Oracle set to expand cloud reach with Tencent alliance

Oracle Corp, the world’s largest seller of enterprise software, may look to its partnership with Tencent Holdings to distribute its NetSuite portfolio of online business applications in mainland China’s software-as-a-service (SaaS) market, an industry segment projected for total sales of up to US$1.6 billion this year.

That initiative, following Oracle’s US$9.3 billion acquisition of NetSuite last year, is part of the company’s latest investment in the world’s second-largest economy, where it has established operations since 1989, chief executive Mark Hurd recently told the South China Morning Post.

“We have a development centre in Beijing that does a lot of localisation for our products, and we’ve doubled our sales force in China over the past year,” Hurd said. So [with NetSuite now part of Oracle] we plan to continue investments in the country, which is not without a few challenges here and there.”

Cloud computing enables companies to buy, sell, lease or distribute a range of software and other digital resources as an on-demand service over the internet, just like electricity from a power grid. These resources are managed inside data centres. “Cloud” refers to the internet as depicted in computer network diagrams.

SaaS is the third-biggest segment of the overall public cloud services market behind cloud advertising and infrastructure-as-a-service, according to research firm Gartner. SaaS is a delivery model in which software is licensed on a subscription basis and remotely managed by one or more providers.

Oracle, which has its own line of cloud products, acquired NetSuite to meet the global enterprise sector’s “huge shift from on-premise [software] to the cloud”, Hurd said.

“This trend is an irresistible force that will dominate the whole [information technology] market over the next decade,” he said. “There may be a 70 to 80 per cent shift from traditional on-premise to cloud.”