As part of its aggressive cloud strategy, Oracle has in recent years often included various cloud offerings at significant discounts or even as freebies within a larger deal or Unlimited License Agreement (ULA) renewal. This practice has allowed Oracle to show Wall Street significant growth in cloud customers and to tell a positive story to stock analysts regarding Oracle’s future in the cloud space.
Problem is, the future is now and the tide has turned. The emphasis today is on consumption – and sales strategies, compensation plans and revenue expectations have evolved accordingly.
Mark Hurd, Oracle’s co-CEO, recently stated that Oracle will be “fine tuning” its sales strategy by organizing by buyer and by product, as well as focusing on selling to business leaders rather than the CIO. This represents a major shift in Oracle’s go-to-market strategy and an even bigger shift to its business model. Oracle’s perpetual license revenue drives Oracle’s growth as well as its recurring maintenance revenue stream. As Oracle shifts to Everything-as-a-Service, expect to see an increased effort to maintain if not grow the perpetual license business to fund corporate investments and the transition to the cloud.
Put simply, Oracle’s perpetual license business will continue to be the company’s bread and butter. The question now becomes how will this mainstay continue to grow if Oracle’s sales force is focused on the cloud? For many Oracle account teams hard-pressed to make their numbers, the answer will likely be audits. Audits of customers’ software assets have, over time, provided Oracle a significant source of revenue and one thing Oracle is adept at is exploiting sources of revenue. While audits may not be an explicit business strategy, expect Oracle account teams to become increasingly more aggressive with the practice.
