Oracle to benefit from SAP’s unclear cloud strategy

By Sam Boughedda

Oracle (NYSE:) may benefit from SAP’s (ETR:)) (NYSE:) unclear cloud strategy, according to Mizuho analysts, who said there are signs of frustration among customers around SAP’s application procedure.

“We recently came across The Register article, ‘Users slam SAP’s public cloud and S/4HANA migration strategy,’ which highlighted that SAP (Not Covered) is facing criticism from its user group, DSAG, for having an unclear strategy with its S/4HANA enterprise resource planning (ERP) software,” explained analysts, who have a Buy rating and $116 price target on Oracle.

“With SAP publicly pushing its on-prem customers to migrate to its cloud offering, DSAG published a letter noting its frustration with SAP’s strategy of pushing customers to an under-developed cloud version that fails to offer the same features and functionalities of the on-prem version.”

As a result, the firm expects the heightened customer churn within the SAP base to create an opportunity for Oracle.

“With its broad product portfolio (integrated Oracle Fusion applications that include ERP, EPM, SCM, HCM, etc.) and underlying infrastructure (via OCI), we believe Oracle may 1) be attractive to existing SAP ERP customers and 2) become more competitive in RFP processes as prospects become wary of SAP (with its multiple strategy changes over the last few years),” wrote analysts. “Overall, we view that SAP’s lack of clear strategy for its ERP applications might help Oracle gain share as on-prem customers evaluate their strategy to migrate to the cloud.”