Oracle: Composability

Composable business starts with three building blocks: composable thin­king, which ensures creative thinking is never lost; composable business archi­tecture, which ensure flexibility and resi­liency; and composable technologies, which are the tools for today and tomor­row. “Business composability isn’t uni­formly high across the economy because it requires business thinking to be rein­vented,” said Monika Sinha, a Gartner analyst. “Traditional business thinking views change as a risk, while composable thinking is the means to master the risk of accelerating change and to create new business value.”

CIOs leading high-com­posability enterprises recognize that bu­siness conditions often change, from customer demands to financial models, and empower the teams that are closest to the action to respond and re-form to those new conditions.

“We built a completely brand-new set of business capabilities for the cloud from the ground up, using a single data model for all line of business challenges,” exp­lains Juergen Lindner, Senior Vice President at Oracle, in conversation with E-3 Maga­zine. Oracle’s offer is modular and compo­sable by design but engineered to work together for seamless extension.

Lindner adds, “Fusion launched in 2010 and is designed as a completely new suite of ap­plications, with a new data model. That way, we can ensure that data is consistent and easy to interpret for end-users. Since we operate at every level of the entire stack, Oracle can be more innovative: every quarter, we can improve our software and provide new innovations, functions, and embedded technologies – for example, AI, machine learning, chatbots, digital assistants, IoT, blockchain, and other emerging technolo­gies. Every company is developing into a technology company and cloud is a great accelerator to get our customers there faster. For over 40 years, Oracle has been synonymous with helping our global customers manage, secure and act on the world‘s most important data.”

Oracle’s offer leans into Gartner’s definition of composable business archi­tectures. Juergen Lind­ner describes the new ERP architecture. “We also offer Fusion Analytics Warehouse for all line of business scena­rios, another powerful way to get access to predefined, cross-LOB KPIs, powerful dashboards, real-time analytics, machine learning-based recommendations, and voice interaction. It allows you to combine third-party data sets easily.”

Industrial-era businesses were desi­gned for stability and slow, predictable change. In the digital era, business archi­tectures need to be designed for uncer­tainty and continuous change. Instead of optimizing for efficiency, the composable enterprise optimizes for adaptability. Sys­tems, processes and workers no longer serve one predetermined use case or pur­pose.

“Digital business initiatives fail when business leaders commission pro­jects from the IT organization and then shirk accountability for the implementa­tion results, treating it as just another IT project,” said Sinha. “Instead, high-com­posability enterprises embrace distribu­ted accountability for digital outcomes, reflecting a shift that most CIOs have been trying to make for several years, as well as creates multidisciplinary teams that blend business and IT units to drive business results.”

Unified data model

Oracle’s Juergen Lindner is aligned with the Gartner analyst, saying, “Because we built it all from scratch, we have one consistent user experience called Redwood, which al­lows us to create solutions that span the depth and breadth of the challenges our customers face.”

Let’s use an example: the Subscription Management application re­quires financial modeling, together with a customer-facing user interface, and it has supply chain dependencies to ensure that you can deliver the goods. “Try this with other vendors,“ Lindner prompts, “and you’ll get different modules with different data models, different user experiences, different release timelines. Our fastest and consistent innovation cycles across the line of business applications with hundreds of new features every quarter keep our customers ahead of change, and able to take full advantage of the under­lying Oracle Cloud infrastructure.”

Homogeneous and consistent SaaS offerings from Oracle offer better sup­port for the business and make end-users more productive. Oracle has a unified data model, meaning all data is in one place and defined in one, and only one, way.

“With Oracle Fusion Applications, we only define master data like custo­mer, employee, product, and supplier once. No matter which pillar or modu­le uses this master data, it al­ways has the same defi­nition. It’s only de­fined once. That helps end-users. When an end-user wants to cre­ate a report or analy­sis, this user will know that customer, employee, product, and supplier are defined once, so when they pick one of these for a report or analysis, they will always have the right one. That seems logical, but you can only achieve this level of consistency if you have desi­gned and built SaaS from scratch,” Oracle executive Lindner adds.

What do ERP users need: SaaS in the context of best-of-breed or holistic cloud computing in the hyperscaler model? “Let’s start by setting context in how ERP has evolved,” advises Lindner. “Gone are the days of big, monolithic ERP imple­mentations; those days have given way to more bite-sized, composable, business process-driven implementations. That’s where SaaS-based cloud ERP is simply not comparable to provisioning a legacy ERP using hyperscaler infrastructure. To be clear, if customers prefer this approach, that is perfectly fine. We also support our customers with that approach, but the experience for end-users and the busi­ness will not change. They still can’t parti­cipate in the same innovation cycles and business process changes. They still can’t benefit faster from technology catalysts such as AI, ML, IoT, blockchain, and new user experiences – not in the way that a real SaaS offering lets them do.”

Oracle Fusion

When a company uses Oracle cloud ERP, they get a fully-managed environment – but they don’t have to run a complete sui­te. Oracle Fusion Cloud applications are modular. It’s up to the user which modu­les they want to use. On-premises solu­tions were designed in the 1990s and are ERP-centric, and so are the best practices delivered with those legacy, hosted applications. On-premises ERP had to be imple­mented first, before you can use any other module. This creates dependencies and often leads to sub-optimal environ­ments.

You often see companies running multiple instances of the same on-premises software, for example – one per business division or one per region. If the legacy software were flexible enough and modular, you wouldn’t need multiple instances of the same software. It’s expensive to run mul­tiple on-premises ERP instances, and it also leads to securi­ty vulnerabilities. Quite a few companies want to reduce costs and move back to a single instance, only to find out that this is extremely complicated. This type of software doesn’t lend itself for these ty­pes of reorganizations and the alleged “best practices” might very well be the reason for your demise – they’re not evolving fast enough in the on-premises environment.

“You don’t have these issues with mo­dern, modular software that is conceptu­alized and designed for cloud,” assures Lindner in conversation with E-3 Magazi­ne. “You won’t need multiple instances. With our experience and expertise in dri­ving automation through machine lear­ning, we believe that business processes as we know them will eventually be elimi­nated and replaced with modern, agile processes every 90 days. This notion of business process flexibility is critical. Most perceived best practices of today originated a long time ago. With increased au­tomation based on pattern recog­nition using ML, those business pro­cesses evolve constantly – and at a much faster rate than any on-premises or hos­ted environment. If you stick with the old approach, you’re at a disadvantage com­pared to peers who made more decisive moves towards SaaS.”

“Business runs on technology, but technology itself must be composable to run composable businesses,” said Gart­ner analyst Monika Sinha. “Composabili­ty needs to extend throughout the tech­nology stack, from infrastructure that supports rapid integration of new sys­tems and new partners to workplace technology that supports the exchange of ideas.”

Juergen Lindner also recognizes the im­portance of suitable technology, explai­ning, “As mentioned earlier, Oracle is fo­cused on helping customers with data, and managing, securing, and acting on the world’s most important data sets. Oracle has deep rooted technology inves­tments to help customers succeed and we have made nothing short of a re­markable pivot to the cloud as foundatio­nal technology.”

The cloud has changed Oracle

Lindner describes how Oracle uses its own cloud offerings to run its business, “The words ‘service’ and ‘customer obsession’ are not lip service in this context. We have funda­mentally changed our business model. You can see, for example, our Oracle Cloud Customer Connect community which connects over 200,000 members.” This network allows Oracle to communicate more intensely and more intimately with its customers. It was designed to promote peer-to-peer collaboration, collaboration between customers and partners, sharing of best practices, and to help members communicate with Oracle product de­velopment teams directly. Within this community, members benefit by levera­ging the collective knowledge of Oracle Cloud customers and product experts.

“The majority of our new features have been suggested by our customers,” Lind­ner states proudly. “Bear in mind that Oracle uses its own software internally. We run our finances on Fusion Cloud ERP the same way that any other customer would. Over the course of the pandemic this helped tremendously. We did not skip a beat in closing the books remotely. In fact, we closed the books faster. We can report back to the street within 10 days af­ter the quarter close. This is quite compelling. With AI and ML, we manage to close our books twice as fast as SAP or Workday. That experience of how you can speed up a company is not our internal secret but something we share with our customers. The program is called ‘Oracle@Oracle’ – one of our best and most sought-after en­gagements with clients around the world. Our own practitioners share their experi­ences and our approach. These are all well documented, so that others can learn from our own experiences.”

Antidote to volatility

“Business composability is an antidote to volatility,” said Monika Sinha, research vice president at Gartner. “Sixty-three percent of CIOs at organizations with high composability reported superior bu­siness performance compared with peers or competitors in the past year. They are better able to pursue new value streams through technology, too.”

Business processes don’t stop at appli­cation boundaries. Companies that can take advantage of tremendous amounts of data are proving to be more agile and resilient, especially as the world recovers from the pandemic and other disruptive market challenges; the benefits enabled by digital technology have become pow­erful differentiators. The concept of a “di­gital business platform” describes a col­lection of integrated, next-generation ca­pabilities that help make it easier to orche­strate end-to-end, so you can drive value. “It’s close to impossible to do this across best-of-breed applications,” warns Juergen Lindner. “The data is too disparate becau­se the applications are too disparate.”

Oracle‘s next-generation platform for digital business combines powerful busi­ness applications, comprehensive core services, and sophisticated cloud infra­structure to support value creation. “Value, of course, varies by company and will be a balance of aspirational and ope­rational drivers like process transformati­on or the ability to pivot to new, digital business models, with tactical goals like launching a new product, creating superi­or customer and employee experiences, designing resilient supply and value chains, or completing a financial close in a few days instead of a few weeks,” Lindner explains. “But,” he cautions, “to make this work – to be able to optimize continuously across all business processes – you need a SaaS suite.”

Suite or best-of-breed?

Companies need to move toward a port­folio that is more adaptable to business change, with composable applications that can be assembled, reassembled, and extended. “That is more important than the notion of suite versus best-of-breed,” affirms Oracle executive Lindner. “Oracle can provide these composable applica­tions because we have the entire suite of applications: ERP, EPM, CRM, HCM, and SCM. Many vendors started with one of those, like Workday with HCM or Sales­force with CRM, and SAP with HCM (with the acquisition of SuccessFactors), but with just one of those cloud solutions, you cannot offer the composition capabilities that Oracle can.”

According to Juergen Lindner, it is im­portant to clarify that best-of-breed does not necessarily translate into being the richest functionality; rather, it’s just ha­ving the best-fit solution to solve a speci­fic business problem or need. The prob­lem with this is that best-of-breed appli­cations are silos, and business processes don’t stop at application boundaries.

“Oracle can offer a SaaS-based, busi­ness-centric application to complement any customer’s on-premises footprint. It adds immediate value, and we can seam­lessly extend this partnership over time,” Lindner adds. “With Oracle you have the possibility to compose this all into one co­hesive suite, engineered to work together. No other vendor can do this right now.”

Many companies are moving from on-premises systems to the cloud, but you cannot expect them to do this over­night. Whether they are an SAP or Oracle customer, or any other, regardless of their starting point, they can reap instant business value with Oracle Cloud. This is not a rip-and-replace scenario. While their on-pre­mises backbone ERP solutions are still up and running, these companies start to deploy Oracle SaaS in parallel; for example, Oracle Cloud EPM for planning, budge­ting, tax, and profitability management or Oracle Cloud Transportation Management connected to their on-premises ERP. Pick any business process and extend as you see fit. That is what a lot of Oracle customers do.

The ongoing pandemic and the surge in digital services are making cloud the centerpiece of new digital experiences. Global cloud revenue will rise to a total of $474 billion in 2022, up from $408 billion in 2021, according to research company Gartner. “There is no business strategy without a cloud strategy,” said Milind Go­vekar, distinguished vice president at Gartner. “The adoption and interest in pu­blic cloud continues unabated as organiz­ations pursue a ‘cloud first’ policy for on­boarding new workloads. Cloud has enab­led new digital experiences such as mobi­le payment systems where banks have invested in startups, energy companies using cloud to improve their customers’ retail experiences or car companies laun­ching new personalization services for customer’s safety and infotainment.”

Cloud First

SAP has been trying a cloud-first strategy for many years – sometimes alone, so­metimes in partnership with the hy­perscalers. How does Juergen Lindner perceive the SAP offering? How is SAP’s “Cloud First” strategy being perceived in the market? “We have taken different approaches,” replies Lindner. “SAP has ta­ken a strategy where, initially, cloud growth was acquired with Concur, Ariba, SuccessFactors, and so on – yet the most business-critical core did not see any re-write for cloud or SaaS for a long time, other than partial offerings. So, the resul­ting architectural complexity, integrati­on challenges, and associated costs of a cloud journey – if you want to run your entire business in the cloud – are high.”

Another complication comes from SAP customers that have customized their SAP solutions. Research shows that around 90 percent of all on-premises SAP customers have customized their SAP on-premises solutions. All of those custo­mizations are not tested or guaranteed to run on S/4 Hana, the Hana database, or the hyperscaler of choice. In addition, those customizations were not created with AI and ML, blockchain, or IoT in mind. “This means a lot of code lines and inves­tments of customers have no viable stra­tegy to be brought over to the Hana world – the costs and effort of reimple­menting them are incalculable,” Juergen Lindner recounts from conversations with customers.

On-premises or hyperscalers?

“You have to maneuver various levels of public cloud elements, on-prem, hosted, private, and hyperscaler dependencies to be successful, and I think that this is what is reflected in customer sentiment,” explains Lindner. “Terminology around Hana, S/4 Hana, S/4 public cloud, and va­rious ongoing branding efforts make it challenging for their customer base to land on the right engagement model. The SAP industry solutions have not seen at lot of cloud investment, either. They’re still mostly old code, and sometimes re­quire on-premises deployment. The foun­dational decision to invest in Hana as a database has taken focus away from line-of-business innovation, which is what SAP used to be known for. They have significant catch-up work to do. That is what we are hearing from their customer base, and the user group and analyst sentiments seem to reflect this as well.”

Oracle has taken a more decisive approach to the cloud and with that created a noti­ceable distance between it and the rest of the market. “We did not take an ‘easy way out’ and created a new offering from the ground up, allowing us to partner imme­diately with any customer, regardless of their starting point,” Lindner describes Oracle’s approach. “In the past, Oracle and SAP had similar applications, based on similar technologies: Oracle E-Business Suite, PeopleSoft, JD Edwards, and Siebel. SAP had R/3, followed by ECC and Busi­ness Suite. Then Oracle decided to create a brand-new suite for the age of cloud, Fu­sion. We started this investment 10 years ago, so we’re 10 years ahead of nearly everybody else in SaaS ERP. You can see this reflected in analyst reports from Gartner, IDC, and others.”

At least in Germany, the SAP “Cloud First” strategy is not accepted, according to E-3 Magazine. Research shows that the majo­rity of the members of the German-spea­king SAP user group, DSAG, are in favor of an on-prem infrastructure. Are the cloud and ERP an incompatible contradiction?

“You bring up an interesting point,” replies Juergen Lindner in conversation with E-3 Magazine. “We know from DSAG and ASUG that SAP D/A/CH customers are more reserved in their move to the cloud, but SAP customers elsewhere are more inclined to consider cloud.” This cre­ates an interesting dynamic, with diffe­rent cloud adoption clock speeds to cater to. Or as Lindner describes it, “If you move too fast and too aggressively, you risk alie­nating customers. If you move too slowly, you risk losing customers. Doing both – designing and building a completely new suite for public cloud while providing new capabilities for on-premises customers, too – is very expensive and takes a long time. That’s why we started 10 years ago.”

What value do customers get? Lindner says, “We can provide a very attractive al­ternative, and we are having a lot of dialo­gue with that customer base. More and more companies are coming to Oracle for distinct line-of-business challenges. Quite a few SAP customers are accelera­ting business value creation with us, since there is no lead time required and you can start right away. Examples include Oracle Cloud Enterprise Performance Manage­ment (EPM), a very strategic offering, especially since cash position and scena­rio planning have become top priorities during and post-pandemic.”

Oracle Transportation Management

Another example is Oracle Cloud Trans­portation Management (OTM), a key so­lution since the pandemic has hit logistics very hard. These offerings don’t re­quire a complete parting with your prior SAP investment, however. “Some custo­mers do go that route,” knows Lindner, “but co-existence and cloud-based mo­dernization over time is the preferred route. Our architecture makes it very sim­ple to partner with us for immediate re­turns, and the customer is in control on where to start.”

Oracle just announced Connected Enterprise Planning, addressing the need for holistic financial planning and analysis across HR, projects, and supply chain. It connects workforce planning, integrated business planning and execution (IBPX), and financial planning. “Oracle can do this because we have a unified data model, so you can plan holistically across ERP, HCM, CRM and SCM,” Oracle executive Lindner explains. In today’s business environ­ment, it doesn’t make sense to just plan your workforce; you need to include your financial resources, sales capacity, and production resources too. “We can do that with Connected Enterprise Planning, and this is what makes Oracle an attracti­ve option to SAP customers,” highlights Juergen Lindner.

It is similar with OTM. “You know about the current bottlenecks in the glo­bal economy, where hundreds of ships are currently waiting at sea to be unloa­ded. Thousands of empty containers are waiting to be transported back to Asia,” Lindner describes the current situation. “SAP customers are starting to use Oracle OTM to help them manage all these dis­ruptions and find alternative transporta­tion routes.”

Conclusion

Oracle has been synonymous with mana­ging, securing and acting on the world’s most important data sets since the com­pany was founded. “We know this busi­ness deeply and take it tremendously se­riously, as shown with recent innovations such as the autonomous database,” Lind­ner explains, and adds,

“But we also have a strong heritage in business applications managing and acting on those data sets, so data is our DNA. Compared to SAP, we always looked very holistically at all lay­ers of the technology stack. Consequent­ly, we can offer a unique ability to partner with our customers. When SAP ventured into database technology, it took a toll on their engineering efforts in other parts of the business that, to this day and for years to come, will slow their customer base ability to innovate. SAP’s innovations on the applications and industry side were inconsistent for years, and they remain so. Customer disgruntlement – which is ap­parent through user group feedback – is profound, and makes customers evaluate other options. SAP customers can post­pone their choice: They can run their SAP ECC and Business Suite solution on Oracle Cloud Infrastructure, continuing to use the Oracle database.”

Thank you for the interview.

This is the first part of a two-part series! If you would like to read the second one, click here.