Oracle's flip flop on SaaS...err...cloud

Oracle's flip flop on SaaS...err...cloud

Summary: It's only a short while since Larry Ellison, CEO Oracle compared the IT industry with the fashion game. At the time, his analogy between cloud, saas and Chanel: 'Last year it was Fuchsia, this year it's Puce' drew plenty of laughter and understandably so.

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It's only a short while since Larry Ellison, CEO Oracle compared the IT industry with the fashion game. At the time, his analogy between cloud, saas and Chanel: 'Last year it was Fuchsia, this year it's Puce' drew plenty of laughter and understandably so. But then it is not so long ago that Mr Ellison was engaging in his own hyperbole around SaaS. This from BusinessWeek August 2003:

What technologies are you excited about now? We are the leader in bio-informatics, and a lot of things there are exciting. Sure, Wi-Fi, even 3G, is fairly cool, albeit expensive. But the thing I'm most interested in is software as a service. That idea that every customer who wants to do accounting on computers, or every customer who wants to do inventory, or manufacturing, has to figure out what computer to buy, what operating system to buy, what Cisco router and switch to buy, what database to buy, is just nonsense.

That was his entree to a pitch for what today is NetSuite. Cleverly done. Fast forward to 2007 where, in a number of statements, Ellison and Charles Phillips, Oracle president both seemed to poo-poo the idea of SaaS (err...now cloud.) Mr Phillips as reported by Phil Wainewright:

Phillips believes the very nature of SaaS will drive demand for on-premise databases. “SaaS is very database intensive. Normally people do not want all their data resident on an on-demand product...

...If there’s a scale for measuring egregiousness, this self-serving nonsense certainly shoots off the high end.

and...

He maintains that customers make two decisions when it comes to software, one concerns ownership, the other the delivery mechanism. “We have customers who want to own the software, pay for the license and then decide if they wanted to run the software themselves or have us do it for them. They really want those decisions separated. They want to be able to switch, bring it in-house or mix and match. It is multiple choice. The issue is whether they want the running of it [to be] outsourced or not.”

I’ve had run-ins before with proponents of this fallacy that customers want to ‘own’ software. What on earth is beneficial about owning a licence (not even the source code) to software that forces your business processes to conform to every other licencee of the same software? (unless you customize it, in which case upgrading will cost you an arm and a leg). There is no conceivable benefit to customers in ‘owning’ software on such terms; all the benefits accrue to the vendor — including being able to tell customers that, having bought it, it’s their responsibility whether it works or not.

See a pattern emerging here? Oracle, like every other IT company has a marketing agenda and turf to protect. Given the pace of change and challenges presented by the market, that agenda is always going to be in flux. However, flip-flopping in this manner does no-one any good. How can decision makers take a company seriously when on the one hand it is asking customers to make long term bets yet does an apparent 180 within a relatively short time span?

Some will argue that a year in IT is a long time. True. Contrast with what happens in the real world. Enterprise buyers don't make decisions based on what's fashionable today or tomorrow. Instead they play for the long haul, expecting stability along the way. Whether that's fanciful in a high speed world is an altogether different discussion. Even so, it must be unsettling to hear such diametrically opposed views from the same vendor within this sort of timespan.

As an aside and with the benefit of hindsight, the remainder of that BusinessWeek article makes for entertaining reading.

UPDATE: Mr Ellison is at it again. According to Tom Kranz on Techdirt:

Apart from accusing the SAP guys of being mentally unstable, a key point from the speech was Larry's attitude to Cloud Computing. Oracle has famously rubbished the concept for a number of years, and Larry took the opportunity to once again speak out.

Topics: IT Employment, CXO, Cloud, Data Centers, Emerging Tech, Oracle, Software

Dennis Howlett

About Dennis Howlett

Dennis Howlett is a 40 year veteran in enterprise IT, working with companies large and small across many industries. He endeavors to inform buyers in a no-nonsense manner and spares no vendor that comes under his microscope.

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