The bulls are running for three tech giants: Oracle, due to its cloud business growth, Salesforce, thanks to numerous big deals, and Workday, with sales growing to Fortune 500 clients, are all on a roll, say analysts at Technology Business Research.
Here’s a breakdown of their views:
- Oracle ever more bullish on its ability to dominate all cloud layers
Meaghan McGrath points out: “Oracle notes great SaaS execution, but hones in on expected IaaS dominance”
Oracle’s recent FY3Q17 earnings call piled on the proof points that Oracle’s cloud business is here to stay. With NetSuite fully impacting the quarter, Cloud SaaS and PaaS revenue increases (73% growth year-to-year) convincingly outperformed new software license declines to deliver overall year-to-year growth of 4% for all collective software and cloud segments.
With legacy business declines inevitable and most pronounced on the applications license and hardware segments, Oracle executives continued to highlight new customers and growth in all areas of cloud. One notable change in the messaging came from CTO and Executive Chairman Larry Ellison, who evolved on his original stance that the opportunity in PaaS was bigger than that in SaaS, to now assert that early traction of the second-generation IaaS indicates the IaaS business will “be leading the way in the future” as the largest of all.
This rapid growth is, according to Ellison, set to take place over the next 5 years as the majority of Oracle database customers maintain and lift their licenses to Oracle IaaS amid other vendor workloads also being moved to the infrastructure.
It is increasingly evident that while Oracle’s initial push into the cloud market was to protect the more immediately threatened applications install base, the company has been able to acquire and build its way to a successful SaaS portfolio that it expects will once again pale in comparison to its database install base’s move to the cloud.
- Salesforce will cross-sell its way to $10B in annual revenue
Kelsey Mason writes: A record number of large, multiproduct transactions validate Salesforce’s role as a strategic adviser
Salesforce’s revenue grew nearly 27% year-to-year in CY4Q16 to just under $2.3 billion, as the company successfully evolves into a strategic adviser of digital business transformations, according to its latest earnings report.
Multiproduct sales as well as an increasing emphasis on professional services and vertical tailoring are critical to Salesforce’s ability to assist with these transformations and drive larger deal sizes. Of the 10 largest deals signed in the quarter, eight included multiple solutions and Salesforce now has 100 customers with contracts worth at least $10 million. In just the last year the company also doubled the number of customers with contracts worth $20 million or more.
To drive additional large transactions and achieve $10 billion in annual revenue in FY2018 Salesforce made changes to its Consulting Partner Program that encourage multiproduct sales.
Salesforce’s multiproduct sales strategy is supported by continued portfolio expansion into adjacent areas of the value chain, often through acquisitions. This inorganic portfolio expansion, evidenced by the acquisitions of Demandware and Krux, hampered operating margin in CY4Q16, bringing Salesforce back to negative margin territory after experiencing nearly two years of positive operating margin.
- Workday successfully infiltrates the Fortune 500
Mason concludes about Workforce that the company ended FY2017 on a high note and evolves its go-to-market strategy for continued growth in FY2018
Workday’s increased engagement with the C-Suite is paying off, as the company grew revenue 35% year-to-year in 4Q16 to nearly $437 million and continued to capture share in the Fortune 500. Workday signed 13 Fortune 500 customers in the quarter, including Wal-Mart and BP, both of which are in the top 10. Workday’s continued penetration of the Fortune 500 often comes at the cost of incumbents Oracle and SAP, showing Workday’s viability in enterprise back offices.
As Workday remains committed to driving top-line growth over profitability, operating margin continues to suffer, declining 160 basis points year-to-year in 4Q16. As part of efforts to drive growth, Workday restructured its global go-to-market strategy at the start of FY2018. Chano Fernandez was promoted to executive vice president of global field operations, and Workday’s North American sales and professional services teams were divided to focus on medium enterprises and large enterprises separately.
This evolved go-to-market strategy combined with a key infrastructure partnership with Amazon Web Services and ongoing portfolio expansion will help Workday reach its goal of exceeding $2 billion in FY2018 annual revenue.
