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Posted by Stefan Ried on October 5, 2011
It was only about a year ago when Larry Ellison was confusing the OpenWorld audience with the “cloud in a box” approach, and only a very few CIOs managed to turn a large Oracle landscape into a real private cloud based on an opex model to their business units. But a lot has changed since last year.
Oracle unveiled today a comprehensive public cloud offering in the area of platform-as-a-service (PaaS) and software-as-a-service (SaaS). Forrester had a chance to look at it prior to today and will definitely compare Oracle’s cloud offering in the future with the major PaaS providers such as salesforce.com, Microsoft, Cordys, and others. We have published detailed Forrester Wave™ evaluations of the established PaaS platforms has been published with the from the app developer perspective and from the ISVs and service provider perspective. Basically, Oracle unveiled today a fully automated public cloud approach providing a Java Enterprise Edition (JEE) application platform and a full Oracle database in a sophisticated self-service provisioning leveraging a wide range of multitenancy capabilities. There is even a full set of high-level components, such as the identity management of Oracle’s Fusion Middleware, available within this service. Forrester expects that BPM and the remaining Fusion Middleware components will move into Oracle’s cloud offering shortly. This fully managed environment puts Oracle’s offering clearly in the camp of a PaaS provider — head-to-head with Microsoft’s Azure and salesforce.com’s Force.com. It is not at all challenging the lower level of raw infrastructure-as-a-service (IaaS) such as Amazon’s EC2. The approach also positions Oracle in a market of higher margins and less price pressure as we predicted for the next 10 years in our popular report, “Sizing The Cloud”. The platform is the basis for Oracle’s future SaaS strategy around its next-generation ERP application, Fusion Application, and a new collaboration style based on the new Oracle Social Network.
Forrester will take its time to explore all of the features, talk to early customers, and publish Oracle’s capabilities compared with its new competitors based on transparent criteria. However, what we can already answer is the key question: For whom is Oracle’s cloud relevant?
Forrester explores frequently in its Forrsights surveys the detailed cloud computing adoption pattern of large and midrange customers. The following figure clearly shows that many customers are not looking for full replacements of their on-premises applications or software platforms by cloud services. The majority of customers are actually putting some workloads into the cloud and complement the remaining private environment with the value of elastic cloud platforms and standardized business applications. This is definitely Oracle’s first target group for its cloud offering.
The second target group will be the huge number of systems integrators looking for an easy-to-use way to develop, test, and deploy pilots in an infrastructure identical to its customers’ private infrastructure at a very low cost, even before a customer might grant the company access to their data centers. Oracle’s commitment to guarantee full compatibility between its PaaS offering and the latest version of its licensed Fusion Middleware is absolutely key to creating credibility for this market segment.
In our conversation today with Oracle’s Executive Vice President Product Development, Thomas Kurian, we have also investigated a group of corporate customers who are simply looking for an opex-based alternative to their capex intensive operations of own hardware and perpetual Oracle licenses, even for their high-end packaged and custom applications. Oracle’s commitment to handle a wide spectrum of performance requirements from small pilots on up to large virtual enterprise landscapes is a prerequisite to providing a great experience for this class of customers. Obviously, this model — if adopted by many large clients — will affect Oracle’s own business and margin. However, we believe that the growth potential and simply sheer retention of these customers looking for a full opex model can justify the transformation of a part of Oracle’s business toward monthly revenues based on usage.
Finally, the value of a platform service is not only driven by its capabilities and the business applications the original vendor puts up there as a SaaS offering. Salesforce.com’s AppExchange is the leading example of how marketplaces make a PaaS offering more attractive based on the instant availability of hundreds of add-ons and some self-contained applications. Oracle is facing a huge transformation challenge to make applications from its long-standing ISVs available in a simpler and more packaged way on its cloud. It might take two years until Oracle has serious volumes of content on its platform. But, it’ll be worth it for ISVs to go that route as Oracle has a very important detail in its cloud strategy: The full multitenant technology stack will also be available for local cloud providers hosting an Oracle cloud on different privacy levels in the “virtual private” business model. A future Oracle marketplace might push an ISV solution into all the data centers of Oracle’s future cloud provider partners.
Please leave a comment here about what type of business applications you’d like to see on Oracle’s cloud beyond Oracle’s own applications.
For a different take on this announcement, see Forrester Infrastructure & Operations Professionals analyst James Staten's blog entry. He's more critical on Oracle's journey from IaaS to PaaS.
(Picture source: Darth Vader by Philips)
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