Disclosure: I wish I had enough money to hold stocks in any of the mentioned companies at the moment or within the next 72 hours. I wish I was held in such regard that people would pay me large amounts of money to express my opinions 😉 My last few posts have been SAP centric – HANA, more HANA, even more HANA, Fiori, Ariba and I still have to start writing something I believe SAP has finally started getting right. The Cloud. But this is odd. Given my current status of scouring thru various technologies and having no affiliations, I need not make any politically correct statements and can study trends and different types of companies. Hence with Oracle Open World around the corner, a surprising set of partnerships announced and my history of work relationship, Oracle seemed a refreshing change. Anyway they are looking to dominate and crush competition ruthlessly, as they have done in the past so this little post is about Oracle Cloud.
Oracle’s Cloud Strategy Most people have one BIG question – “Does Oracle Understand the Cloud?”. First let me address how the cloud has changed the world today. I have mentioned in my posts earlier, cloud computing is not just technology. Moving to the cloud has fundamentally changed business. Business Models and operations have evolved. Why? Because cloud has improved flexibility – flexibility for employees to work from remote locations, flexibility to work across multiple devices, flexibility around services and products etc. Cost saving and per-per-use affects IT budget planning significantly. We are moving from HIGH capex (not exaggerating) – high opex (am exaggerating) – to a low capex and variable opex scenario. Eventually you will even out, but product companies really need look at margins and satisfying the Wall Street in a whole new dimension. Last but not the least is the demand and power a client yields now. Ultimate game changer. Unhappy with SAP – switch over to Salesforce. Unhappy with Microsoft – switch over to Workday. Not that it’s done at a snap of a finger but it certainly doesn’t have a 10 million sunk investment and an additional 10 to switch that’s on the mind of a CxO. Traditionally Oracle runs somewhat polar opposite to the way of the cloud. So most people believe Oracle is doomed. Most felt, even openly say, Oracle is not prepared for the Cloud. I feel differently. Oracle will survive and I wrote ‘why’ in this post earlier. Oracle is massive. I refer to the very breadth of its footprint. The resources, capability and knowledge it possesses. Oracle invests more than most people might know on R&D. I’ve been extremely blessed at this relatively young age to have had a chance, a little insight, into some of their projects and work they are doing. You’d be surprised that they are investing in the old, in the current and in the future. Billions of dollars. Does Oracle understand the cloud? I think it does, albeit differently. I believe Larry Ellison is far smarter than >99% of the population giving him advice on the internet. Everyone can be a general after the war. That said, he is not flawless. He is after all human (rich, funny, arrogant and flamboyant among many other adjectives but still human) and hence has miscalculated on various occasions but to say he doesn’t understand the cloud is being tad naive.
Did Oracle miss the cloud? Probably not. For one, let’s look at a company called Netsuite. Guess who practically “owns” the company? Also guess who was on the board of SFDC and had enough insight into what was coming from his ‘apprentice‘ (and new potential competitor)? Larry invested and knew this would be the future. Yet, Oracle miscalculated the rapid adoption and shift to the cloud. Fusion was not exactly a success was it? As much as they say it was “meant for the cloud” the fact remains it not only took a while, it became more complex because they were not in all honesty not “defined” for the cloud. Oracle has its own way of approaching the cloud. It moves into the new, fitting the ways of the old. Oracle’s obsession of its ‘One Stop Shop‘ strategy, license revenue and “lock-in” made them take the unimaginable step of being prevalent across every possible layer. Oracle is amongst the select few that plays at every layer of the cloud stack – Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS). So it had to integrate everything – on a single code base. It wants customers to switch back and forth. Why? I believe On-premise will live in its form for another 7 to 10 years (although phasing out, there’s a massive market and LOTS of money sitting there) and Ellison wants every penny milked there. Not ‘moving’ to the cloud showed how they “grew”. In 2005 revenues were still to touch $12 billion. Inside 7 years they stood worth more than 3 times that value! It deliberately pushed licenses and ridiculed the ‘new fad’ while not-so-secretly working on re-writing code. Over the next 7 – they hope the mix will be enough to still give still a good number of high margin deals. Then there are those who are risk-averse but will move or are moving gradually to the cloud. Oracle can claim security, data integrity, migration-ease and protect a large % of the installed base. To be fair, they have the entire combination of on-premise – hosted – cloud apps portfolio to ensure change is smooth. Finally those who run too fast and ahead of the game! Acquisitions takes care of that. Oracle is simply saying “You-run-away-from-me-I-will-bring-you-back-into-my-fold”. That has come at a price – because they were slow, but they are covering tracks. Here comes in the intense focus on BI and Engineered Systems I need to write about this sometime) Ellison seems to have initially touted as the “cloud”. Oracle still believes in its ‘all-encompassing’ model – have enough horizontal presence to work on capabilities across the verticals. That’s an ERP mindset. They will lose business to pure players, they will be attacked by several more niches – cause the cloud does exactly that. It allows smaller and very specific applications possible for cheap. It opens a completely new dimension of working. Something the System Integrators will need to think of. Oracle continues to bet on SUN although that I will write about SUN another time. Oracle understands the cloud but in their own terms. This means the teams selling will all have different agendas and that’s not really nice. Oracle will survive and continue making revenues, but they are going to suffer from a few nimble and new players. The biggest challenge would be to formulate the platform with extensive compatibility across the top-tier cloud players, not confuse clients with an extensive “menu card”. They are cannibalizing themselves but they have no choice! 12c seems to be the strategy and the Salesforce & Microsoft partnerships are already showing some signs. OOW-13 will certainly be a feisty affair! Competition and profits have become so important that the economy is unforgiving. However we must take a very strong stance on ethics in business. As His Holiness Sri Sri Ravishankar says “The backbone of business is trust. If trust is broken, business cannot succeed. Greed kills the consciousness. That’s what we saw with the financial crisis”. As we move into the cloud, we should be more grounded in our values and style of working 🙂 Until next time then! Cheers Adi