Innovation

Oracle must build out APAC data centers

With just one in Australia, and a second slated to open in Singapore, Oracle will need to beef up its footprint in Asia-Pacific if it wants firms in the region to buy into its cloud play.

Written by Eileen Yu, Senior Contributing Editor Oct. 2, 2012 at 11:56 p.m. PT

SAN FRANCISCO--Operating just one data center in Asia-Pacific is not sufficent to serve the region's diverse business landscape and Oracle will need to addres this if iit wants organizations to adopt its cloud services.

Sandra Ng, group vice president of practice group at research firm IDC, said businesses want data centers to be close to them so near-shore or on-shore cloud services are preferred.

Speaking at a media brefing held here Tuesday evening at Oracle's OpenWorld conference, Ng noted: "Obviously, if you only have one data center in a region as diverse as Asia-Pacific, it's not going to be adequate."

Oracle currently operates one data center, located in Australia, in the region and will open a second in Singapore within the year. A company spokesperson said plans to build new data centers in other Asian markets would depend on customer demand.

The IT vendor this week added infrastructure-as-a-service (IaaS) to its portfolio, bumping up the vendor's cloud service tiers to three including software-as-a-service (SaaS) and platform-as-a-service (PaaS). CEO Larry Ellison said this puts the company in a stronger position where other players such as Amazon only has one service tier, while arch-rival Salesforce.com has two.

ZDNet Asia had asked Ng if organizations in Asia-Pacific would take to Oracle's push into the space, and whether its lack of data centers in the region will prove challenging. The IDC analyst said a positive point was the majority of multinational companies, and Oracle has several Fortune 1000 customers, based their Asia-Pacific headquarters in Singapore.

"So you're closer to the CIO and decision-maker, that makes it easier," she explained. "But, if you go beyond that group, which is a smaller market and installed base for Oracle, then it's a different thing because...whether for regulation purposes or otherwise, users generally prefer the data center to be closer to them.

"I, too, asked Oracle [here at the conference] about the number of data centers they will be rolling out over time in our region because that would be critical. I don't think a single provider, without partnership, is adequate to serve as diverse a region as ours and I'm sure Oracle knows that."

She noted more and more cloud providers also are expanding their portfolio to encompass all three service tiers--IaaS, SaaS and PaaS--because they recognize the importance of doing so.

Vendor lockin concerns shouldn't be dismissed
Oracle's message at this year's conference also hit big on its ability to provide across the entre software and hardware stack including servers, storage, CRM and ERP. It touted tighter integration and optimized performance as key benefits of running an Oracle shop in a company's IT environment.

Ellison said during his keynote Tuesday the company had more SaaS applications than any other vendor in the market. "But it doesn't stop there [because] every time you acquire a SaaS application, you also acquire the underlying technology...it's got to sit on a database, a programming laguage... You need to consider the application you're buying as well as the patform you're buying," he said, and pointed to Oracle's portofolio spans across the entire stack.

But will Asian businesses embrace an Oracle-only environment?

Matt Boon, Gartner's managing vice president and group team manager of global data center research, said: "Are Asia-Pacific companies concerned about vendor lockin? Absolutely they are, and that would be true in most geographies."

Speaking at the same briefing Tuesday evening, the analyst explained that organizations understood the benefits the single-stack approach could provide, but at the same time, they were concerned about what that ultimately meant.

"Gartner advises organizations to have a competitive procurement model packed in with vendors and this [single-vendor approach] goes against the grain of that," Boon noted.

However, he underscored the need for vendors to better demonstrate the benefits of deploying their products, especially when CIOs were facing pressure to ensure IT was able to meet their company's businesses requirements and directly impact revenue.

"What any vendor needs to be doing a lot better is really articulating what the benefits are. It's one thing to say, yes, [the products will] improve performance, [but] you need to have enough sea of benefits that outweigh concerns about being locked into the vendor. That is a concern [but] most of the vendors are very dismissive of that. They don't think it's a really big issue.

"But when I talk to CIOs about that, lockin is a concern. The players in this space need to do a better job of articulating the benefits versus the concerns the customers have," Boon said.

During his keynote, though, Ellison said Oracle's technology was based on open standards such as Linux and Java.

"Standards are still important. Just because we're in the cloud doesn't mean we forget about standards and make everything proprietary again," he said.

Pricing strategy needed for Asia-Pacific
The Gartner analyst also noted the need for vendors to come out with a pricing strategy that caters to the local needs of Asia-Pacific markets. India, for instance, is a price-sensitive market and cost is a big issue for any vendor playing in the cloud space here, he said.

He noted that most vendors today, however, usually price their products in US dollars and peg an exchange rate when these products are sold in other markets. "This is not going to be good enough," he said, noting that it was one of the concerns of Indian organizations. Boon urged Oracle and their competitors to relook their pricing strategy for Asia-Pacific.

Ng suggested one way to address this was to sell their products through a local host provider or partner in the targeted Asian market.

Eileen Yu of ZDNet Asia reported from OpenWorld 2012 conference in San Francisco, United States, on the invitation of Oracle.

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