Oracle's cloud blitz: Are there term limits on enterprise tech giants?
Oracle filled out its cloud strategy in a three-day blitz through New York that delivered a new version Solaris, which increasingly will power Exadata systems, an integrated Oracle Marketing Cloud, and migration tools for customers to move to software as a service. For good measure, Oracle showed user cloud app interface tweaks and talked strategy with analysts.
Add it up and it's clear the Oracle selling machine is revving up for the cloud. What remains to be seen is whether customers go for Oracle's big sale or decide that incumbent enterprise vendors are more marketing machines instead of innovation partners and look elsewhere.
The big question: Are there term limits on massive enterprise tech vendors? The point is worth noting as all the big companies you'd never get fired over buying from talk cloud, mobile, big data and other trends. SAP CEO Bill McDermott talked about how the suite will always win even in the cloud. Oracle President Mark Hurd on Tuesday said the company's goal is to be the best at every part of the (cloud) stack. IBM is also retooling to be a cloud player, but does have an interesting bet on cognitive computing rolling.
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On the other side of the equation are companies like Workday, Salesforce as well as up-and-comers like Splunk, New Relic and Appdynamics, which are merging operational intelligence and business intelligence.
Oracle's cloud push---here's a ton of stuff go sell it---may work in many cases. Historically speaking, who can really argue with Oracle's acquire everything, integrate and sell it strategy?
But this time may be different. Here's a look at Oracle's strategy and what was rolled out this week:
Oracle's Marketing Cloud. The pitch here is that Oracle can break down data silos and meld IT and marketing into an integration machine that can find the best customers. Hurd in New York talked about how Oracle BlueKai, Oracle Content Marketing, Oracle Eloqua, and Oracle Responsys with Oracle Social Cloud are all integrated and enterprise ready in the Oracle Marketing Cloud. Challenge: it's worth noting that three of those parts are acquired. In many respects, the customer is lumping together best of breed parts as if you had Salesforce, Marketo and Adobe's marketing suite.
Customer 2 Cloud program. The idea behind this effort is to launch pre packaged cloud integrations and move HCM and CRM vendors to Oracle's cloud lineup. Think PeopleSoft and JD Edwards, on-premise applications, to Oracle's cloud. The integration services are a spin on the suite always wins and seen as a defense against Workday and Salesforce in many respects. Seats can be transferred to cloud subscriptions. SAP has a similar effort underway.
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Solaris 11.2. The Unix-based operating system is an option on Oracle's integrated systems. The idea is that Solaris integration will be so strong that it'll be a cloud OS and include OpenStack. "We're trying to lead in each layer of the stack," said Hurd.
Demos of Oracle's cloud experience. Oracle also had a show-and-tell with its cloud applications and a bunch of iPad demos. Macquarie analyst Bred Zelnick and other analysts had the recap. Zelnick's key points:
- Oracle's Fusion HCM and discounting could keep Workday at bay.
- "After a full day of hands-on iPad demos, we feel good about Oracle’s comprehensive suite of cloud ERP, HCM, and CX applications. While the user interfaces were not all consistent, they were certainly modern and in many ways quite slick."
- Information as a service and big data insights may be more important for cloud apps than function.
- Oracle's stack as a service will be a tough sell against Amazon Web Services.
Clearly, Oracle has a lot to sell in the cloud. The catch is whether it'll cannibalize the on-premise gravy train. Oracle's cloud efforts could be seen as a way to keep customers instead of acquiring new ones. Wedbush analyst Steve Koenig noted:
Replacement cycles for enterprise applications (especially ERP) tend to be very long, but we expect adoption of Oracle’s SaaS applications to begin to drive organic growth for Oracle's cloud revenue. However, many customer examples today were drawn from PeopleSoft (and some Siebel) migrations, lending credence to our view that SaaS vendors such as Salesforce.com and Workday are gaining share at Oracle (and SAP’s) expense.
Those share gains from smaller rivals may lend some credibility to the term limit argument. IT buyers have to believe that the giants they've been buying technology from for years will get the cloud and innovate. For now, the burden of proof rests with the enterprise giants.
Zelnick said:
While the offering appears competitive and we appreciate Oracle’s history of execution, we question whether technology companies face term limits. Oracle itself has proven the best product doesn’t always win (think Informix), and there are many other examples of this in enterprise tech (i.e. Novell). We believe Oracle’s future success will be governed by its ability and willingness to cannibalize its existing on premise business and the market acceptance of Oracle as a cloud player.