As usual with these analyst days, we were inundated with slides and news, so very hard to distill the Top 3 – but take a look at the video I recorded (or for more details the Storify) below.
No time to watch, here are the top 3 takeaways:
Oracle is ready to push cloud – All cloud providers need load to utilize and grow their infrastructure. Oracle has a huge potential load sitting with its on premises run applications. Common market wisdom was that Oracle was tapping into that and ‘aggressively’ converting that load from on premises into cloud. But CEO Hurd was very adamant that this wasn’t the case. According to him cloud customers are mostly net new, and he used the very slowly dwindling on premises license sales as proof point (-2% YoY). So where will Oracle get more utilization in 2016? One strategy that was not explicitly mentioned, but the informed attendee could read between the lines, was Oracle’s push for exogenous load with its nested hypervisor capability. Not sure when / if I missed this before, but the nested hypervisor allows Oracle to take load from VMware, AWS and Google. On top of that, EVP Kurian mentioned support for Microsoft Hypervisor would be coming soon. All this means that Oracle will be able to pitch Oracle Cloud to CIOs / CTO’s running load on these hypervisors. It certainly introduces another dependency, but as discussed vividly, it’s an attractive outlet to e.g. running a native VMware load on premises. Assuming the nested hypervisor works well, Oracle needs salespeople to pitch the ability to prospects. Considering last week’s announcement that Oracle plans to hire 1400 salespeople for selling cloud into its EMEA region, one has to assume that Oracle executives are certain the cloud products are working and the vendor now wants to go for load much more aggressively than in the past.
IaaS ready for primetime!? – In the overall Oracle cloud offering, IaaS was the late comer. At Openworld Chairman Ellison even openly shared the Oracle learning steps, SaaS required PaaS, PaaS required IaaS. And Oracle’s offering follows that sequence in regards of maturity, market share and adoption. So all eyes on IaaS, and for the first time Oracle executives in their presentations got very close to both detail and comfort level that we see from e.g. public cloud rivals AWS and Google. Details on storage, networking and more were very abundant, more importantly the confidence with which the executives talked about the infrastructure allows the interpretation that execution has happened and Oracle has found its operational patterns for IaaS. But now comes the rollout of capabilities that takes time. Speaking to Oracle partners and ISVs outside of North America the other week in India, makes clear that new capabilities are first and foremost coming to the North American data centers. Nothing unusual, but the speed of creating a common worldwide platform will be key. And as tradition – I asked EVP Kurian in regards of the ‘bubble up / ripple’ effect of IaaS changing under the hood while operating a growing SaaS suite. The answer was same as at Openworld, standards, APIs, encapsulation shield the SaaS teams. Kurian also shared that SaaS teams are shielded by a dedicated cloud ops team, a good move. Still a considerate challenge, though a good problem to have.
DaaS remains a key differentiator – Oracle remains the only cloud vendor stressing DaaS – Data as a Service capabilities. The future of enterprise applications is more than running software, but also allowing access to data sources that power next generation applications. Oracle has been adamant of DaaS being part of xaaS – right from the first cloud summit 2 years ago. And Oracle plays this from a dual perspective, both offering the data consumption as a service (see the recent acquisition of Addthis) but also the tools to become a DaaS provider. As the reader knows, Constellation Research strongly recommends enterprises to look into DaaS monetization and to make DaaS a revenue stream. Oracle is well positioned to take advantage of this trend, but needs to expand its DaaS portfolio beyond marketing – into other areas of business automation. A generic DaaS offering allowing enterprises to monetize data will be a first step. And network effects e.g. in regards of benchmarking are something always of value to enterprises, understanding the network effects and benefits is an area where Oracle can e.g. learn from SAP.
Analyst Tidbits
- UIX matters – User experience has not been what Oracle has been traditionally known for. The more surprising Oracle dedicated demos and presentations on the topic. And no surprise, the Oracle UIX team around VP Ashley has made good progress from a few years back. The new ‘Waterfall’ design does not fall behind any best efforts in the industry. It’s also good to see that Oracle has managed to propagate a common interaction paradigm across its products, not a trivial undertaking given the vast range or products and users.
- HCM shines – No surprise – the HCM suite shined one time more in regards of customer adoption, live customer numbers across the Oracle SaaS portfolio. It always helps to be early, and Oracle is pushing HCM on a worldwide base. The Oracle HCM suite has some interesting and unique differentiators as shared back at HCM World 2015 (reputation management, competitions etc.) – it now needs a new set of 2016 differentiators, EVP Miranda like all presenters was pressed for time, and my guess it they are reserved for the HCM World event in spring later this year.
MyPOV
Oracle is making progress with its overall cloud offering. As a welcome change and sign of progress this was the first cloud summit with no mention of hardware and database beyond their relative importance to cloud, a good change. That said we lacked some details e.g. on how Oracle runs its cloud, e.g. I’d be very interested how many Oracle made machines are in the Oracle cloud footprint. Oracle’s CAPEX for cloud is behind that of key public cloud rivals, but then Oracle maintains it can run more Oracle on Oracle thanks to the ‘chip to click’ integrated tech stack. That would mean that more uptake of Oracle Cloud would mean more revenue for Exa-Machines and 2-socket servers (launched a little less than a year ago). But seeing the TCO comparisons would mean that one Oracle infrastructure $ can run 3-4 times more than e.g. an AWS infrastructure $ - for the same load. That will be a key and interesting area to watch, as if and when it materializes, it would be another explanation what makes Oracle executives so bullish on competing with the cost leaders. We have seen e.g. with Storage that Oracle can be an effective cost leader. I asked CEO Hurd if cloud for Oracle is more a product or a sales challenges. He responded with a diplomatic ‘cloud is a blessing for Oracle’ response, but the confidence with which Oracle executives spoke about cloud makes clear that the challenges have morphed from a product to a sales and marketing challenge. When I asked Hurd on who will be Oracle’s #1 competitor in 5 years he punted the question, it would have been an interesting insight. Where Hurd was very clear (he is a big tennis fan) that Nadal won’t win the Australian Open, and that Djokovic is he is favorite…Back to Oracle’s cloud offering, getting the overall stack to work isn’t trivial, and there is always room for potential hiccups on the product side, always keep in mind that what Oracle is creating is very likely the largest software project out there, from my estimate is 25k+ product developers working up and down the integrated / engineered to work together tech stack. No easy undertaking. But a unique effort in the industry, now it’s up to Oracle to get customers to adopt. And here may lie Oracle’s biggest challenge – as mentioned in my OpenWorld takeaways, the vendor is well respected, but less ‘loved’ by its customers than other key players. Getting the ‘love’ and passion for Oracle into its customer base is emerging as the biggest challenge for Oracle in the medium term.
Recent blog posts on Oracle:
- Event Report - Oracle Openworld 2015 - Top 3 Takeaways, Top 3 Positives & Concerns - read here
- News Analysis - Quick Take on all 22 press releases of Oracle OpenWorld Day #1 - #3 - read here
- First Take - Oracle OpenWorld - Day 1 Keynote - Top 3 Takeaways - read here
- Event Preview - Oracle Openworld - watch here
Future of Work / HCM / SaaS research:
- Event Report - Oracle HCM World - Full Steam ahead, a Learning surprise and potential growth challenges - read here
- First Take - Oracle HCM World Day #1 Keynote - off to a good start - read here
- Progress Report - Oracle HCM gathers momentum - now it needs to build on that - read here
- Oracle pushes modern HR - there is more than technology - read here. (Takeaways from the recent HCMWorld conference).
- Why Applications Unlimited is good a good strategy for Oracle customers and Oracle - read here.
Also worth a look for the full picture
- Event Report - Oracle PaaS Event - 6 PaaS Services become available, many more announced - read here
- Progress Report - Oracle Cloud makes progress - but key work remains in the cellar - read here
- News Analysis - Oracle discovers the power of the two socket server - or: A pivot that wasn't one - TCO still rules - read here
- Market Move - Oracle buys Datalogix - moves more into DaaS - read here
- Event Report - Oracle Openworld - Oracle's vision and remaining work become clear - they are both big - read here
- Constellation Research Video Takeaways of Oracle Openworld 2014 - watch here
- Is it all coming together for Oracle in 2014? Read here.
- From the fences - Oracle AR Meeting takeaways - read here (this was the last analyst meeting in spring 2013)
- Takeaways from Oracle CloudWorld LA - read here (this was one of the first cloud world events overall, in January 2013)
And if you want to read more of my findings on Oracle technology - I suggest:
- Progress Report - Good cloud progress at Oracle and a two step program - read here.
- Oracle integrates products to create its Foundation for Cloud Applications - read here.
- Java grows up to the enterprise - read here.
- 1st take - Oracle in memory option for its database - very organic - read here.
- Oracle 12c makes the database elastic - read here.
- How the cloud can make the unlikeliest bedfellows - read here.
- Act I - Oracle and Microsoft partner for the cloud - read here.
- Act II - The cloud changes everything - Oracle and Salesforce.com - read here.
- Act III - The cloud changes everything - Oracle and Netsuite with a touch of Deloitte - read here.
Finally find more coverage on the Constellation Research website here and checkout my magazine on Flipboard and my YouTube channel here.
