Composability

To become a composition-enabled enterprise, CIOs must incorporate three elements: composition-enabled thinking, composition-enabled enterprise architecture, and composition-enabled techniques. "The composition capability of companies is not uniformly high in the economy, as it requires a change in corporate thinking" said analyst Monika Sinha of Gartner. "Traditional entrepreneurial thinking views change as risk, while Composable Thinking is the means to manage the risk of accelerated change and create new business value."

CIOs who lead highly composed organizations recognize that business conditions change frequently, from customer requirements to financial models, and empower their teams closest to the action to respond and regroup to these new conditions.

"We built entirely new business capabilities for the cloud from the ground up, using a single data model for all business needs", explains Jürgen Lindner, Senior Vice President at Oracle, in an E-3 interview. Oracle's offering to existing SAP customers is modular and composable, but designed to be expanded seamlessly.

Lindner specifies: "Fusion was launched in 2010 and was designed as a completely new application suite with a new data model. This allows us to ensure that data is consistent and easy for end users to interpret. Because we own the entire stack, Oracle can be more innovative than other companies. Every quarter, we can improve our software and offer new innovations, features, and embedded technologies - for example, AI, machine learning, chatbots, digital assistants, IoT, blockchain, and other emerging technologies. Every business is evolving into a technology company, and the cloud is a great accelerator to get our customers where they want to go faster. For more than 40 years, Oracle has been synonymous with helping our global customers manage, secure and use the world's most important data."

Oracle thus largely complies with the Gartner definition of composition-capable business architectures. "We also offer Fusion Analytics Warehouse for all business line scenarios, another powerful way to access predefined cross-LOB KPIs, powerful dashboards, day-one analytics, machine learning-based recommendations and voice interaction. It also allows customers to combine third-party data sets", Jürgen Lindner describes the new ERP architecture landscape.

In the digital age, enterprise architectures must be designed for uncertainty and constant change. Instead of optimizing for efficiency, the composition-enabled organization optimizes for adaptability. Systems, processes, and people no longer serve a single use case or purpose.

"Digital business initiatives fail when management commissions projects from the IT organization and then shirks responsibility for implementation results by treating it as just another IT project" says Monika Sinha of Gartner. "Instead, high-composition organizations are embracing distributed accountability for digital outcomes, reflecting a shift that most CIOs have been seeking for several years, as well as the creation of multidisciplinary teams that bring together business and IT units to drive business success."

Uniform data model

Oracle's Jürgen Lindner is thus in line with the Gartner analyst: "And because we built everything from the ground up, we have a unified user interface called Redwood that allows us to build solutions that address the depth and breadth of our customers' challenges."

For example, a subscription management application requires financial modeling along with a customer-facing user interface and depends on the supply chain to ensure companies can deliver the goods. "Compare this with the same process at other providers", Lindner urges. "You get different modules with different data models, different user experiences, different release schedules, and so on. Our fast and consistent business application innovation cycles, with hundreds of new features per quarter, keep our customers ahead of change and allow them to take full advantage of the underlying Oracle Cloud infrastructure."

Oracle's homogeneous, unified SaaS offerings support businesses and make end users more productive. Oracle has a unified data model, which means all data is in one place and defined in only one way.

"With Oracle Fusion Applications, we define master data such as customers, employees, products and suppliers only once. Regardless of which column or module uses this master data, it always has the same definition. They are defined only once. This helps end users. When an end user wants to create a report or analysis, they know that the customer, employee, product, and supplier are defined only once, so they always have the right data when selecting for a report or analysis. This seems logical and obvious, but you can only achieve this level of consistency if you have designed and built SaaS from the ground up", defines Oracle manager Lindner.

What do ERP users need: SaaS in terms of a best-of-breed approach or holistic cloud computing in terms of hyperscalers? "Let's start by putting the development of ERP in the right context", recommends Jürgen Lindner. "Gone are the days of large, monolithic ERP implementations; these have made way for composable, business process-driven implementations. That's where SaaS-based cloud ERP simply doesn't compare to deploying legacy ERP over a hyperscaler infrastructure. To be clear, if customers prefer this approach, that's perfectly fine. We support our customers in this approach as well, but it won't change the experience for the end user or the business. They still can't participate in the same innovation cycles and business process changes. They still can't benefit faster from technology catalysts like AI and ML, IoT, blockchain, and new user experiences - not in the way that a true SaaS offering enables."

Oracle Fusion

When a company uses Oracle Cloud ERP, it gets a fully managed environment, but does not have to run a full suite. Oracle Fusion Cloud applications are modular. Users can decide for themselves which modules they want to use. On-premise solutions were developed in the 1990s and are ERP-centric, and so are the best practices that come with these older hosted applications. The ERP has to be implemented first before you can use any other module. This creates dependencies and often leads to suboptimal environments.

You often see companies running multiple instances of the same software, for example one per business unit or one per region. If the legacy software were flexible and modular enough, there would be no need for multiple instances of the same software. It's expensive to run multiple instances, and it also leads to security vulnerabilities. Many companies want to reduce costs and go back to a single instance, only to find that it is extremely complicated.

This type of software does not lend itself to such restructuring, and "best practices" may well be the reason for customers' demise - they are not evolving fast enough in the local environment.

"With modern, modular software designed and developed for the cloud, customers don't have these problems", Lindner explains in an E-3 interview. "You don't need multiple instances. Based on our experience and expertise in machine learning automation, we believe that business processes as we know them will eventually be eliminated and replaced by modern, agile processes every 90 days. This idea of business process agility is critical. Most of today's supposed best practices are still processes that were created a long time ago. With increasing automation based on pattern recognition through machine learning, these business processes are constantly evolving - and much faster than in any on-premises or hosted environment. If customers stick with the old approach, they are at a disadvantage compared to other companies that have embraced SaaS."

"Businesses run on technology, but the technology itself must be compositional to run compositional businesses" said Gartner analyst Monika Sinha. "Composability must extend across the technology spectrum, from the infrastructure that supports rapid integration of new systems and new partners to the workplace technology that supports the exchange of ideas."

The technology approach is also an important parameter for Jürgen Lindner. "As mentioned earlier, Oracle is focused on helping customers manage, secure and leverage data sets. Oracle has made deep-rooted technology investments to help customers succeed, and we have made a remarkable pivot to cloud as an enabling technology."

The cloud has changed Oracle

Linder explained that Oracle itself runs the entire business through its own cloud offerings. "The words service and customer orientation are not just lip service in this context. We have fundamentally changed our business model. One example is our Oracle Cloud Customer Connect community, which connects over 200,000 members. This network enables us to communicate more intensively and closely with our customers."

It is designed to foster peer-to-peer collaboration, customer-partner collaboration, and best practices sharing, and to help members communicate directly with Oracle product development teams. Within this community, members benefit from the collective knowledge of Oracle Cloud customers and product experts.

"Most of our new features were suggested by our customers", Jürgen Lindner knows from his professional practice. Oracle also uses its own software internally. "We manage our finances with Fusion Cloud ERP in the same way as any other customer. Over the course of the pandemic, this helped us tremendously. We were able to close the books remotely with ease. In fact, we closed the books faster. We can report to the public within ten days of quarterly closing. With AI and ML, we manage to close our books twice as fast as SAP or Workday. This experience of how to accelerate a business is not our internal secret, but something we share with our customers. The program is called Oracle@Oracle - one of our best and most requested engagements with customers around the world. Our own practitioners share their experiences and our approach. These are well documented so that others can learn from our experience."

Survivability

"Preparation for change is essential for the future viability of a company", Monika Sinha from Gartner also emphasizes. "Composability makes change easier, faster, safer and therefore less costly. It is a model worth the investment for those who expect the number and speed of changes in the market environment to continue to increase."

Business processes don't stop at application boundaries. Companies that can leverage massive amounts of data are proving more agile and resilient, especially as the world recovers from the pandemic and other disruptive market challenges. The advantages enabled by digital and compositional technologies have become a strong differentiator.

The concept of a digital business platform describes a collection of integrated, next-generation capabilities that facilitate end-to-end organization to enable customers to create value. "It is almost impossible to achieve this with best-of-breed applications", warns Oracle manager Jürgen Lindner. "The data is too inconsistent because the applications are too inconsistent."

Oracle's next-generation digital business platform combines powerful business applications, comprehensive core services and advanced cloud infrastructure to support value creation.

"Value creation, of course, varies from company to company and consists of a balance between ambitious and operational goals, such as transforming processes or moving to new, digital business models, and tactical goals, such as launching a new product, creating better customer and employee experiences, designing robust supply and value chains, or completing a financial transaction in a few days rather than several weeks", Jürgen Lindner also knows. But: "For this to work and for all business processes to be continuously optimized, you need a SaaS suite."

Suite or Best of Breed?

Enterprises need to move toward a portfolio that is more adaptable to business changes, with applications that can be composed and extended. "This concept is more important than the term suite or best of breed", explains the Oracle manager. "Oracle can offer these compatible applications because we have the entire application suite: ERP, EPM, CRM, HCM and SCM. Many vendors started with one of these, like Workday with HCM or Salesforce with CRM and SAP with HCM (with the acquisition of SuccessFactors), but with just one of these cloud solutions, you can't offer the same composition capabilities as Oracle."

It's important to clarify, says Jürgen Lindner, that best-of-breed doesn't necessarily mean having the broadest feature set, but simply having the most appropriate solution for a particular business problem or need. The problem with this is that best-of-breed applications are silos, but business processes don't end at application boundaries.

"Oracle can provide a SaaS-based, business-focused application that complements each customer's on-premises system. This adds immediate value, and we can seamlessly expand this partnership over time", Lindner defines the current Oracle position.

With Oracle, customers have the ability to combine all solutions into a single suite designed for collaboration. "No other provider can currently offer this", Jürgen Lindner is convinced.

Many companies are moving from on-premises systems to the cloud, but they can't be expected to do so overnight. Whether they are SAP, Oracle or other customers, regardless of their starting point, they can get immediate business value with Oracle Cloud. It is not a rip-and-replace scenario. While their on-premises ERP backbone solutions are still up and running, companies are also starting to deploy Oracle SaaS - for example, Oracle Cloud EPM for planning, budgeting, tax and profitability management. Or Oracle Transportation Management as a SaaS solution, connected to on-premise ERP. Customers can choose any business process and extend it as they see fit, and many are taking advantage of this offer.

The cloud will be at the heart of new digital experiences. Global cloud revenue will be $474 billion in 2022, up from $408 billion in 2021. The ongoing pandemic and the rise of digital services are making the cloud the centerpiece of new digital experiences, according to research and advisory firm Gartner.

"There is no business strategy without a cloud strategy", says Milind Govekar, Analyst and Vice President at Gartner. "Adoption of and interest in public clouds continues unabated as companies adopt a cloud-first policy when onboarding new workloads. The cloud has enabled new digital experiences, such as mobile payment systems, after banks invested in startups. Or energy companies using the cloud to improve their customers' shopping experience, and automakers offering new personalization services for their customers' safety and infotainment."

Cloud-first strategy

SAP has been trying to implement a "cloud first" strategy for many years - sometimes alone, sometimes with hyperscalers. How does Jürgem Lindner see SAP's offering? What is the perception of SAP's cloud-first strategy? "We have taken different approaches." Oracle manager Lindner describes the current market situation ."SAP has followed a strategy of first adopting cloud growth with Concur, Ariba, SuccessFactors, while the business-critical core has not been rewritten for cloud or SaaS for a long time - except for partial offerings. So the resulting architectural complexity, integration challenges and associated costs of cloud migration - if you want to run your entire business in the cloud - are high."

The SAP community knows that another challenge comes from existing SAP customers who have customized their solutions. Research has shown that about 90 percent of all SAP legacy customers have customized their on-prem solutions. For all these customizations, there is no guarantee that they will run on S/4 or the Hana database or hyperscaler of choice. Moreover, these customizations were not built with AI and ML, blockchain and IoT in mind.

"This means a lot of lines of code and investments from customers for which there is no viable strategy to transition them to the Hana world - the cost and effort of re-implementation is so incalculable", Jürgen Lindner knows from numerous discussions with customers.

On-prem or hyperscaler?

"You have to master different layers of public cloud elements, on-prem, hosted, private and hyperscaler dependencies to be successful, and I think that's reflected in customer sentiment", reports Jürgen Lindner. "The terminology around Hana, S/4, S/4 Public Cloud and the various ongoing branding efforts make it difficult for the customer base to decide on the right model. There has also not been much investment in SAP industry solutions regarding cloud computing. Indsutrial solutions are still mostly old code and sometimes require on-prem deployment. The fundamental decision to invest in Hana as a database has taken the focus away from innovation in the business areas that SAP used to be known for. The company has significant pent-up demand. We hear this from its customers, and the opinions of user groups and analysts also seem to reflect this."

Oracle has obviously taken a more decisive approach to the cloud, creating a noticeable distance from the rest of the market. "We didn't take the easy way out and created a new offering from the ground up that allows us to partner with any customer immediately, regardless of their starting point - with no lead time", Lindner knows from his daily work with Oracle customers.

"In the past we had similar applications based on similar technologies", explains Jürgen Lindner. "Oracle E-Business Suite, PeopleSoft, JD Edwards and Siebel. SAP had R/3, followed by ECC and Business Suite. Then Oracle decided to develop a brand new suite for the cloud era: Fusion. We started this investment ten years ago, ten years ahead of almost all other SaaS ERP vendors. This is also reflected in analyst reports like the Gartner Magic Quadrant and others."

At least in Germany, SAP's cloud-first strategy is only moderately accepted. The majority of DSAG members prefer an on-prem infrastructure. Are cloud and ERP irreconcilable opposites? "You raise an interesting point. We know from DSAG and ASUG that SAP customers in the DACH region are rather reluctant to move to the cloud, while SAP customers in other regions are more inclined to consider the cloud", answers Jürgen Linder in an interview with E-3 Editor-in-Chief Peter Färbinger.

This creates an interesting dynamic with different speeds of cloud adoption to consider, Lindner says. "If you move too fast and too aggressively, you risk alienating customers. Move too slowly and you risk losing customers. Doing both - designing and developing a completely new suite for the public cloud while delivering new features to on-premises customers - is very expensive and takes a lot of time. That's why we started doing this ten years ago."

Where is the added value? "We can offer a very attractive alternative, and we are having many conversations with this customer base. More and more companies are turning to Oracle when it comes to specific business areas", Lindern can report. "Quite a few SAP customers are accelerating value creation with us because there is no lead time and you can start immediately. One example is Oracle Cloud Enterprise Performance Management, EPM - a very strategic offering, especially as the liquidity situation and scenario planning have become key priorities during and after the pandemic."

Oracle Transportation Management

Another example is Oracle Cloud Transportation Management, OTM, a key solution as the pandemic has hit logistics very hard. These offerings do not require customers to completely divest from previous SAP investments. "Some customers go this way", knows Lindner, "but co-existence and cloud-based modernization over time is the preferred path. Our architecture makes it very easy to partner with us for immediate gains, and the customer is in control of where they want to start."

Oracle has announced Connected Enterprise Planning, which addresses the need for holistic financial planning and analysis across human resources, projects and supply chains. It connects workforce planning, integrated business planning and execution (IBPX) and financial planning. "Oracle is able to do this because we have a unified data model that allows customers to plan holistically across ERP, HCM, CRM and SCM", Linder explains the compositional architecture.

In today's business world, it no longer makes sense to plan only for headcount. Rather, financial resources, distribution capabilities and production resources must also be included. "That's what we can do with Connected Enterprise Planning, and that's what makes Oracle an attractive option for SAP customers", emphasizes Jürgen Lindner.

Similarly, OTM. "Everyone knows 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 situation. "SAP customers are starting to use Oracle OTM to handle all these disruptions and find alternative transport routes."

Conclusion

And finally, here's an attempt to define its position: since the company's founding, Oracle has been synonymous with managing, securing and using the world's most important data sets. "We know this area inside out and take it enormously seriously, as our latest innovations, for example the autonomous database, show", defines Jürgen Lindner and adds:

"But we also have a long history of business applications that manage and respond to these data sets - so data is our DNA. Compared to SAP, we have always looked holistically at all levels of the technology stack. As a result, we are able to offer a unique partnership to our customers. When SAP ventured into database technology, it took its toll on their development efforts in other areas of the business, to the detriment of their customer base to this day and for many years to come. SAP's innovation in applications and industry was spotty for years and still is today. Customer disgruntlement - as evidenced by user group feedback - is profound and is causing them to consider other options. But SAP customers can also postpone their S/4 migration: They can run their SAP ECC and Business Suite solution on Oracle Cloud Infrastructure and continue to use the Oracle database."

Thank you for the interview.