Editor’s note: At its recent Oracle OpenWorld conference, the tech giant concentrates on a full stack of cloud offerings while spending little time on traditional software and hardware. Technology Business Research concludes that the cloud is the key to future growth. Here’s the first of two reports.
At Oracle OpenWorld, the company displayed and emphasized its 100% commitment to cloud offerings and the components needed to build and support various cloud services. Oracle spent little time talking about traditional products or delivery models, implying that customers who still want to buy traditional software or hardware know what is available and how to contact their sales representatives. The depth and breadth of the announced cloud offerings span layers of the stack, from infrastructure and networking to development platforms as well as applications to Data as a Service offerings. To match cost of sales with the annuity cash flow of subscription models, Oracle continues to shift its sales model from traditional field sales‐led direct teams to an inbound, customer self‐service‐based approach in which try‐then‐buy opportunities put the sales rep at the end of the funnel.
- VIDEO: Watch a replay of Larry Ellison’s keynote at: https://www.youtube.com/watch?v=WY5qhLwIqBA
Oracle’s transformation is significant and permanent, as changes have been made across product development, tooling, delivery and sales. Not all changes are at scale. Sales transformation is in its initial phase, and the business results will reflect the transition to the new model for several years. Oracle will not abandon its existing business, but recognizes the cloud‐driven imperative. Partners and customers should feel confident Oracle will remain focused on providing the technology they need to build their businesses, now packaged and contracted in more convenient and agile ways. Challengers such as Amazon, IBM, SAP and Salesforce have targeted opportunities to slow Oracle’s transition and to take share in segments where they compete. Oracle’s broad reach, however, enables it to compete around the edges of each competitor, so agile account‐based business strategies will be a requirement for vendor wins across the competitive landscape.
Event overview
Oracle’s 420,000 customers represent the largest and lowest‐cost opportunity for the company, which can more easily replace its own offerings with new cloud based versions in customers’ environments. Many examples of replatformig, “lift and shift” and cloud‐based integrations were provided to reduce migration pains. Oracle did take aim at its competitors, however, looking to take share from Amazon Web Services with its second‐generation cloud IaaS platform and the PaaS and application layers that will run on the new cloud. “You have to be willing to pay 20% less,” CEO Larry Ellison said, highlighting that pricing plays a significant role in the computing‐at‐scale business and showing Oracle is willing to be perceived as a price leader, even at high performance levels.
As OpenWorld events over the past few years have progressively increased their focus on cloud‐delivered Oracle solutions, they have also moved their way down the cloud stack. Earlier announcements centered on the SaaS layer and new applications and were added to with increasing PaaS announcements.
At the 2016 event, IaaS was placed at the forefront of product announcements and vendor comparisons. The previously alluded to “Generation 2 IaaS data centers” were a large focus of the event, as Executive Chairman and CTO Larry Ellison spent much of a keynote discussing the improved performance of the new systems leading innovators in the U.S. Northwest have been secretly developing for the past two and a half years. Other executives continually highlighted the Bare Metal architecture’s scale‐out ability, software flexibility and performance advantages that make it a far superior product to previous Oracle and competitor IaaS options. Being its own hardware and software provider gives Oracle a time‐ to‐availability advantage of only seven weeks for the new IaaS centers, as well as reduced deployment expense that results in meaningfully lower costs for customers at high performance levels.
Oracle’s deployment flexibility, rivaled by only IBM, was a focus as executives highlighted the growing Cloud at Customer family of on‐premises solutions, which are both configured and priced identically to Oracle Public Cloud Dedicated IaaS and PaaS services. The solutions act as one of many paths to cloud as Oracle technology enables on‐premises, self‐built private cloud from hardware and software components; hosted private cloud; hosted public cloud; and on‐premises, prebuilt cloud solutions. TBR believes this is core to Oracle’s differentiation from competing applications vendors, as customers looking for integration across workloads paired with a breadth of cloud applications will be enticed by Oracle’s robust capability set.
As its SaaS portfolio was broadly developed over the past four years, Oracle spent the remaining conference time discussing expansions of each of its eight PaaS subsegments. In particular, Oracle introduced a Virtual Assistant Platform, giving customers ChatBot development capabilities to improve usability in a new era of customer service driven from consumer communication trends. Executives also echoed the security of Oracle’s second‐generation infrastructure with Identity Cloud Services, which helps better secure data by managing identity‐based access across both on‐premises and cloud environments and workloads.
Beyond Oracle’s emphasis on cloud, customers were at the forefront of event messaging to stress the changing Oracle engagement culture, in which long‐term, well‐managed relationships are believed to be the key to driving sustainable cloud success. This was especially evident at the Financial Analyst Meeting, where customer panels were added to an extended schedule. Throughout the event, customers offered candid testimonials about the stark difference between Oracle’s prior market reputation around customer tactics and its pivot toward engaging in more amicable contracting tactics as well as offering customers high‐touch support and a collaborative approach to product development that help best address the average customer’s most pressing needs. While customers are genuinely satisfied with the “new” Oracle they’ve done business with in the cloud space, there is still pervasive skepticism among stakeholders about the scalability and continued support for this high‐touch model, especially when Oracle reaches a relative maturity of feature sets, reducing the need to field feature requests from customers. Meanwhile, CEO Safra Catz noted Oracle will invest in reinvigorating its internal consulting capabilities to overcome large partner friction in the U.S. and speed deployments.
Part two: Impact and opportunities
(C) TBR