Oracle's OpenWorld conference and analyst day have concluded with a barrage of product announcements, more references to the America's Cup victory than you can count and a lot of customers and onlookers taking a wait-and-see approach about what could be a few potential game changers.
Here's the recap of the moving parts and key questions customers should be asking.
Is Oracle's Database 12c in-memory option a game changer? The biggest news out of OpenWorld was that Oracle planned on launching an in-memory option for its database. The main point is that customers could run many applications on 12c with the in-memory option with minimal changes. Oracle isn't first to market with in-memory applications, but given its database footprint the company could make a big splash. SAP's HANA efforts have focused on its installed base and Oracle may be playing defense as well as offense later. We have no idea if Database 12c's in-memory option will be a game changer. Customers need to take a wait-and-see approach, but the loose ends on Oracle's in-memory plans go like this:
- What changes exactly will be needed to run Salesforce, NetSuite and SAP in-memory on Database 12c? We'll need something more specific than minimal as an answer.
- What's the in-memory option cost?
- Will 12c in-memory run on commodity and high-end hardware?
- How will total cost of ownership improve with 12c in-memory?
Evercore analyst Kirk Materne said:
We believe the introduction of the in-memory option for 12c is important in helping dent some of the momentum SAP has built in the market, but expect that the existing installed base is likely to be the biggest adopter of the technology (in much the same way as SAP appears to be leveraging its own base to drive HANA adoption).
Can Oracle land net new customers with its cloud portfolio? Oracle outlined a series of cloud efforts such as new applications, database as a service and infrastructure as a service. Oracle also upgrade numerous clouds---HCM, sales and service and ERP. The existing application base is likely to utilize Oracle's cloud and may see it as more appealing than an on-premise Fusion upgrade. The larger question is whether Oracle can bring in large---and new---application deals as Salesforce and Workday expand.
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Are there more cloud acquisitions ahead? Wedbush analyst Steve Koenig reported that Oracle CEO Larry Ellison thinks that software as a service consolidation is still in its early stages. Oracle will continue to go shopping. Ellison argues that integrated suites always win and Oracle needs to offer a broad portfolio of cloud services. Also:
Are engineered systems going to take on new workloads? One key Oracle customer said his company tried the company's Exa- line of systems, but remained with commodity hardware running Red Hat and other open source options. Oracle is committed to hardware, but until revenue turns higher skepticism abounds. Oracle needs its Exa- systems to win on architectural decisions not project based deals.
Is there a Fusion application story that's clear and concise? Fusion apps were largely downplayed at OpenWorld and you have to wonder if Oracle's cloud apps will rule. Morgan Stanley analyst Keith Weiss found what a lot of us discovered about Fusion: Enthusiasm is hard to come by. Weiss said in a research note:
Partner commentary around adoption of Fusion applications was mostly consistent across our conversations, with contacts expressing lower than expected traction, although remaining moderately optimistic that improved sales processes could help to boost uptake. This viewpoint matches our own survey work, most recently detailed in our June note, FY14 Playbook: Grinding Out the EPS Growth, where our data led us to take a more measured expectation of the potential top-line benefits to Oracle from the Fusion cycle. As one indictor of this sentiment, a larger partner we spoke with disclosed his firm was hoping to bring on ~50 Fusion customers last year and that the actual number came out in the low-teens. Perhaps more troublesome and indicative of one of the key struggles that Oracle faces, only two of these customers actually made themselves references. This was not isolated either, as multiple partners expressed similar dynamics playing out.