Oracle’s Cloud. Hype or Reality?

Author: Steven Zolman

Undeniably, there is a cultural shift going on – and despite lingering security concerns and fears of supplier lock-in, our clients (like many others) are moving to the cloud with increasing confidence that the cost savings, operating efficiencies, and improved services levels are quite worth the perceived increase in risk of additional supplier accountability for security and data issues.  In the last couple weeks, as I have participated in two conferences, numerous clients have asked me about Oracle’s cloud strategy.  It’s no doubt that Larry Ellison, who famously denounced the cloud in 2005, is not necessarily the first one you think about when you think of someone who is committed to cloud computing.  In addition, you don’t often think of Oracle when you think of cost savings, operating efficiencies, and improved service levels.

In 2008, Ellison said, The interesting thing about cloud computing is that we’ve redefined cloud computing to include everything that we already do. I can’t think of anything that isn’t cloud computing with all of these announcements. The computer industry is the only industry that is more fashion-driven than women’s fashion. Maybe I’m an idiot, but I have no idea what anyone is talking about. What is it? It’s complete gibberish. It’s insane. When is this idiocy going to stop?” 

With Oracle’s ability to single-source the hardware platform through its Sun acquisition as well as the database and middleware layers, and its ability to provide a full complement of enterprise applications for HR/HCM, CRM, BI, Financials, Project Management, ERP, and potentially others, it has the potential to offer a very compelling cloud offering.  If Oracle could overcome the non-technical challenges related to helping its customers move to the cloud; challenges such as cultural challenges, and the effect on existing employees, management, processes and policies, it could quickly capture share and become a leading force.

Imagine the promise of a giant suite of enterprise applications in an Oracle Fusion bundle all running in the cloud, and available on a per user per month charge.  It’s frankly very compelling when you consider that Oracle owns the hardware, database, middleware, and applications, so conceivably, they can deliver a tightly integrated service in at a lower cost than their competitors (likely with higher margins as well).

When you consider the hype versus the reality question, it’s really a bit of both.  A disproportionate number of Oracle customers that have expressed interest in Fusion are considering it in the cloud.  Oracle claims that roughly 400 customers are licensing the Fusion software, and that about 100 of them have gone live.  Of those, about 40% are using Fusion CRM and another roughly 40% are running HCM.  The rest are running Fusion ERP modules, and 66% are deploying Fusion in Oracle’s cloud.

One of the interesting factors when considering taking your business to Oracle’s cloud is its willingness to allow its customers to move deployments between models without added charges.  This is an excellent risk mitigation benefit, and enables customers to have better dials to control the economic and strategic value of these investments.  If you consider Saleforce.com as an example, who does not offer an option to move its solution in-house, and whose customers are often shocked at the costs of a fully deployed solution at scale, you can see how this is a requirement to be a serious player in this market.

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