Oracle: Vertical Data Competitive Advantage

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Do you have an idea of how win rates are affected, to make it more tangible? How has the evolution of the product impacted win rates, especially with migrations? If someone has an old on-prem licensing model and they're upgrading, there's a strong incumbency advantage. However, with new clients, it's more competitive as you're competing with cloud-native SaaS solutions.

As the product improved, Oracle began to look more modern than SAP. SAP's S/4HANA is based on decades-old code. Oracle started with finance and expanded to a diverse set of applications, including supply chain and manufacturing. Their win rates began to improve. In recent years, Oracle hasn't feared SAP. For the last five years, Oracle has won any fair competition against SAP where Oracle was the incumbent. Their win rates were very high, probably over 75%. SAP would win if they were the incumbent or had the majority of the install base within a client. For example, clients like Ingersoll Rand or Eaton Corporation had numerous ERP systems, including Oracle and SAP. If SAP was dominant, they could argue for rolling it out everywhere, making it harder for Oracle to win.

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Do you have an idea of how win rates are affected, to make it more tangible? How has the evolution of the product impacted win rates, especially with migrations? If someone has an old on-prem licensing model and they're upgrading, there's a strong incumbency advantage. However, with new clients, it's more competitive as you're competing with cloud-native SaaS solutions.

In head-to-head competitions without an install base, Oracle would win on merits about 60% of the time. If Oracle was the incumbent, they'd win over 75% to 80% of the time. If SAP was the incumbent, Oracle's chances were less than 50%. This trend continued until the last 24 months. Now, with SAP requiring migrations to S/4HANA and their cloud product, the high implementation costs have become a factor. Oracle Fusion is less expensive to implement. Currently, Oracle's win rates are over 60%, often close to 70%, due to SAP's high costs.

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One last question on this topic. You haven't mentioned them, which I think says something. Do you have any thoughts on Workday and their position in the marketplace?

In the case of CRM, they lost the battle to Salesforce. The only reason you would buy Oracle CRM is if you had all the other products around it, and it was a better fit. I think Oracle's product is every bit as good as Salesforce, but Salesforce ate their lunch. Now the problem is where does Salesforce go? It's hard to pivot from CRM to finance. The decision-making process in CRM is always left to the sales organization, with some help from the CIO. But as you start to pivot to the core, the CFO and the CIO have a closer working relationship, and they are the buyers. They have no loyalty to Salesforce, and there's no buzz about Salesforce in those areas.

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