and we're speaking with three top industry analysts: Liz Herbert, Neil Ward-Dutton, and Mike Fauscette. Right now there's a tweet chat going on using the hashtag #CxOTalk. It's a perfect opportunity for you to ask questions about Oracle or anything else you want to these three top analysts.

Liz, don't go away because I want to turn attention to the Oracle applications. What's happening from a software standpoint at Oracle? Can you share your thoughts with us?

Liz Herbert: Sure. I'll share a few observations. One is what we've been discussing the last 30 minutes that they have made a significant investment towards cloud. Most of the core applications, if you look at ERP, HCM, and CRM, and now supply chain and other areas, they are now available as the cloud.

What's notable about Oracle's strategy as it relates to the applications moving to the cloud, which really is more and more part of the strategy we see with customers, is that they are a very comprehensive portfolio. While we might talk about giants in the cloud space, particularly pure plays, Oracle offers a very comprehensive suite available on the cloud. To me, something different about this approach to the suite that is different than what we saw in the '90s and in the early 2000s is that, by design, the nature of these cloud modules is that you don't have to bite it off all at once. They've enabled a lot of different types. Just like we were saying with the path to the cloud and the path away from legacy applications, they have enabled a lot of different approaches, a lot of different entry points to try and use those.

A lot of the clients that I'm working with, what they like is that they are able to go to fewer providers. I think some of the clients I've worked with, they're getting soured on this litany of SaaS and cloud applications. Going best of breed is certainly in fashion right now. But, just like any other time in history, too much best of breed is a bad thing. There's a cost of doing that in terms of the vendor management, in terms of the overhead, in terms of not getting great discounts because you're buying small chunks of software from everybody. That's a couple comments.

The last thing I'd want to highlight is, Oracle has really made great investments in industry. Mike Fauscette referenced earlier the acquisition binge that they were on in the early 2000s. Some of those companies were very deep, industry oriented companies such as Retek for retail, Stellent, and others, so a lot of them in retail and utilities. In healthcare as well. What's notable about where they are today with their application strategy is those industry specific applications lag the horizontal ones.

I know I'm working with clients who are keenly interested to move more and more of their portfolio to the cloud. They want to work with Oracle for a variety of reasons, but that's got to be the next phase for them because, today, there's not that much there. However, if you look broadly at SaaS adoption, cloud adoption, it's been pretty horizontal across the board, across every vendor, and that's the pattern of adoption we've seen. It's not to say that other competitors are outpacing them, but that's an industry wide challenge we're tracking as well.

Michael Krigsman: That's really interesting because this notion of companies wanting to reduce, say, the vendor footprint, reduce the number of vendors just for simplicity sake and, therefore, going back to suites. It requires that trust that we were speaking about because, if you're going all in on a suite, you better feel good about that vendor. Make sense, Liz?

Liz Herbert: Yeah, absolutely. I think the other point I'd add about something else that's different with today's suite is back to the point we talked about with Open. One of the other trends we're tracking is this idea of path ecosystems, or you could say cloud ecosystems. More and more leading applications vendors are in the cloud, first of all. Second of all, they offer an ecosystem play. This could take the shape of a marketplace or other similar flavors, but essentially that's another factor that our clients are looking at too.

They may want to buy from a vendor like Oracle who has got a wider portfolio of applications. But, inevitably, they will also need to promote those truly best of breed, niche applications that aren't going to come from that vendor. That's been another shift we're seeing is some of the clients I'm working with are starting to think about that during vendor selection; not just what is the vendor, are they open, do they have great culture, all the things we've talked about, but then also how do they foster an ecosystem? Do they really make it easier for me to consume and do they really encourage; or do they say they have an ecosystem, but they've been trying to cut into their business at every turn? That's another important battleground that we've seen. It's early days for that as well.

Michael Krigsman: Now another point that we haven't touched on really at all is the Oracle database. We've been talking about Oracle as a cloud company, as an infrastructure cloud company, as a software as a service company. What about the database? That database still runs business in many, many, many large organizations. Mike Fauscette, do you want to give us a quick overview on the database?

Mike Fauscette: Sure. Think about how unusual what you just said is. We just spent 40 minutes, or whatever it is now, talking about Oracle, and we haven't brought up the database once. How often would that have happened two, three, or four years ago?

Just like the tech industry, we've seen software for years. Most companies that were really successful, wildly successful, had a product that was a category killer product. The database, of course, was for Oracle. Certainly, they invested and continue to invest in evolving that offering. While the world moves to the cloud, it doesn't change the fact that, underneath that, there still has to be a place to put all that data. Some of it is unstructured now, of course, but some of it is structured. Oracle, of course, is invested across both of those and in the cloud, so to compete with Amazon, Microsoft, and others there. They have continued to evolve the database.

The big announcement this year was 18c. That's the database evolution that Larry Ellison talks about that was the autonomous database. The idea, if you just take it in its own sort of little bubble, it seems like a pretty interesting idea.

We've seen a lot of issues with keeping software current, particularly from the security standpoint. The Equifax breach is a great example of, "Oops, we forgot to patch this little thing," and what did that do? It opened up a huge window. That's just the reality. It's difficult to keep things up to date.

Now if you could have software or a database that has the capability to take through several different types of technologies, the capability to do things automatically, autonomously--so there are two different things there--then that's a pretty good proposition. It made a pretty big splash if you think about the impact to the database.

It's a combination, though. It is database as a service, and it's not in the autonomous iteration of it. It's not just a database. It's also the Oracle operations, cloud operations team, and a whole sort of offering that goes around that that makes it completely autonomous.

It is also automatic in that it has a lot of features that do happen. It's self-provisioning, it's self-tuning, it's self-optimizing, things that you used to have to spend a lot of DBA (database administration) effort doing. Now those are automatic or can be automatic. Then they could also be autonomous, so you don't even have to do anything other than define the policy. That's a real shift.

The idea is not to replace DBAs, by the way. It's to free the DBA up to do things that are more strategic and look across the business and add more value to the way we use data, the way we analyze data, and other things there.

It's a really interesting offering, and it's available in December in its first iteration as a data warehouse. Then next year an OTP version in June, I think, is the target, but it's not completely baked yet. It is definitely moving, and it's an evolution, the combination of a bunch of technologies that they've been working on for many, many years.

Michael Krigsman: This notion of the autonomous database that you don't have to patch, I have two questions. Number one, why is that important, for example in security?

Mike Fauscette: Yes.

Michael Krigsman: Number two, they're announcing something that is not going to be fully fleshed out maybe for perhaps another year. They'll ship part of it in December. How real is this, and how likely is it that they'll actually be able to deliver on that promise?

Mike Fauscette: The interesting thing is, if you start to unravel it a bit and look at its base level technology, a lot of the features, a lot of the capabilities were already in 12c when they released 12c. The one thing about Oracle and the database, there are very few times in the history of their releases where they have done this huge gab between what they did before. It's a continuous path of innovation that keeps them ahead in the database, and it just combines all of those new features and adds some new capabilities in each time they release the new one. They have a great history of being able to do exactly that, to hit those releases for the database. I think that there's good confidence in the customer base.

Then to talk about your first question, though, the automatic piece, the patching piece particularly, this is a really complicated problem for a lot of businesses to make sure that all of the software in your stack has been patched on a regular basis, even just to know all the patches that are available for a mixed stack that probably has some open source in the infrastructure. It probably has different vendors involved in that. It's very difficult to do that, to keep everything current. Like I said, the Equifax security breach recently is a good example of that. It was a missed patch that had been available for months, and they just hadn't applied it.

In the new database that Oracle is talking about, it has the capability to either, once a quarter, apply all the patches automatically, or you can even, in critical cases, define for it to happen automatically when the patch is released. There's a certain amount of control from the user, but it is automatic.

Michael Krigsman: And it matters.

Mike Fauscette: And it matters.

Michael Krigsman: Yeah. [Laughter] Well, we are just almost running out of time. We have a few minutes left, and so what I'd like to do is ask each of you to kind of share your view of the next two, three years of the future. Where do you see Oracle evolving? Neil, do you want to take this from an infrastructure and a path point of view? Do you want to try that?

Neil Ward-Dutton: Sure. Yeah, thanks very much. Where do I see Oracle in the next two, three years? Well, like I said earlier, you might expect that Oracle would be kind of doing just enough because, fundamentally, more broadly it's playing a defensive position. It makes no secret of the fact that it's all about kind of shoring up its database business, shoring up its enterprise apps business, and making sure that, as people move to the cloud, they don't have reasons to go look anywhere else.

You might think that they're just going to do good enough. I would say that barring any surprises in terms of kind of big executive shakeups or huge changes in direction because of some kind of mega acquisition, I would expect that Oracle continue to maintain their position, maybe not at the very, very leading edge of kind of platforms as a service capabilities, but not far behind. Really being, I guess you might call them, a fast follower in terms of implementing the capabilities that we talked about early, whether that's IoT related, chat bot related, AI and machine learning, blockchain, and all that other stuff.

From what I saw at OpenWorld, and what I've seen from talking to execs at other venues, they continue to place a lot of importance in these investments. To me, the only main question that remains is to what extent, fundamentally, in the field do they end up trying to drive those capabilities into new parts of the market, and to what extent they focus on mainly trying to make sure that their existing core customer base takes some of these things up. To me, it's really a question of how big the box around Oracle is. Is it basically the same size box as we have today, or does Oracle really try to grow that box out?

Yeah, does that answer your question?

Michael Krigsman: Yeah. The question about the Oracle footprint; where is Oracle going as far as that footprint trajectory? Liz Herbert, your thoughts on where things are going and maybe look at it especially from an applications and even a services and customer relationship perspective.

Liz Herbert: Sure. A few major shifts I think we're going to see in the next three years: one, we started to see traces of it at OpenWorld, would be the real shift of applications that now embed next generation technologies like artificial intelligence, automation, and blockchain. One thing Oracle is doing very well is making that not as a standalone, separate part of their story, but really showing what that means in the context of CRM, in the context of supply chain, et cetera.

Mike Fauscette: Right.

Liz Herbert: I expect, in the next three years, we'll see significant advancements there. The market is starting to look for it, and they're clearly putting a lot of muscle behind it.

Second, I think the industry story will start to become very, very strong. We're already seeing that. You mentioned the partners. I know, talking with a lot of their services partners, that's where they're investing. Service partners know industry. They tend to be very, very deep when you talk about not just a broad industry like financial services, but a sub-industry within there like loss management or even more specific than that. That'll be a big part of the story in the next three years, I believe.

Third would be the shift to data as a service. They talk about cloud with one extra layer on it versus a lot of companies; infrastructure as a service and platform as a service or some combined platform; software as a service, clearly; and then data as a service. Right now most of the use cases they've promoted at the recent Oracle OpenWorld event tend to be marketing in nature, at least most of the ones they showcase, but you could see applicability everywhere. One of the shifts that you get moving to a one version, multi-tenant SaaS offering is that you've got very unique analytics. You can do great analytics on compensation, HR recruiting processes, or supply chain processes. That's a third thing that we'll see.

One final thing that I want to tie back to something Mike Fauscette said earlier, right now the story has been really about the shift to the cloud and some of these next generation technologies, but what they haven't done a great job of yet is showing fundamentally reinvented business models, new business models based on Oracle's technology. I expect, within three years, we're going to start to see them tie together through technology and investments with real disruptive business stories. Their competitors are doing it, and so the industry demands us of that.

Michael Krigsman: Okay. It looks like, Mike Fauscette, you are going to get the final word. Where is Oracle going over the next three years?

Mike Fauscette: [Laughter] Oracle has proven, through the years, and I've watched them closely for 12 years, and certainly more than that as a competitor before that. They're very good at playing a longer game than you guess they are playing. I think a lot of analysts, a lot of people, customers even, have in the past maybe thought that they were short-sided around certain things. But if you look at the longer play, and you look at how much they have done, I think you're right, Neil; they're not going to be the bleeding edge of anything because that's not where their customers want them to be. But they can easily be a fast follower that does innovative things inside of a continuous innovation paradigm.

If you trace where they have been, the story has been really consistent for at least ten years, maybe more. They had this apps unlimited strategy. They made all these acquisitions. They started a fusion project that took a long time, but they built out applications that had the capabilities to be in the cloud. They added the hardware business. All of that is just continuous innovation that gets them to where they are now.

I think, if you just continue to draw that line out, you're going to see. They're going to continue to do more with embedded AI. They're going to continue to do more with IoT. They're going to continue to expand the use of the blockchain, which, you talk to customers, there's a lot of excitement around that.

Liz, I think you're absolutely right. They're going to go deep, deep, deep on verticals: vertical clouds, industry clouds. That's really the next wave. I think they know that, and that's where they're going to go the heaviest over the next few years.

Michael Krigsman: Okay. Wow! What an action-packed 45 minutes we have had. I want to thank our three industry analysts: Mike Fauscette from G2 Crowd, Liz Herbert from Forrester, and Neil Ward-Dutton from MWD Advisors. We've had a lot of information about Oracle and where Oracle is going. Thanks so much, everybody. I'm Michael Krigsman.

Check out CxOTalk.com. We have another show on Friday. We have shows all the time. Be sure to like us on Facebook, and don't forget to subscribe on YouTube. Take care, everybody. Have a great day.