Lawrence J. Ellison
Chairman and Chief Technology Officer at Oracle
Thank you, Safra. I'm going to discuss Oracle's Cloud ERP status and strategy. So, how big is our on-premise ERP business today? I mean, a lot of the people, a lot of the companies like Microsoft did a great job of moving their entire Microsoft Office installed base into the cloud to dramatically increase the size of their cloud business. And unfortunately, we didn't have the same option or opportunity. So I think it's -- I think you'll find this interesting. So how big is our on-premise business today? Well, we had 7,500 customers in Oracle on-premise or ERP made up of E-Business Suite, PeopleSoft and JD Edwards. Only 1,000 of those 7,500 have moved to Fusion Cloud ERP. Now, we have not lost any of these customers to competitors. We expect all the remaining 6,500 to move to Fusion ERP, but it hasn't happened yet. That's all upside. That's all upside. And I think a lot of people don't realize that how -- so let's now migrate over and look at how big is our Cloud ERP business today.
Well, the round number is $5 billion a year, revenue, and we have 8,500 Fusion customers. But remember, only 1,000 of those 8,500 came from our old on-premise business, 6,500 is planning to come. So 7,500 of this 8,500 were not running Oracle ERP before we came out with our cloud product. Those were all new customers. Add to that the 28,000 new NetSuite customers. So Oracle has a total of 35,500 cloud ERP customers that are new to Oracle. Only 1,000 of our on-premise installed base has migrated so far. Let me repeat that, 35,500 net new Cloud ERP customers we've got in the last few years, only 1,000 from our installed base. That's going to be coming to us later on.
So how fast is Cloud ERP revenue growing about? So we're growing about 30% a year. And so, let's look out five years and ask the question, how big will we be in five years? And I think the number is going to be approaching $20 billion in Cloud ERP, where the majority of those customers are not people who are migrating, our customers that are migrating from Oracle's on-prem business, but they are migrating from other people's on-prem business, whether it's a small company like Infor or a large company like SAP or a variety of other companies, the vast majority of our Cloud ERP customers are not coming from our installed base. They're coming from someone else's installed base. And, again, 85% of that we have are from someone else's installed base.
So what are our margins in this five-year? Let's say, we're estimating $20 billion Cloud ERP business. Well, at scale -- at that scales, that's about an 85% margin in that business. And as Safra pointed out early in her comments, the cloud business is inherently much more profitable and much more predictable than our old on-premise business. So, we expect five years from now -- and again these are just estimates, but based on our -- based on growth rates and the size of our current business. But we expect that about 30,000 -- five years now, 30,000 Fusion customers, plus 100,000 NetSuite customers bringing in $20 billion at 85% margins.
All right. So, what's happening? I mean, how are we winning so many new customers? Where are they coming from? Who are we competing with? Well, we have -- really, we only have two significant customers or two competitors, the two significant competitors, SAP and Workday. And I've said this before, SAP did not build a true cloud product and I'm going to explain what a true cloud product is in just a minute. But SAP, because they didn't build a cloud product, they bought some edge products around the cloud, but they didn't actually be building their software for the cloud. That's the same old, 35-year-old software they've been selling forever. Their goal is simply to hold on to their installed base, but they are losing customers to us. This -- for example, this quarter PETRONAS, oil and gas -- a big oil and gas customer moved over. We have a -- I gave a long presentation about a couple of -- us taken already a couple of hundred pretty good sized SAP customers. But -- so we're doing very well against SAP and continue to do it well -- SAP, winning PETRONAS and others this quarter.
But Workday is very interesting, because Workday does have a cloud product and they've done quite well in HCM, but they have very few live. Try to find -- try to go and find a live Workday ERP customers, try to find any. So we're winning almost everything in Cloud ERP. We're beating Workday -- 90% -- I don't know, 98% of the time we beat Workday, we -- and we're taking customers from SAP's installed base. There is still -- we are holding onto more of their base than we're taking, but we're making inroads.
So, again, what's going on? Why are we winning? Well, we're winning because we have a true cloud product that is very, very feature-rich and very, very -- has a very low cost of ownership. So it's enormously capable and it's not expensive compared with the old on-premise systems. Our implementations -- I mean, we've got implementations of medium, large companies that sometime take six months. Now, don't get me wrong. Someone like Bank of America took a few years. That was an SAP customer that we won and that was just doing the Merrill Lynch division, took a few years, and then hopefully we're going to continue to make progress with Bank of America. The -- so we have, in general, much faster and lower cost to implement our cloud product than just implement, let's say, SAP or even Workday. But much -- it's been a gigantic difference with SAP.
Very easy to use. We have the user interface. There's two aspects. There is the computer interface that works on mobile phones and tablets and things like that and then we have a voice digital assistant. You talk to our applications. You talk to all of our applications. You ask for reports, you ask questions and I think it's like Alexa for the enterprise. All our apps run on smartphones, tablets, desktops, every app, not a handful of apps are mobile, every single app runs on smartphones, tablets, desktops, every single app has a voice interface. We have -- and this is what I mean by a true cloud product. We deliver a new version of Oracle Cloud ERP to 100% of our customers, all 8,500 customers for Fusion every three months. It's right. They get a new version with sometimes hundreds or sometimes even thousands of new features. Every three months they get that.
Now, why is that important? Well, I mean, because our customers want -- specifically in different industry, they don't want -- they don't all want the same new future, depending on the industry you're in, depending on your size, depending on the country you're in, your three most important new features you must have are different among a lot of different customers. So in the old days, with SAP, customers built this themselves. They went out and hired Accenture or somebody else IBM, IBM Services, when it was IBM Services, and to build these features for them. Now, the new model is, don't customize your product, you don't have to. Give us your list of new features that you need and we'll build them and put them in the next release and we can build them faster than you can. And you might have to wait three months or four months or five months before you get in a new version, but you get them quickly and we're the ones that built them. And they're part of the standard product, they are not some customization, you have to maintain forever. So they are not expensive. In fact, they're free. They come with the product. This is radically different than what SAP offers and they are -- and what they call their cloud product, which I say is not a true cloud product, because they don't have new versions every three months. They don't have new versions every three years in their so-called cloud product.
You make all the same modifications you used to make with by hiring people and customizing. That's not the new model. That's not how it works in a real cloud system. That's a fundamental. And every time they go and modify their system, what if they make the mistake, what if they have a bug, that's going to make the system less reliable and more expensive, potentially slower, that doesn't happen with real cloud systems. We, the vendor, are responsible for enhancing it and enhancing it on a regular cadence and responding to their requirements and delivering things to them in months, not years.
We're also on schedule to deliver some unprecedented new technology. We won't be long before when our customers upgrade -- every three months they upgrade and sometimes they are down for an hour or so. And we're going to -- we're on schedule to deliver a zero downtime upgrades. So it won't be long now when our customers move to the new version. There will be no downtime. Nobody else has this. Nobody else is working on this. And we're -- and soon all of our applications will be on the autonomous self-tuning maximum security database.
I've said this before, what's most important thing about the Autonomous Database? The money you save, because there is no human labor. No, actually, the money -- it's good, the money you have been saving, because there's no human labor is good, but no human labor, and no human errors. No security risks, no stolen data. Almost all of the -- not all, but almost all of the data that's going to hacked out of other clouds, it has been hacked because some human being made a mistake, left the port open, created a vulnerability. You can't do that with the Autonomous Database, because human beings don't touch it. It just like a self-driving car, it's safer than a car driven by human being. A self-driving database is much safer and more secure than a database that is managed by human beings who make mistakes and cause problems. Okay.
So I'll stop there and I'm going to slightly turn a little bit and describe what's going on in the marketplace kind of on an -- from an industries perspective. Fusion ERP has been out for a while and we are beginning to roll up entire industries. We're adding the features for banking -- I think, on an earlier quarterly call, I said our two largest and most strategic industries going forward in the ERP would be banking and healthcare, not -- may not just the ERP, but for the Company in total, will be banking and healthcare. And we're doing extremely well in those industries.
Some of our live banking and financial services customers include JPMorgan, Bank of America, Bank of New York Mellon, HSBC, State Street, NatWest, Santander, Macquarie, I can go on and on and on with a long list of banks all over the world, but also we have insurance customers, USAA, Nationwide, AAA, and again a lot more. I'm not going to list everybody. In fact, we provide a printed list at the end of every quarter of our -- all the new wins we had in the quarter. And we had a lot of new logos in banking and financial services in Q2. We won Barclays. That was another big bank and we won FirstBank [Phonetic]. In insurance we won Ameritas, MoneyGram and we had some major go-lives, huge go-lives with MetLife, Blackstone and Assurant. We're doing very well in financial services and specifically banking.
Healthcare, the other industry I identified as being strategic and above the -- and on par with banking in terms of the importance of our -- to our future. So live healthcare customers include Kaiser, Cleveland Clinic, Providence St. Joe [Phonetic]. I would say that we have a lot of healthcare wins around the world, but I'd say our healthcare wins are concentrated more in North America as compared with banking. New healthcare wins this quarter, Mayo Clinic, the number one ranked hospital in the United States, Highmark Health, Syneos Health and PPD. Again, I can go on and on, but again, we print those out for you and you can read them in your leisure.
Let me talk about one other industry before I get my closing remarks and that's logistics customers. We become very, very strong with logistic customers. That's actually the key win for us, take away from SAP, UPS. We have UPS, DHL, FedEx, DP World, SH [Phonetic], TTS, Yellow, I could go on and on. We have most of the big logistics companies around the world, around the world. And FedEx, which is -- but a lot of our companies aren't through rolling out Oracle Fusion ERP, but FedEx, for example, is now live in 98 countries. We're winning in lots of other industries as well, but I wanted to highlight these three industries because they are essential to our plan to add major new capabilities to our Cloud ERP system.
Before I describe those capabilities, I have a confession to make. We are not -- I don't believe anyway [Phonetic]. We are not on our way to building a $20 billion Cloud ERP business in five years. I think it's going to be a lot bigger than that. Let me explain why. As more and more companies adopt and run Oracle Cloud ERP asked a question, what does a B2B procurement transaction look like? In other words, how does it work when one Oracle Cloud ERP system is talking to another Oracle Cloud ERP system and placing an order? We are working in concert with our banking and logistics partners to originate purchase financing, product shipment, delivery tracking, invoicing and payments right in the side the two transacting Oracle Cloud ERP procurement system.
Oracle Cloud ERP will soon bring an entirely new level of automation to B2B e-commerce, one that very much resembles the ease of doing business and efficiency of B2C e-commerce. This new ERP automation system, all these new capabilities will dramatically simplify our customers' procurement and supply chain processes. And as such, it represents a huge new opportunity for Oracle to grow its Cloud ERP ecosystems.
Thank you. Back to Safra.