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As more businesses consider a move to the cloud, finding ways to save money to reinvest in the cloud has become a priority. SearchOracle asked Rebecca Wettemann, vice president of Nucleus Research, about this trend. Wettemann leads the quantitative research team at Nucleus Research, which specializes in case-based technology research directed at the interests of CFOs. In this question and answer session, Wettemann explains how third-party support can play a role in speeding along cloud adoption. She discusses the ROI that can be found in third-party support and cloud adoption and how the nature of cloud support has changed the relationship between Oracle and Oracle cloud customers.
This is the second part of a two-part interview. To read the first part, click here.
Have you seen a good ROI for companies that saved money by using a third-party vendor for support and then invested that savings in cloud adoption?
Rebecca Wettemann: Yes, if we take the third-party support piece, we're looking at using the total cost of maintaining those business-critical applications and reinvesting that money in an application that delivers 1.7 times the traditional on-premises stuff. You're almost doubling your money.
Does the specific third-party vendor or area of technology affect ROI?
Wettemann: Yes, if we look at our case studies, analytics pays back $13 for every dollar spent. HCM is $9 and change. CRM is $8.71. Now those numbers are going to be different for every customer, but we certainly see HCM, analytics and CRM as being cloud areas where there are great applications, and where there are competing applications with a level of maturity where customers have the ability to pick and evaluate which one is best for them. There's no single one in the cloud network. And, because there are competing applications, they are competing on innovation and price too, so customers are getting value there.
Is this true for Oracle cloud customers?
Wettemann: We're seeing a growing number of Oracle customers looking at third-party support, but also a growing number of Oracle customers that are looking at how to take advantage of the investments that Oracle has made in cloud with the least cost and the least disruption to the business. And that means, in most cases, they're not moving wholesale PeopleSoft to ERP cloud or JD Edwards to ERP cloud. What they are looking at is: "What is the supply chain cloud offering that might work for me? What is Taleo cloud that might be interesting to me? What is the data cloud and what they are doing with data as a service?" It's very, very interesting. So I would say that this doesn't mean that customers are walking away from Oracle. What they are likely to be doing is looking at how they can lower the cost of maintaining those core business applications until they are ready to make that change and use that money to innovate in the cloud and other areas.
If customers need third-party support less once they're in the cloud, is cloud adoption something that third-party vendors see as a threat to business?
Rebecca Wettemannvice president, Nucleus Research
Wettemann: I think the reality is that the support that's provided for cloud applications is, by the nature of the cloud applications, of a higher level and on an ongoing basis, because it's the vendor that's actually managing the support. So, effectively, I have the support as part of my subscription price and no separate license for support for cloud applications. That said, there are an awful lot of people and companies out there with their core business operations -- financials, accounting, procurement -- running on on-premises applications that are not going away any time soon.
The other big area I know for Rimini is Siebel. A lot of big customers have deeply customized Siebel applications where they're running their customer master or they're running their call center. That's not something that's going to be very easy to pull out and essentially very disruptive to their business. So they're more likely to move something like that to third-party support and look at: "How do I take advantage of things like data as a service, Marketing Cloud, CPQ Cloud and other things like that where I can start to integrate those innovative pieces with what may be sitting on on premises for a long time to come?"
It sounds like you're seeing more in the way of hybrid cloud than full cloud adoption. Is that right?
Wettemann: I think so, at least in the short term, unless I'm a brand new business in some way. And that's the other area we see with Oracle customers, where I'm in startup mode, but startup mode to scale aggressively, then going all in on cloud makes sense since I don't have those legacy systems to start with that have data that I've customized and built my business on.
What other big trends have you noticed in the cloud adoption and third-party support?
Wettemann: The cloud sale is very different from the on-premises sale. Cloud customers are much more likely to talk to references not just for the initial decision, but on an ongoing basis to find out how they can get the most value when companies go with cloud applications. Unlike with on-premises applications, they're likely to be much more demanding. Think of it this way. If I have an on-premises application that's doing about 80% of what I'd like it to do, I have to go to my own internal IT team to ask them for changes and development. I've burnt up capital there that I may need to use somewhere else. However, if I'm relying on the vendor for that sort of thing, I'm likely to be much more demanding since I'm the customer and I'm paying a subscription fee and because I'm not burning up that kind of internal political capital battling with IT. So, customers are much more likely to demand that they get closer to that 90 to 95% of what they want with a cloud vendor than an on-premises one. IT is still there, but the sort of effort that IT is involved in is fairly minimal. I'm going to the vendor for those things.
I was talking to some folks yesterday and they were saying that one of the things they really like is they see on the roadmap the things that they're asking for. Vendors in the cloud world recognize that they have to keep putting that roadmap out there. They have to keep responding to customer demands with that roadmap, because customers will be willing to go elsewhere.
Is this true for Oracle and Oracle cloud customers as well?
Wettemann: Oh, yes, absolutely. I think Oracle has done a significant rethinking of its cloud sales strategy over the past two years, and a lot of that is about hiring different sales people. It's about being more consultative in the sale and selling to an audience that hasn't traditionally been Oracle's audience. They've had to adjust a lot of things in how they sell.
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