Oracle Corp. (ORCL) recently introduced the Oracle Solution for Project-Driven Supply Chain to help its customers enhance project performance and increase profitability in the process.
The new solution integrates Oracle Value Chain Planning and Oracle's Primavera project portfolio management solutions.
Oracle Value Chain Planning applications help supply chain managers to sense and shape demand, optimize promotions for growth, perform fast event-driven scenario analysis, and get a handle on supply chain risk.
Oracle’s Primavera currently focuses on providing web-based Enterprise Project Portfolio Management software that encompasses resource allocation, cost reduction, supply-chain efficiency, and decision-making — using real-time data for businesses.
This integration, in turn, will help organizations in balancing and adjusting their material and manufacturing capacity decisions to better adhere to project milestones and avoid unexpected delays and costs.
The new solution is also expected to enable organizations to develop a single planning and execution strategy that will unify the interests of all project stakeholders and drive consistent and profitable decisions.
We believe that the new initiative will prove fruitful for the company and will attract more businesses, thereby driving Oracle’s profitability going forward.
Further, we believe that the speedy adoption of engineered systems and cloud suites will drive incremental top-line growth in 2015.
However, Oracle’s continuing transition from licensing where revenues are recognized upfront to a cloud subscription model where it is recognized over the years will hurt the top line in the near term.
Nonetheless, higher Software-as-a-service (SaaS) & platform-as-a-service (PaaS) adoption is expected to provide a recurring revenue base over the long term. However, increasing mix of lower-margin IaaS will hurt profitability.
We believe that Oracle’s cloud business will continue to face stiff competition from Workday and Salesforce.com (CRM). In ERP, SAP AG (SAP) remains a dominant force, while in the Infrastructure-as-a-service (IaaS) segment it will compete against the likes of Amazon. Further, hardware revenue growth will suffer due to sluggish IT spending and competition from International Business Machines (IBM).
Currently, Oracle has a Zacks Rank #3 (Hold).
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