Oracle Cloud: The King is Dead, Long Live the King

Author: Michael Welsh

oracle crownOracle’s history with the cloud has been somewhat (shall we say) evolving.  As recently as 2008, Oracle co-founder Larry Ellison has called the cloud “complete gibberish”, “insane”, and likened its “idiocy” to that of “women’s fashion”.  Later he said that cloud was his idea.  Still later, Larry Ellison said he liked the brand of “cloud computing”, calling it “charismatic”.  Then, at OpenWorld 2014, Oracle declared itself “King of the Cloud”.  We found this suspicious at the time, given Oracle’s true standing in the cloud was diametrically opposed to its public statements at that time.  The legions of techie’s at Oracle were hard at work to have something, anything to offer in the cloud.  Oracle’s non-HCM Fusion Applications are on release 4 and the early reviews have been anything but favorable.  The roadmap for the ‘cloudification’ of EBS under the moniker of Fusion applications was fairly aggressive to some – completely unbelievable to others.  NET(net) previously wrote on this topic in the blog entitled, “Oracle’s Cloud.  Hype or Reality”.  Regardless of thoughts on the believability of the roadmap, all agreed that even if the roadmap was achieved, the applications themselves wouldn’t be usable at an enterprise scale for another 18-24 months after their initial release.

Kudos to Oracle though, as after looking at its credibility gap in the cloud, they decided there was a better way to deliver enterprise applications under the Oracle logo and grow their cloud revenue.  On July 28th, Oracle announced the acquisition of NetSuite for almost $9.3B (of which, almost 40% merely changes pockets for Larry Ellison).  Oracle will undoubtedly comfort some existing customers by touting its lifetime support policy which is how Oracle kept PeopleSoft and JDE users faithfully on their side.  This time, it is Oracle’s eBusiness Suite customers (EBS) who will be fed the line that EBS remains its flagship product and NetSuite is an additional or lower tier product line.  Unlike EBS based Fusion applications which serve as the basis for Oracle’s cloud – pre-NetSuite purchase, NetSuite’s product actually works in the cloud, as it was built for the cloud whereas EBS is being retrofitted to be delivered via the cloud.

Oracle may continue to throw money at its legacy EBS platform for a while, even longer than it should — as it has shown a penchant to do with its ill-fated acquisition of Sun Microsystems and its Exa-engineered solutions.  In the end, it is our belief that there will be only one cloud offering, and it will likely be the one that works.  It is clear now that Oracle just bet $9.3B it will be NetSuite. All things considering, the strategic future direction of Oracle would appear to be risky.  This puts the ongoing costs of Oracle legacy maintenance and support in even more serious question.  Are the research and development investments really going to be there to make meaningful enhancements to future versions of the software?  Most customers who benchmark their Oracle spend find out they are already significantly out of market.  How much more so now with this new consideration?

OpenWorld 2016 should be interesting.  Should we look forward to another declaration that they will be the first cloud provider to hit $10B in revenues ahead of Salesforce and AWS?  Larry has made mention of this previously, but before the acquisition of NetSuite, the road to get there was a bit murky.  So what will Larry crown Oracle as next?  We will be at OpenWorld 2016 to advise our clients and to sift through the evolving tea leaves with them.  If you’re going to be there, look us up or contact us at dsiglin@netnetweb.com, to set up a discussion about your Oracle investments and roadmap.  We would love to get your perspective as well.

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