Oracle says AI will save it from the SaaSpocalypse, not bring it on

Oracle has argued AI will strengthen its applications business, by giving customers new ways to use software and making them easier to implement.

Co-CEO Mike Sicilia decided to defend applications in his first remarks on Oracle’s Q1 FY 2027 earnings call.

“The introduction of AI is an accelerator, not a replacement for packaged applications,” he argued.

“Before AI came along, application suites had already proven their effectiveness.

Companies have been able to increase their profit margins because end-to-end automation of standardized and efficient business processes proved to be much more effective than one-off custom solutions.” The CEO then admitted that business apps “did require organizations to follow workflows and processes as designed in the system, something that many struggle to achieve consistently across functions, teams and regions.” “AI changes this dynamic,” he said.

“Rather than asking every employee to navigate and execute a process exactly as a system expects, AI agents can perform tasks using the organization's established workflows and business rules.

Employees then shift to overseeing agents, resolving exceptions and applying human judgment where it matters most.” Sicilia is not alone in that view.

Salesforce’s Claudeforce puts an AI interface on the CRM giant’s wares.

“We are incredibly confident in the potential for this new paradigm to deliver much more rapid ROI for our customers,” Sicilia said.

He then promised that in October Oracle will debut an “agentic AI accelerator” that will “automate and orchestrate implementation at an unprecedented scale, compressing SaaS deployments from years to months and months to weeks.” The CEO offered another reason for investors to be bullish about Oracle’s applications biz.

“Our SaaS business is also a wonderful lead generation business for our IaaS business,” he said.

SaaS is also a solid performer, growing ten percent even as Oracle’s line item for software revenue slipped three percent to $5.5 billion.

The database giant’s cloud biz did rather better, growing revenue 60 percent year-over-year to $11.6 billion.

Financial analysts on Oracle’s earnings call wanted to know if the company’s colossal investments in datacenters and AI infrastructure are paying off and co-CEO Clay Magouyrk said Oracle is “constantly finding interesting ways to fund the business.” He also pointed to demand for AI infrastructure remaining strong and customers being willing to pay a premium to access it.