‘Challenger brand’ Oracle's digital hubs in Asia mark its transition from product to services company
By Karamjit Singh September 29, 2017
- 250 digital natives run centre that covers 22 countries in Asia
- Cloud computing focus allows Oracle to go cheap and after SMEs
THE transition of the economy and business from brick and mortar to digital is making for interesting times. Where, a global tech company with US$10.9 billion in Q4 2016 revenue can say it is a “challenger brand”, despite having made over a hundred acquisitions, invested 10 years and spent heavily on R&D.
And that’s because its competitors are Amazon, Google, Microsoft and Alibaba. Welcome to the world of cloud computing, where many customers, especially small and medium enterprises (SMEs) make their choice of service provider based on cost, compelling Oracle Japan and Asia Pacific senior VP François Lançon to answer, “I think we are cheaper,” in reply to a question about a competitor’s cloud pricing being cheaper.
Oracle touting it is cheaper? Welcome to the world of the digital economy. But it’s not a race to the bottom between the global cloud providers, and this is a fast growing business for Oracle with the company charting a 51% increase in cloud revenue in the first quarter of its 2018 financial year. To be sure, the entry point is cheap, to which Lancon says, “It is incredibly cheap to start with the basic services but then customers will move up [to buy more services].”
And, these customers Oracle is targeting now are the SMEs, especially those in the top 75% because while Oracle, “used to be very high end with its strong technology, security and speed, now with the cloud, SMEs can afford the same products as well,” says Lancon.
And this is where Oracle is making a big sales push to deepen its penetration into the SME market in Asia, with its Digital Hub strategy with Kuala Lumpur being the most recent one to be launched on Tuesday witnessed by Lancon with InvestKL and Malaysia Digital Economy Corporation. Both government agencies played a key role in helping Oracle pick Malaysia as a location for their digital hub.
Lancon cites reasonable business costs, talent availability, language diversity and a government that is supportive of digital economy initiatives as being the pool of factors that makes Malaysia one of the very few places in Asia ideal for setting up such digital initiatives.
With five hubs up and counting in the region focused on demand generation and sales, Oracle is recruiting a pool of digital natives to run these hubs with the goal of acquiring potential SME customers online and passing them on to the relevant country account managers to try and close the leads.
Covering 22 markets in Asia, Kuala Lumpur is the main demand generation hub for Oracle with about 250 staff and with the likelihood of expanding the numbers even though operations just commenced in June.
“It’s all upside for us as we have not been addressing the SME market,” says Lancon speaking of the potential ahead even as he says the cloud business is growing at startup speed.
Interestingly, while the digital hubs is a strategy for its cloud business to tap into the SME market, there is also a cultural aspect around speed and talent.
“Your Gen Z need a fun environment and we are trying to create a new culture with these digital hubs as it’s easier to start new than to change the old culture which takes too much time,” he says expressing the hope that the new culture at these hubs could be a change agent for Oracle.
Despite being a challenger brand in the cloud space, Fitri Abdullah, Managing Director, Oracle Malaysia says they will engage with customers and help them take small steps to get started on their cloud journey. “That is the model for cloud. You land with a small project and grow from there.”
This sell cycle itself is a big change for Oracle, a product company used to selling its anchor ERP (Enterprise Resource Planning) to customers as a complete package with various modules. “We are now becoming a service oriented company and this is a cultural change we need to make to be closer to our customers.
The cloud automatically helps with speed as well, a key business trait today. Fitri shares that Oracle was able to take a logistics customer that wanted a cloud based ERP solution to go live in just five weeks. “The old ERP model would have taken us two years to go live.”
Lancon adds that while adopting a cloud solution used to be about managing costs differently but today it is less about cost and more about the speed to market to allow one to innovate and change. “This is a world where if you do not run fast enough, someone else will. That’s what we are seeing.”