 Live from San Francisco, extracting the signal from the noise, it's the Cube, covering Oracle OpenWorld 2015. Brought to you by Oracle. Now your hosts, John Furrier and Brian Grace Lee. Okay, welcome back everyone. We are here live in San Francisco for Oracle OpenWorld, special exclusive coverage from Silicon Angles the Cube. This is our flagship program. We go out to the events and extract the signal and noise. I'm John Furrier, the founder of Silicon Angles joining my co-host Brian Grace Lee, top analyst at Wikibon.com. Our next guest is Sean Price, senior vice president of Oracle Cloud. He's running all the go-to market reports to Mark Heard himself, man on stage today. Welcome to the Cube. Thank you so much for having me. It's great to be here with you guys. You're a tech athlete. You've been a pro bike rider. You've noticed like a rider. You won the Daytona 05. You're now leading the cloud with Mark Heard. I mean, I know he's operationally tight, so you must have your stuff together. You have to ride a bike that fast and win and also work for Mark Heard. Well, what they don't tell you about riding bikes or racing cars is that to get to the front, there's a lot of crashing that's involved and I've had my fair share of those, but Mark is, of course, an exceptional CEO and it's amazing that he understands every atomic level of detail of our business and really driving the ship. You think about things like our growth from 90,000 employees four and a half years ago to today, almost 140,000 a shift to the cloud. Yeah, it's been a real privilege. You notice Mark has an affinity towards the Cube. He's an anchor desk. He was having fun up there, right? He's really feeling good, but I saw his interview this morning on CNBC and the reporter, they always ask kind of lightweight questions, but the question was, you know, are you guys determined to get into the cloud business? And his response was determined, like the playoffs, you know, it's like, we are in the cloud, we're winning, so I want to drill down on that. You guys are in the cloud, you're not determined, you're winning, so share with folks because I'm actually surprised that the mainstream press and analyst groups don't put Oracle in the top three. They always talk about the other guys, you know, Microsoft, Amazon, and Google, that you guys are dominating. Give some stats on where you guys are with cloud on this modern era, kind of pipeline looking, what's it look like to go to market, how well received has the Oracle cloud been and why? Yeah, it's as simple as this. This is a transformation that has happened, not happening. It doesn't matter on whatever dimension you measure it, it's transforming us, and I think this is the, singularly, the largest transformation either in computing history, but certainly for Oracle. And we're determined, when I joined the company, I really asked two questions of the exact leadership team. Are we committed to transforming and disrupting ourselves? And will the skill sets that have made us so incredibly successful over the last decades transfer to the new world? And I mean, you need to look no further than what we've done in terms of our compensation with our sales teams, how we're addressing our customers, migrating support revenue streams to modernization in the cloud. And so, and then the skill sets, move from sort of this notion of best of breed, single app to now it's a complete platform where you need data, SaaS, platform as a service to extend and infrastructure to run certain computing storage. It's a database transformation right now. That's Oracle's core. You talk about customers in the sales motion with the Salesforce. Yeah. They're in the front lines every day. What is the Oracle cloud strategy with respect to the product and the sales motion specifically? You know, platform as a service is really strategic on a couple of dimensions. I think the first use case is clearly extensibility. SaaS has historically been isolated. Everybody gets the same level of code. So then the question is how do you build IP and how do you take this ecosystem of partners that in some cases have 50,000 certified consultants, 21,000 Java developers and monetize the IP they have to extend. So SaaS extension is one. In the new world of enterprise, SaaS, you don't flip the switch on your ERP overnight. You coexist with PeopleSoft, JD Edwards, EBS, and then you add HCM in the cloud. Well, we use platform to integrate those two by a product, you know, so that we can coexist. And if you look at database as a single unit of work, we have 40 of these services, by the way. We're seeing that there will always be units of work that stay behind the firewall and run mission critical work that should be there. But increasingly, things like app dev test and database in the cloud, they're comparing two dimensions. They're saying on-premise, it's 88 steps. I've got to have provisioning network storage IT where it's five clicks and I migrate to the cloud. So there's pent up demand in the customer base saying, help me take TCO out of my running infrastructure by moving units of work to the cloud. Well, let's talk about TCO. Let's talk about TCO. I want to get that on the table because that's a big thing. Cloud looks great with price and price attractive and economics all are great. But there is a cost of ownership of cloud. What does that look like? And how does the customer actually start putting that together because there aren't a lot of models out there for cloud cost of ownership? Can you share some insight of what you guys have found? Any kind of best practice? Any kind of equations? Any kind of tips? Absolutely. I think there's two parts to this. If you just stay with a database example for a minute. If you look at what it costs to migrate a unit of work to the cloud. Well, most companies, particularly the big out-sourcers are taking out facilities cost of $50, hardware of $100, $500 in license. But by far the biggest cost in the TCO is the operating cost. And when you go to an Amazon or an Azure or any of these companies that run those personal productivity units of work, they don't solve the one thing we do. We take out 70% of that in the operating cost around maintenance, no more maintenance, no more upgrade, no more patching, no more DBA. And Oracle on Oracle is uniquely able to do that unlike any of these others that run Oracle units of work that we're migrating. I mean that's an immediate one. I think what was announced today with John Fowler in the hardware group has applicability as well. When you look at our M7 chip strategy, we're starting to do things like archive storage at pennies per terabyte. And so if you look at compute power and you look at operational excellence, we see that we're incredibly advantageous in our TCO. Sales guys must love the antenna encryption message. I mean that's like all right. But perimeter security being dead, that's the only thing that I would say is dead in this new era is that perimeter based security is gone. So if you look at Larry's message and you look at portability and you look at what happened with European justice this week around the Safe Harbor Act, we now have a potential to let customers decide based on their tolerance, whether they run an on-premise unit of work, whether they make a migrated managed cloud service or public cloud. And if we do that, I can leave the data where it is and I think that portability, that same skill set supply and the management layer to understand what runs where solves a lot of pains that have been historically unsolvable for companies. Just the compliance alone is a huge win. I mean security being applied in silicon, I mean compliance is a service. Ryan, you wanted to get some... Yeah, so you talked about part of your role is to disrupt internally. You know we've seen a number of companies, I mean HP just got out of the public cloud game, there was a piece in the Wall Street Journal saying they could never figure out their sales comp model. How do you make sure that your customers say when my Oracle rep or my Oracle SI partner is working with me, that I'm getting the best technical solution, not the one that puts the most money in their pocket. Like how are you guys managing through that transition because it's hard to go from capex to op-ex? Yeah, I think the first starting point of that journey really is about the different journey and consumption of innovation. This is a market that's raising its hand in hyper growth, not necessarily being directed. And so how are they driving hyper growth? What areas are transforming first? Well, it's clear that a lot of the infrastructure of the past in no way works against a new set of consumer expectations. Take for example in the U.S. market, every single day 20,000 people turn 65 for the next 20 years. So all the experience is leaving. And on the front end, there's a war on talent, not enough millennials. But the applications we've been running are about payroll and benefits and applicant tracking. And so companies are saying I need to move because of this top-line operating model shift, and I'm going to start with workforce planning in the cloud. And then I'm going to add recruiting marketing because I want social recruiting. There's not enough people. The best way for us to get candidates, Brian, is for me to ask you, we know each other, and you bring them, or branding, or onboarding. And so this transformation is occurring from the market demanding it. The second part of it is there's a consumption of innovation issue that I don't think people really look at in the breadth. I don't know if you know this. We have 70 million subscribers that do 33 billion transactions a day. Mark announced in Q1 we have a $500 million-plus bookings business growing at 150% year-over-year. The way we produce new products is we listen to those 70 million subscribers, and today we produce 500 feature upgrades on an approximate 90-day basis. That means 6,000 feature enhancements without a scope of work, without coming in and accounting for your configurations, and immediately hitting the sweet spot. So it's a completely different world today. It's a different world. And the ecosystem is an issue. I want to talk to you about your go-to-market with partners and alliances. In the old days, a lot of people made money on enabling platforms, certainly Oracle, SAP, during the ERP heyday. I mean, the consultants made a ton of dough. People in the ecosystem were reading 5, 10x per order dollar that you guys were booking in Oracle and whatnot. But now that world's changed. So talk about the role of the deployer, of the integrators, the main lines of integrators. They're starting to get in the cloud business or they're getting in the tooling business. So that has shifted. So talk about the landscape of the partners and how do they make money with you guys? Because at the end of the day, it's a shared go-to-market. You're seeing that out there. You mentioned that. What does the main line SIs and what do the new SIs do with you guys? How do they make money? Yeah, I think that they're having to respond to the transformation that we are, which is the customers are saying, it's not only about big bang transformation. I'm in the line of business. I'm the CHRO that has this shortage of talent. And so they've had to rethink how companies adopt and what the respective options are. I think also there's been a fundamental shift from just implementation dollars to now specification. Companies are putting the big companies and small company digital natives and born in the cloud into a position to help guide that digital transformation. So their revenue streams I think are numerous. It could be on specification. It could be on cultural adoption and change management and process, which are sort of really big sweet spots. And in order for transformation to occur, two things need to be present. Technical innovation, which we have and behavioral innovation. And I think the combination of our channel plus what we do technically is unparalleled. I guess the last point I'll make is, it's really unique. Imagine coming with my ecosystem across ISVs and resellers and SIs. You know, 85,000 consultants deep. And the same skill sets that you're already trained on apply seamlessly to the cloud. So we're seeing great adoption, great traction. And what's the update there here at Oracle Open World? What's the SI and partner message that you guys are putting forth? Any new announcements, anything new? Yeah, we announced a program this week, which is a new cloud program. We announced here saying that we're going to have a cloud, four layers of a cloud program, top layers cloud elite. And we would like our partners to align to our strategic direction. That's not to say that Diamond and all the programs that are on-prem don't exist, they do. But we need to pivot to the cloud fully through our ecosystem. And part of what the feedback is, as I've talked to hundreds of customers and CEOs of these partners, is they're saying, look, we need your help. We want to know how you measure us in the cloud. It's no longer about certification and number of consultants. If you don't get utilization, if you don't get go live, if you don't get expansion, you never renew, you never expand. And so we're aligning a different measurement system. They're saying, we need help in your messaging. What's repeatable? We need help in targeting against your install bases and how to engage. So we've announced a new program, four tiers, cloud elite. We're building it now. What's the cloud elite look like? Pick us through who a profile. We have an announcement of the criteria. In fact, what I've used this platform for is an opportunity to actually solicit input from our community so that we hit the right mark. So you're doing some due diligence, getting some requirements. We're trying to line that up with how you guys... So how do the people make money with you guys? Now that's ultimately the economic question. What's it in for me? You're my partner. How do I make the cash? You can take any layer of the stack that I just described. You could take data as a starting point and you could build all of the data practices in the world of data as a service. Today, all of those need to be integrated. All of those have to be enabled and expanded. The platform as a service is a unique revenue stream. Imagine if I said to you, I have 400,000 customers with captive oracle units of work that you can take all your trained consultants and point at this new revenue stream. So PAS becomes a new revenue stream and then the associated infrastructure as a service to work through that vertical compute to support PAS. You guys have a lot of margin to work with in the cloud. I mean, cost of goods sold is pretty much some costs are ready. Mark talked about that on CNBC. A lot of margin to play with. He says, oh, my 80 points margin and big numbers here. How do you guys take that margin and reinvest in the company for your mere standpoint? How are you guys going to take that to the next level? And how do you judge yourself in the next year? It's really simple. I think in terms of sort of the judgment from my perspective, it's about did customers go live? Did they use the subscription and did they get value from it? And that drives all else because if that model doesn't exist, you don't get renewal, you don't get expansion. The customer acquisition costs are off. The R&D sunk costs don't relate. And if we just make it that simple, go live, use the subscription and renew and value. I think that you could look across any dimension of the company. What do you do? So the Oracle Cloud story is great. Like you said, if I've got captive Oracle workloads, what do I do though if you want to talk to the automotive industry who wants to do connected car? You want to talk to cities that want to do connected streets that aren't Oracle workloads. What's your pitch to them that says you should build on my platform when I'm not starting from an Oracle application? What's the alternative? You could pick a bunch of pieces to try and string together and preintegrate. And by the time you get there, the internet of things to create the connected smart car connected to my phone is gone. What we're seeing, I just came back from India. It was pretty fascinating. They had taken a car. They'd censored it. They'd censored the road. They built a mobile app. And all of a sudden, why do I need a driver's license bureau? And so we've got all of the elemental building blocks, no matter if it's the most atomic level of work as a database or it's 40 components of platform as a service. And ultimately, it's about how do I get the data in? How do I manage the data? And how do I distribute it? So taking even our mobile development platform to extend. I think that there's the rest of the market is largely fragmented. If you think about how would it, how would anybody else solve that? And you'd have to do it through 10 different vendors in 10 different ways. And I think we have a pretty good story there. How are you guys organized at the cloud? Because one of the things we talked yesterday that came up is you're being attacked on the competitive landscape from two fronts down from the top of the stack at SAS and up from the infrastructure service with Amazon. Yeah. Play sales force, workday, whatever. But you have two vectors of inbound and you guys are right there on some really good fortified turf. You guys got really good territory locked in from the all atomic elements. You nailed it, right? So I'm bullish on the platform. I think you guys got a good opportunity ahead of you. Still not over yet. This game is in the early innings of Game 2 of the double header. Amazon win Game 1. Game 2 is the enterprise. Yeah. How are you guys organizing your sales motions? And talk about that. It's pretty simple. The question is, if I own all the infrastructure that's run your companies for decades, the question has to be why not Oracle? Not why. And then if I approach you and say you can attach any initiative from a single application and 10 subscribers, land and expand, every transaction audition to the next, if you want to take a cluster of apps or you want to transform and to end, we'll meet you at that buyer's journey. And then because the expansion is so critical to the economic model, we'll surround it with services and best practices in an ecosystem to ensure that happens. And so the motion is really simple. Be transparent. Be simple to do business with. It's not about discovery where we push everything in. We need to have a point of view on what constitutes state-of-the-art in CX, state-of-the-art in ERP and guide our customers through that journey. I think you got a good opportunity because it's not a rip and replace market. It's really additive because if you look at, you mentioned land and expand, no one's saying replace Oracle. They might say Oracle's too expensive and there's other alternatives. That's a different question, but it's not Oracle's going away. New things are happening. So I think that's a very viable play. The answer is that Oracle just gets all these customers and Mark Hurd's talking about because they're part of the Oracle Mafia and they just get them to go use the cloud and it's part of a licensing negotiation. There's a lot of fun out there around that one point that there's some sales muscle being used to muscle customers into the cloud. So address that. Talk about that and refute that or comment to that point. I think it's really straightforward. The published data that we have is 70 million subscribers and 33 billion transactions a day. That's an awful lot of people not doing anything, isn't it? It's true. And our bookings growth rate, if you look at what Mark announced in Q1, was 500 million plus on 150%, but two important data points. 200 net new ERP customers, 620 plus net new SAS customers and 660 expanded their license, which means that they are actually not just buying through financial engineering, they're using, broadening and expanding. People have taken a shot at Oracle. I mean, we've heard about it today. It's like copying a sear, they're throwing mud around this way. I mean, at the end of the day, proof is in the pudding. Are they spending money? Are they putting their money where their mouth is? Are they deploying? To me, that's, I think, the real value. Any thoughts on that? Absolutely right. I think it's great. If you're talking to customers that aren't there yet, what's the biggest success? I mean, is there a low hanging fruit to moving to the cloud? Is there stuff that's, I want to get big vision, but they can't get there. Give us a sense of, what do your customers go through in thinking about this? They start their journey in three ways. They say, I'm a traditional CIO, and I'm interested in moving CAPEX to OPEX. And boy, can you help me take 2,000 apps down to 500 because I want to take the TCO and cost out. That's sort of the first level. And they're opportunistic, database, middleware, a unit of work. The second layer is a company that's responding to a threat on consumer expectations. Your application doesn't work social, mobile. It doesn't work the way that my infrastructure works, and I need to modernize that footprint. The third is the strategic operating model shift that I was sharing around HCM. I have to do this because I can't hire, or I've just acquired a company and I have a choice. I'm at this inflection point. Do I go with my on-premise and extend, or do I throw ERP in the cloud in the middle? I've got a centralized ERP, two-tier subsidiary. So really three things. Strategic imperative that's forcing the company, and I guess the last one is the disruptors can't be discarded. If you look at regulated industries like finance, and you look at two years ago, 20% of CFOs are saying, never am I going to take finance to the cloud. Nowadays, you get companies like Lending Club that have come in and said, we're going to socially raise $9 billion in capital. We're going to offer credit cards at half price, but we only want your best consumers. If you're a brick-and-mortar bank, you need to disrupt pretty quickly. And so all of these, you can enter at any one of those three drivers that move companies to the cloud. The thing I want to do is I don't want to convince you. If I have to convince you or you're not ready, or we're going to run into the security or the data residency, I don't need to convince you. I have such a robust, enormous market that is proactively disrupting and raising their hand that that's where we should focus our efforts. They've been wanting to raise their hand for years now, pretty much. Absolutely. And there's a lot of little nuances involved in the enterprise. That's why I say game one with Amazon was 10-run rule. I don't know if I agree with that, by the way, but I'm not going to debate you on your show. I can't just roll over on that. We have to wrap. Let's get up for another segment. We'll go over time. I do love the go-to market. I think you guys have a great job. I think you have a fantastic opportunity and certainly exciting. I mean, being disrupted is a big thing. If you don't disrupt yourself, I think that's the thing. So I'll give you the final word for the audience. If they're not here at Oracle Open World and they're watching Oracle Cloud, what would you like to share with them about the show and Oracle Cloud in general? I think that everyone who has a cloud initiative should have us in to talk about our viewpoint on what we think state-of-the-art is, whether that's moving an individual component, looking at a managed service, or disrupting SaaS, or past. I think that the world has really thought about cloud and very fragmented microscopic pieces, and as the world has moved to enterprise cloud, the only way to solve it is through the four tiers that Larry and Mark and Safran Thomas have engineered. And I think I have the most exciting, most fun, most relevant job in the world, and it's an honor and a privilege to be in this role. And I love spending my time out with customers because they inform our strategy. And thank you so much for having us. Thank you for sharing your insight here on theCUBE. We really appreciate sharing the data. We're sharing with you, the audience, for your live. On Howard Street in San Francisco to theCUBE, we'll be right back with more after this short break. Go to SiliconANGLE.tv and check out our podcasts and our other videos up there are all going to be all available instantly right now. I'm sure there's some videos I'm showing up on the net right now. We've got some highlights coming out. Thanks for watching. We'll be right back after this short break. Thanks a lot.