{"id":21510,"date":"2017-11-12T17:13:05","date_gmt":"2017-11-12T22:13:05","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/functionality-and-fellowship-oracle-and-the-supply-chain-management-software-of-the-future\/"},"modified":"2017-11-14T16:23:41","modified_gmt":"2017-11-14T21:23:41","slug":"functionality-and-fellowship-oracle-and-the-supply-chain-management-software-of-the-future","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/functionality-and-fellowship-oracle-and-the-supply-chain-management-software-of-the-future\/","title":{"rendered":"Functionality and Fellowship: Oracle and the Supply Chain Management Software of the Future"},"content":{"rendered":"

Supply chain leaders identify visibility tools and cloud technology as key components of the \u201csupply chain of the future,\u201d but 69% of leaders report that less than 25% of their current software solutions are cloud-based [1]. More surprisingly, 71% of leaders report that they still rely on manual tools to manage their extended supply chains, even though digital transformation and technology adoption is widely noted as a key business initiative [2]. Supply Chain Management (SCM) software vendors have typically catered to manufacturing and retail customers, but real-time data, powerful analytics, and inter-connectedness across all business units are becoming key drivers of competitiveness for companies in all industries [3]. As a result, the SCM software market has grown quickly from 2010 to 2017, and SCM software vendors are vying for market share [4].<\/p>\n

These technology adoption trends are critically important to Oracle, a leading provider of enterprise software solutions and the second largest player (14% market share) in the SCM market with $1,552 MM in software sales [5]. As companies rush to adopt or upgrade their SCM systems, Oracle is faced with two major challenges. First, the company has traditionally delivered complex, on-premise solutions that are highly specialized, customizable, and expensive to deploy and maintain. As a result, their customers are primarily large enterprises. With digitization comes an expectation of cloud-first technology, SaaS business models, lower implementation fees, and broader accessibility for small and medium-sized businesses (SMBs). Second, the fast pace of change in SCM requires that companies build platforms and solutions that are highly flexible, allowing for iterative and incremental changes as technology continues to advance. Will Oracle\u2019s Supply Chain Management software become companies\u2019 first choice?<\/p>\n

First steps<\/em><\/strong><\/p>\n

In 2011, Oracle signaled their growing focus on cloud technology when they first reported cloud services revenue as a separate line item in their financials. The revenue contribution of cloud services (inclusive of all applications, not only SCM) grew from $1,378 MM in 2011 to $4,571 MM in 2017 [6]. In an effort to encourage clients to migrate to the cloud, Oracle offers Fusion modules which allow customers to gradually migrate from on-premise systems to the equivalent cloud-based systems.<\/p>\n

Additionally, in late 2016, Oracle announced their acquisition of NetSuite Inc., a provider of ERP solutions for SMBs [7]. With this acquisition, Oracle is now able to offer solutions to customers of all sizes. Further, NetSuite is recognized as a leader in cloud-first ERP solutions, bringing Oracle much needed expertise in the cloud technology segment.<\/p>\n

Short term, Oracle\u2019s primary focus has been establishing themselves as a leader in cloud-based services and expanding their customer based along these lines. Longer term, Oracle is focusing on strengthening their developer eco-system and the customizability and reach of their platform. Their new Oracle IoT Cloud Platform allows businesses to collect and collate data from various devices and input systems in their supply chains [8]. The Oracle AI Platform Cloud Service helps businesses capitalize on this data to improve their supply chains by uncovering patterns in the collected data [9]. The Oracle Blockchain Cloud Service is intended to enable real-time transactions across business units and between partners, greatly enhancing logistics and introducing wide-spread visibility into the supply chain [10].<\/p>\n

Facilitating Fellowship<\/em><\/strong><\/p>\n

Only 3% of supply chain leaders report that they have access to comprehensive data from their extended supply chain partners [11]. To establish a true leadership position in the SCM market, Oracle should focus on facilitating, streamlining, and improving the interactions between all parties in the supply chain, not just those within a single company. While Oracle and NetSuite both offer supply chain collaboration tools, the success of these solutions depends on partners\u2019 willingness to engage with new technologies or applications imposed on them by partners in the supply chain. There are many non-technical reasons \u2013 uneven power dynamics, partner mistrust, fear of information reaching competitors \u2013 why companies may be reluctant to share more detailed data with partners. To truly succeed in this market, in addition to offering purely technological solutions, Oracle should work to lower the existing barriers to communication by aiding information sharing in ways that do not require companies to give up full control.<\/p>\n

Potential obstacles<\/em><\/strong><\/p>\n

While Oracle\u2019s progress in cloud development has been impressive, cloud revenue accounts for only 15% of Oracle\u2019s software revenue, and a study by Daitan Group found that providers of on-premise software have typically struggled to shift their business models towards SaaS\/cloud-based models that demand expertise in multi-tenancy, scalability, integration with third-party applications, and continuous integration, testing, and release processes [12, 13]. Will Oracle be able to beat the odds, leave their reputation as an on-premise software provider behind them, and out-perform their cloud-first competition, all while keeping pace with technological advances in SCM?<\/p>\n

 <\/p>\n

(784 words)<\/p>\n

 <\/p>\n

[1] Mathieu Dougados and Boris Felgendreher, \u201cThe Current and Future State of Digital Supply Chain Transformation,\u201c 2016, pg. 7, http:\/\/mktforms.gtnexus.com\/rs\/979-MCL-531\/images\/GTNexus-Digital-Transformation-Report-US-FINAL.pdf, accessed November 11, 2017.<\/p>\n

[2] Inspirage Management Consulting Services, \u201cThe Future of the Integrated Supply Chain,\u201d 2017, http:\/\/www.inspirage.com\/downloads\/Inspirage-ISC-Research-Study.pdf?elqTrackId=8F3BC39A65A3A60719480A965FF70E04&elqaid=422&elqat=2, accessed November 11, 2017.<\/p>\n

[3] Albert Chiang, \u201cSupply Chain\u2019s Future Rests in the Cloud,\u201d Material Handling and Logistics, October 16, 2017, https:\/\/search-proquest-com.ezp-prod1.hul.harvard.edu\/businesspremium\/docview\/1951444817\/FB6C780773964A76PQ\/9?accountid=11311, via ProQuest, accessed November 11, 2017.<\/p>\n

[4] Josh Bond, \u201cTop 20 Supply Chain Management Software Suppliers 2017,\u201d July 13, 2017, http:\/\/www.mmh.com\/article\/top_20_supply_chain_management_software_suppliers_2017, accessed November 11, 2017.<\/p>\n

[5] Josh Bond, \u201cTop 20 Supply Chain Management Software Suppliers 2017,\u201d July 13, 2017, http:\/\/www.mmh.com\/article\/top_20_supply_chain_management_software_suppliers_2017, accessed November 11, 2017.<\/p>\n

[6] \u201cQ4FY17GAAP EPS UP 15% TO $0.76 and NON-GAAP EPS UP 10% TO $0.89,\u201d press release, June 21, 2017, on Oracle website, h<\/a>ttp:\/\/s1.q4cdn.com\/289076952\/files\/doc_financials\/quarterly\/2017\/Q4\/4q17-pressrelease-June.pdf, accessed November 11, 2017.<\/p>\n

[7] Shelly DeMotte Kramer, \u201cWhat Oracle\u2019s $9.3 billion NetSuite Acquisition Means,\u201d November 07, 2016, http:\/\/www.supplychain247.com\/article\/what_oracles_9_3_billion_netsuite_acquisition_means\/infor, accessed November 11, 2017.<\/p>\n

[8] \u201cOracle Cloud Platform for Integration Enhances Application Integration Across Cloud, Mobile and IoT,\u201d press release, October 27, 2015, on Oracle website, https:\/\/www.oracle.com\/corporate\/pressrelease\/cloud-platform-integration-102715.html, accessed November 11, 2017.<\/p>\n

[9] Hannah Williams, \u201cOracle pushes out AI across its cloud services,\u201d Computerworld Hong Kong, October 9, 2017https:\/\/search-proquest-com.ezp-prod1.hul.harvard.edu\/businesspremium\/docview\/1949754220\/fulltext\/FB6C780773964A76PQ\/16?accountid=11311, via ProQuest, accessed November 11, 2017.<\/p>\n

[10] \u201cOracle Introduces Enterprise-Grade Blockchain Cloud Service,\u201d Entertainment Close-up, October 8, 2017, https:\/\/search-proquest-com.ezp-prod1.hul.harvard.edu\/businesspremium\/docview\/1948040172\/fulltext\/FB6C780773964A76PQ\/17?accountid=11311, via ProQuest, accessed November 11, 2017.<\/p>\n

[11] Inspirage Management Consulting Services, \u201cThe Future of the Integrated Supply Chain,\u201d 2017, http:\/\/www.inspirage.com\/downloads\/Inspirage-ISC-Research-Study.pdf?elqTrackId=8F3BC39A65A3A60719480A965FF70E04&elqaid=422&elqat=2, accessed November 11, 2017.<\/p>\n

[12] \u201cQ4FY17GAAP EPS UP 15% TO $0.76 and NON-GAAP EPS UP 10% TO $0.89,\u201d press release, June 21, 2017, on Oracle website, http:\/\/s1.q4cdn.com\/289076952\/files\/doc_financials\/quarterly\/2017\/Q4\/4q17-pressrelease-June.pdf, accessed November 11, 2017.<\/p>\n

[13] Daitan Group, \u201cReference Model for Cloud Applications,\u201d October 2013, http:\/\/www.daitangroup.com\/wp-content\/uploads\/2013\/10\/2013.10_Reference-Model-for-Cloud-Applications_file-358430293.pdf, accessed November 11, 2017.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

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