Will customers forget vendor lock-in concerns for Oracle?

Are CIOs willing to let go worries about running a single-vendor environment for tighter integration across their IT infrastructure?
Written by Eileen Yu, Senior Contributing Editor

I'm in San Francisco this week covering Oracle's annual OpenWorld conference, where the war cry so far has centered around how companies can approach the vendor for all their IT needs, and I mean, all their IT needs.

Once just a software company, Oracle's value proposition changed when it acquired Sun Microsystems in January 2010 for US$7.4 billion, adding a strong history of hardware products to its portfolio.

During his opening keynote, themed "Hardware and software: engineered to work together", CEO Larry Ellison announced Oracle had added infrastructure-as-a-service (IaaS) to its cloud offerings, bumping up the vendor's cloud service tiers to three including software-as-a-service (SaaS) and platform-as-a-service (PaaS). Ellison said: "Our customers running our SaaS and PaaS solutions, they need to run certain kinds of custom applications and move some of their existing apps onto the cloud as well. The only way we can accommodate that is offer infrastructure-as-a-service in addition to SaaS and PaaS."

So, not only does Oracle offer a portfolio which spans across the entire software and hardware stack including servers, storage, CRM, ERP and social enterprise, it now plays in all three key cloud segments. The vendor would like its customers, and potential customers, to believe running an Oracle-only environment would offer better integration between the different enterprise applications, and between software and harware, as well as deliver performace that has been optimized across all its products and on the Oracle Cloud.

But would this value proposition be enough for customers to let go of common concerns about running a single-vendor environment and risk vendor lock-in?

At the ZDNet Asia IT Priorities panel discussion in February, a question from the audience touched on the impact of market consolidation and the increasing pressure for IT departments to streamline on one vendor. CIO of Courts Singapore, Bo Christensen, highlighted his concerns about having a single vendor drive his company's IT needs, applications and capabilities. "I will always want to have a range of companies...because technology keeps changing so what guarantee will I have that one large vendor can keep pace?" Christensen questioned.

YCH Group CIO Alec Ang, though, said his decision would depend on the type of applications deployed. It wouldn't make sense, for instance, to have three large ERP implementations, he noted, but said he would hunt out different options in market segments where several new technologies were still emerging.

These concerns were echoed in another ZDNet Asia panel discussion held last month on converged infrastructure. Panelists highlighted that CIOs generally were advised never to over-rely on one single vendor. It reduced their bargaining power and limited them to the technology that one vendor provided.

These are valid business concerns every CIO needs to seriously consider. And Oracle probably recognizes this too, since it also unveiled several new offerings for its partner ecosystem at the conference this week.

Will its proposition be compelling enough for companies? I think a lot would depend on how well Oracle is really able to integrate its software and hardware products. But it will likely face a tougher time in the cloud space which is still evolving, and that is still fairly crowded with market players and no clear cross-the-board market leaders.

As Ang pointed out, a single-vendor approach wouldn't make sense in market segments where new technologies are still emerging and different viable options are available.

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