Birmingham, England, moved its finance and HR systems onto Oracle Corp. (ORCL) software in 2022. The first rollout left Europe’s largest local council unable to reconcile its own bank accounts, The Register reported.
The project is now set to cost about £144.4 million ($193 million), against a first estimate of £20 million ($27 million).
The council’s own custom changes played a part. Still, the case captures a fear every business software buyer knows: Getting the system to work is where budgets break.
On Monday, Oct. 26, Oracle tackled that fear at its AI World conference in Las Vegas. It launched a public library of setup instructions that AI agents can follow to configure its Fusion business software, the company announced.
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The launch follows a rare admission on Oracle’s Sept. 10 earnings call. CEO Mike Sicilia spoke of “compressing SaaS deployments from years to months and months to weeks.”
SaaS means software rented online, so Oracle’s own boss conceded that its products can take years to go live.
Oracle is giving its slowest setup work to agents
Setting up business software means deciding how every approval, payment rule, and report should work, then testing each choice.
Oracle’s registry turns that knowledge into skills that agents from OpenAI and others can run and test, the company said. Human experts can then review the finished setup and approve it before it goes live.
What stands out to me is who applauded. Accenture Edge, Deloitte, PwC, and Grant Thornton all praised a tool that automates setup work their teams traditionally did by hand, Oracle’s announcement shows. Oracle said the registry frees them to focus on redesigning how clients operate.
That support is smart business, since freed consultants can sell more valuable advice. However, the bigger winner may be Oracle itself.
Faster rollouts help Oracle’s books as much as customers
Sicilia spelled out that payoff while answering Jefferies analyst Brent Thill. He said some deals in complex industries ramp up as customers go live, so faster launches let Oracle recognize revenue sooner.
Some complex health care rollouts once ran into high-double-digit total months, he added.
That matters because Oracle’s software business is growing far more slowly. Cloud applications revenue rose 10% in the quarter, Oracle told investors on the same call. Cloud infrastructure revenue, which includes renting out AI computing power, jumped 121%, Oracle said.
The data center growth comes at a steep price. Oracle’s debt climbed to about $125 billion as it built out AI capacity, CNBC reported. Each month cut from a rollout pulls steadier software revenue forward, and a company carrying that much debt needs it.
Related: How much Oracle stock is Larry Ellison using as loan collateral?
Wall Street still likes Oracle but keeps trimming targets
Investors have mostly focused on that debt. Oracle shares rose about 1% on the morning of Oct. 26. Even so, the stock is down about 54% over the past year after its worst weekly slump since 2001 in June.
That slide has made the stock cheap on paper. Oracle trades at about 15 times expected earnings, meaning investors pay about $15 for each $1 of expected profit. The discount reflects negative free cash flow of $28.7 billion over the past year, as the same data shows.
Analysts remain upbeat. The 43 analysts tracked by StockAnalysis rate Oracle a Buy, with an average price target of $236.54. The latest calls, using each firm’s own rating, show lower targets:
- Overweight, $250 target, cut from $280: Wells Fargo’s Michael Turrin, Oct. 26
- Buy, $206 target, cut from $240: Goldman Sachs’ Gabriela Borges, Oct. 23
- Overweight, $284 target: Cantor Fitzgerald’s Thomas Blakey, Oct. 22
- Sector Perform, neutral rating, $165 target: RBC Capital’s Rishi Jaluria, Oct. 22
I rate Oracle a hold for now. Faster rollouts can lift the software business, but they won’t fix the cash drain. Chief Financial Officer Hilary Maxson declined on the Sept. 10 call to give a date for positive free cash flow.
If management offers that timeline at its investor day on Oct. 28, I’d be a buyer at today’s price. Until then, the low multiple looks like a fair price for real uncertainty.
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The next software fight is over how fast it goes live
The registry also cuts both ways for Oracle. The pain of switching business software has long kept customers loyal, because few companies want to risk another Birmingham. If agents make rollouts quick and cheap, that pain shrinks for every vendor.
As a result, Oracle could win customers who once feared a long project. It could also lose customers more easily if rivals build similar tools.
The number worth watching may not involve data centers. It may be how many weeks a new customer now waits to go live.
Across business software, that wait is quietly becoming the price that decides who wins.
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