LNS Research recently attended Oracle OpenWorld 2019 in San Francisco. One of the mega technology events for the Golden Gate City, the conference took over all three halls at the Moscone Center and had over 60,000 attendees.
Oracle is now over $40 billion in revenue (2018) with over 137,000 employees; it positions itself as the number one supplier of business software. The company is clearly innovating in many directions. The event covers the two sides of Oracle: Oracle, the technology, and Oracle, the applications vendor. Additionally, the firm has sophisticated positioning for “emerging technologies.” So, let’s examine each, and determine if this means Oracle can finally engage deeply in the plant.
Technology Stack Development: What It Means for Manufacturers
We recently explained that cloud is core to Oracle’s strategy. OpenWorld reinforced that position, however the big word during the event (and likely for the next few years) was “autonomous.” In manufacturing and operations, we think of autonomous as a driverless vehicle (automatic guided vehicles [AGVs] and increasingly transportation and heavy equipment). Oracle uses “autonomous” to mean a driverless database, which is core to its technology and application stack. It positions autonomous as “self-securing,” “self-patching,” and “self-repairing.”
Multiple speakers explained that users can’t make changes that jeopardize the security of the database. All applications above the database “inherit” these autonomous capabilities, so Oracle Supply Chain Cloud inherits these benefits. Given that 60% of data breaches are tied to users improperly changing configuration files, Oracle positioned autonomous as the only means to truly preclude cyber security breaches.
OpenWorld 2019 featured a series of extensions of Oracle’s autonomous capabilities and the first release of an autonomous operating system, Oracle Autonomous Linux. Further, Larry Ellison, founder, chairman, and chief technology officer, made it clear that autonomous capabilities will be available for the company’s on-premise technology stack in 2020 (subject to safe harbor limitations). For manufacturers with operational technology (OT) systems not managed by IT professionals but rather by “shadow IT,” autonomous may provide critical functionality in the Cloud and (in the future) on-premise. This could be a key step to secure OT systems and data fully. We will be watching carefully.
Process Manufacturing ERP and Supply Chain in the Cloud
Also notable during OpenWorld 2019 was the announcement of immediate availability of Oracle® Process Manufacturing, Oracle® Hybrid Manufacturing, and Oracle® Project Manufacturing (for supply chain) in the Cloud. The firm re-wrote its supply chain, enterprise resource planning (ERP), and HR applications from the ground up to maximize performance in the Cloud. Oracle quietly became the first company with a comprehensive cloud supply chain solution. However, not for process, batch, or hybrid manufacturers ― until now. The recent announcement shows that Oracle intends to have a comprehensive ERP and supply chain solution in the Cloud. While there is, of course, a multi-year roadmap, the announcement showed the “current” availability of a “fixed-formula” process and hybrid manufacturing. One target focus is food and beverage, given its hybrid manufacturing models: process for creating beverages, and discrete for packaging those beverages into specific containers. Oracle touted its machine learning (ML) and artificial intelligence (AI) capabilities, and “closed-loop quality” that it built into the offering. Over time, the company will roll out the rest of its process portfolio.
Sophisticated Strategy for “Emerging Technologies”
Another key strategy that should be of interest to manufacturers is the company’s effort to embed “emerging technologies” into its technology stack. That approach allows it to make those capabilities available standalone or integrate with any Oracle applications where they offer value. Of relevance to manufacturers are the “emerging technologies” of AI, ML, digital assistants/voice, and advanced analytics. In fact, when the company embedded these emerging technologies, it led to the “Gen2 Cloud” positioning that it echoed across the conference.
Oracle can deploy any of these technologies in any other application in its overall stack, or for customers directly. For example, the company reports using its ML algorithms in cyber security. As well, it uses digital assistants and voice in purchasing and expense reporting. AI is being used in several applications, including preventative maintenance and accounts payable. Oracle has also applied them in specific application packages: AI for manufacturing, five in IIoT applications (asset monitoring, production monitoring, fleet monitoring, connected worker, and service monitoring), etc. Multiple customer presentations showed how these applications and technologies are deployed in manufacturing, even for customers that aren’t using Oracle for ERP.
The one challenge for Oracle is that with all the focus on cloud, its edge message got lost.
Overall, we’re impressed with Oracle’s positioning with these emerging technologies. It is clearly an important piece of the puzzle for the company, but only one piece. The position aligns quite well with LNS findings on Industrial Transformation Leaders’ (IX Leaders’) best practices. IX Leaders are implementing five technologies, versus only two by Followers. IX Leaders are twice as likely as Followers to also be re-architecting business systems and upgrading OT systems (MES, automation, process control) as part of the IX program. IX Leaders view these new technologies as an essential piece of the IX puzzle ― but again, only one piece.
Oracle and Manufacturing
In manufacturing, the devil is truly in the details. Oracle has historically wanted to play above those details. Despite originally acquiring ERP vendors with strong roots in manufacturing, Oracle has not moved deeply into manufacturing applications, especially outside of high tech. It hasn’t sought to deliver solutions that run manufacturing ― MES/MOM, for example ― nor has it aggressively positioned itself in quality execution, manufacturing intelligence, or “plant floor to board room connectivity” as other ERP vendors have. The question becomes: does the availability of Oracle natively written applications for AI, IIoT and ML finally enable and push Oracle deeper into manufacturing? The preliminary evidence indicates that the answer is “yes.” It has launched apps that provide connectivity to equipment and operations, which it has historically lacked. Success stories it promotes show those technologies squarely on the plant floor, even if deployed in the Cloud. One customer presentation by Noble Plastics, for example, could have been transplanted easily into any number of OT vendor events in terms of its topic, tone, and plant engineering focus. “Emerging technologies” could be critical for Oracle in emerging as a real player in manufacturing operations applications.
Final Thoughts and Recommendations
Oracle ERP Customers
- Carefully evaluate the potential of Oracle’s cloud offering for your business. Clearly, Oracle cloud ERP and supply chain have matured and should be considered ready for mainstream deployment for discrete manufacturers (though check Oracle the Oracle roadmap to ensure readiness of specific functions critical for your business). Implementation for process, batch, hybrid, and project-driven is now available. Of course, monitor customer progress and roadmap developments.
- Shortlist Oracle for emerging technologies as well. Its applications in AI, IIoT, and advanced analytics are worth evaluating for their ability to deliver value as standalone applications. Additionally, that these applications leverage across Oracle cloud ERP and supply chain applications provide a significant advantage over the long run.
Manufacturers with a Variety of ERP Systems
Only 32% of enterprises have standardized ERP across operations and business units. This could be a critical transformational strategy for the 68% of companies that don’t yet have typical business and supply chain solutions across the corporation: leapfrog on-premise standardization and jump to the Cloud for standardization instead.
Industrial Transformation and Oracle
We view Oracle as a solid partner for companies on the IX journey, well beyond its obvious ERP capabilities in the Cloud. We’ll continue to watch Oracle’s growth, rollout, and deployment of IIoT, AI and ML applications to see if it continues to push deeper into manufacturing, as the preliminary evidence suggests.