In the swirling conversations about dual-use technology—where tech serves both civilian and defense purposes— the biggest success is…. no not Palantir, it is Oracle.
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Starting from a CIA Codename...
Larry Ellison, Bob Miner, and Ed Oates met at Ampex Corporation, a pioneer in magnetic tape technology. Their shared passion for database technologies led them to found Software Development Laboratories (SDL) in 1977 in Santa Clara, California, amid the tech boom of Silicon Valley. Inspired by Edgar F. Codd's paper on relational database systems, Ellison and his team saw a golden opportunity to commercialize this concept.
Their break came with a CIA project, codenamed "Oracle," to develop a relational database management system (RDBMS). This venture not only provided initial funding but also challenged them to solve complex data management problems. By 1982, the success of their RDBMS technology prompted SDL to evolve into Oracle Systems Corporation, taking its name from the CIA project and marking a pivotal shift towards broader technological applications.
This transformation from SDL to Oracle Corporation was more than a name change—it was a leap into becoming a dominant entity in database management and cloud computing.
$28B Cerner Acquisition
Fast forward to 2022, the acquisition of Cerner by Oracle in 2022 was not just a major event in the tech and healthcare sectors; it was a strategic move of considerable magnitude, marked by a deal size that underscored Oracle's commitment to becoming a dominant player in healthcare IT. Cerner had about 6B in federal awards then. The deal, valued at approximately $28.3 billion, was one of the largest in Oracle's history and highlighted the significant investment Oracle was willing to make to secure a leading position in the healthcare technology market.
This acquisition brought Cerner, a leading provider of electronic health records (EHR) and healthcare IT solutions, into Oracle's ecosystem. Cerner's technology is critical for hospitals and healthcare providers worldwide, offering solutions that manage patient data, streamline administrative tasks, and enhance the delivery of healthcare services. By integrating Cerner's established expertise and wide-reaching influence in the healthcare sector, Oracle aimed to leverage its own cloud, data analytics, and artificial intelligence capabilities to revolutionize healthcare IT.
The deal's size and the strategic importance of Cerner to Oracle's ambitions in the healthcare market reflect Oracle's vision of creating a connected, efficient, and patient-centered healthcare ecosystem. Through this acquisition, Oracle not only expanded its portfolio but also significantly enhanced its ability to offer comprehensive, end-to-end solutions that promise to improve patient care outcomes, operational efficiency, and data management in the healthcare industry.
The Federal Revenue: A Closer Look
Oracle recently announced a 6% year-over-year revenue increase, highlighting the company's solid performance across its various segments. We delve into two particular areas of Oracle's business: its overall Federal operations and the transaction amounts excluding the health care segment.
The U.S. government's annual expenditure on commercial-off-the-shelf software and cloud services ranges between $10 billion and $15 billion. Oracle's constitutes a significant portion of the government's total cloud spending.
As shown here, Oracle's pure cloud service transactions have remained relatively flat, reflecting the company's long standing relationship with government contracts and underscoring its established presence in this sector.
Oracle Federal Transaction Excl Health Care Segment
Including the health care segment, we see a clear spike in overall transaction especially in 2022 after the Cerner acquisition, but the overall trend remained consistent.
Oracle Federal Transaction Incl Health Care Segment
Another critical metric is Oracle's ability to incrementally increase its award amounts each year, signifying expansion and growth in its award vehicles. Remarkably, Oracle has achieved a consistent 10%+ increase from the 2022 to 2023 fiscal year in its non-healthcare-related cloud business. Including healthcare, the company has been consistently adding $2 billion in award capacity annually, demonstrating its ability to grow and diversify its revenue streams effectively.
Oracle Incremental Federal Award Excl Health Care Segment
Oracle Incremental Federal Award Incl Health Care Segment
Oracle's Enduring Dominance Amidst Competitors
While emerging tech stars like Snowflake and Databricks hustle to carve out their niches, Oracle remains the steadfast giant, seemingly unfazed by the bustling market activity. The company's enduring success, particularly in securing government contracts, speaks volumes about its deep understanding of the sector's needs, its ability to adapt, and its commitment to delivering unrivaled solutions. Oracle's transaction breakdown tells the story of a company that, despite the noise, maintains its colossal presence, continuing to outperform its competitors in federal space.
Oracle vs Databricks vs Snowflake in Total Federal Transaction