In his keynote on Monday at Oracle OpenWorld 2016, Oracle CEO Mark Hurd showcased customer success stories and offered three new predictions for the future of cloud, which, he said, represents a generational shift in the IT market.
The presentation was interspersed with recorded customer testimonials and live interviews with companies from a range of industries, including Motorola Solutions, Tippett Studios, Orange, Lyft, HSBC, boingo, and ClubCorp, on how they are implementing Oracle cloud solutions to benefit their businesses.
Backdrop for the Importance of the Generational IT Shift to Cloud
Describing the move to cloud as a generational shift, Hurd explained that the deployment model will alleviate the plight of CEOs who are being pressured to grow revenue and innovate while also cutting costs.
According to Hurd, in corporate IT, more than 80% of IT spending today is dedicated to simply keeping existing services going with very little room for innovation and the ability to implement programs to capture new insights about customers. In addition, there is increasing demand from corporate boards to improve security and demonstrate regulatory compliance. This, he said, places enormous pressure on innovation budgets which are already stretched thin. Repeating statistics he has shared in the past, Hurd said that the average age of an application is about 21 years, running on infrastructure that is about 5.5 years old.
If all cloud did was cost less, it would still be worth doing because it drives down capital expenditures, reduces labor costs, creates certainty of monthly expenses, and reduces costs on maintenance, upgrades and patches, said Hurd. “But, you actually get more,” he said. Cloud is more secure, more reliable, more extensible, easier to use and “all of the innovation shifts from your IT budget to the cloud provider’s R&D budget,” enabling faster innovation, with quicker time to market, he said, noting, “Innovation actually goes up and that happens simultaneously with the reduced cost.”
With that context as a backdrop, Hurd said that IT is going through a generational shift which he expects to accelerate in the coming years.
Mark Hurd’s Predictions for Cloud by 2025
Last year, Hurd offered his predictions on the future of IT, and this year recapped those predictions, while adding to them. Last year, he said that 80% of production apps by 2025 would be in the cloud, there would be two suite providers that owned 80% of the SaaS market, 100% of dev/test would be in the cloud, nearly all enterprise data would be stored in the cloud, and that enterprise clouds would be the most secure place for IT.
This year, Hurd added incremental updates to those predictions:
- By 2025, 80% of IT budgets will be spent on the cloud, not traditional IT systems - and almost all new applications will be SaaS applications by 2025. In addition, 100% of dev/test will move to the cloud by 2025 and spending on cloud infrastructure will grow rapidly every year through 2025.
- By 2025, the number of corporate-owned data centers will drop by 80%, he added. Data centers will decline symmetrically as workloads move to the cloud and the corporate data centers that remain will be using holder hosting systems. This will facilitate a dramatic flip of the budget from maintenance to innovation.
- And, if all this happens, by 2015, CIOs will spend 80% of their IT budgets on innovation, not maintenance, Hurd said. Cloud providers will take on the cost of complexity and cloud solutions, re-engineering the economics of IT, while companies will find and new ways to innovate to gain share, engage customers, and bring new products to market.
“If anything this might happen sooner than 2025,” Hurd concluded, “with some of the momentum that we have seen represented on the stage and some of the numbers that we have seen so far.”