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Why Oracle Could Advance in the Cloud Space

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ERP to report maximum growth in enterprise SaaS space

Earlier in the series, we discussed Oracle’s (ORCL) “underappreciation” by the market in the overall cloud space, which is expected to grow in the high double digits. Within the cloud, robust growth is expected to continue across all primary cloud service segments, with database and IoT-oriented (Internet of Things) PaaS/IaaS services being the segments expected to report high growth.

Public PaaS/IaaS revenue is expected to report average growth of 29% annually, while hosted private cloud or managed cloud services are expected to grow 24% annually, as reported by Synergy Research Group. Within the enterprise SaaS space, which is expected to grow 23% per year, ERP is expected to witness the highest growth. Currently, Microsoft (MSFT) rules the overall enterprise SaaS space.

Why Oracle Could Advance in the Cloud Space

Oracle’s leadership in the ERP cloud space

As the presentation above by Gartner shows, Oracle with its ERP cloud is a leader in financial management suites by a wide margin.

In the most recent quarter, Oracle’s cloud ERP business grew 156%, excluding NetSuite’s contribution, and reached an annual run rate of $1.2 billion. According to Allied Market Research, the ERP space is expected to grow 7.2% on an annual basis to reach $41.7 billion by 2020. This growth bodes well for Oracle, which has a dominant position in ERP.

Brad Zelnick, an analyst at Credit Suisse, shared the same enthusiasm when he said, “The cloud ERP opportunity is just now heating up, and ORCL is in pole position.”

He added, “Our field work suggests ORCL has the leading cloud product in the largest of app software categories (ERP).”

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