Oracle's Sudden Jump Into The Cloud

Stefan Ried

Oracle is about to launch its Cloud Computing strategy with a worldwide roadshow. What does this mean for Oracle customers and partners?

First of all, Oracle remains a technology platform provider and will not jump into the hosting business themselves for PaaS. Only for the space of hosted applications, will they remain in the OnDemand hosting business. Let’s have a look at the SaaS and PaaS segments separately:

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SAP CEO Resigns – Long Live The Co-CEOs

Holger Kisker

SAP changes its board structure to focus again on product and technology

2009 was a tough year for the whole IT industry but SAP’s performance (-8% in total revenue and -28% in software revenue) was somewhat below the results of many other leading IT companies. The product launch of Business ByDesign is years delayed and clients are still unhappy about the way the new Enterprise Support was introduced. No question, SAP is currently in a difficult situation. At this point SAP announced yesterday that CEO Léo Apotheker’s contract will not be renewed and his resignation is effective immediately. In his place, the company appointed the two board members Jim Hagemann Snabe, responsible for product development and Bill McDermott, in charge of field operations, as co-CEOs.

After 20 years of service with SAP it would not be fair to blame Apotheker, who was certainly instrumental for SAP’s tremendous growth in the past, for the challenges SAP is currently facing. Over several years the company shifted from its traditional strengths, such as products, technology, quality and reliability to a strongly sales driven entity. In fact the whole board of SAP was slowly replaced by a team of pure sales professionals. Product innovation and quality, or customer satisfaction was no longer in the center of corporate strategy, but replaced by sales performance and quotas. In a press and analyst call today Hasso Plattner, Co-Founder of SAP and Chairman of the Supervisory Board, acknowledged that mistakes e.g. with Enterprise Support, were made, but the whole SAP board was involved and it was not Apotheker’s fault.

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Where in the world is the cloud going?

Jennifer Belissent, Ph.D.

In a recent blog departures_cloudpost and press kit on Building Confidence in Cloud Computing, Microsoft's General Counsel, Brad Smith, calls for government action to "ensure that a robust privacy and security legal framework exists to protect and provide user rights and benefits in the cloud."  Microsoft's statement rightly suggests that in order for the promise of "cloud computing" -- be it applications, software infrastructure for developers or physical computing capacity -- to be realized issues of data protection must be better addressed. The statement appeals to the US government to to update, modernize and strengthen two existing pieces of legislation -- the Electronic Communications Privacy Act (ECPA) and the Computer Fraud and Abuse Act (CFAA).  The statement also promotes greater transparency regarding security provided by cloud services providers as well as global collaboration around rules governing access to data for law enforcement purposes. 

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The Cloud-Compliance Challenge

Stefan Ried

Cloud computing challenges the CIO legally as well as technically!

Cloud computing is the availability of standard IT resources over the internet in a pay-per use model. Initially this is an attractive proposition. However there are many challenges which CIOs will face when running firm critical applications and data over the internet. The most successful CIOs have built an IT governance strategy to avoid the uncontrolled variety of technologies, meta data and business process evolution in their IT landscape. A good governance strategy ultimately makes the implementation of legal compliance requirements from Basel II or SOX much easier. Without searching first for critical data, an orderly approach is much simpler and the CIO won’t be the only one sleeping better.

So long as everything is in your own company or at local infrastructure, IT governance and compliance should be governed centrally from the CIO office. But what happens when a firm’s cloud computing is effectively deployed? This technology paradigm has its largest cost savings when applications and business processes have extremely high and uneven resource requirements. In most cases these are automatically firm critical applications and confidential data. The responsibility of a CIO then moves from pursuing operational excellence in the datacenter, to the greater responsibility of developing and managing intelligent sourcing concepts in the cloud and bringing its consequences under control. The large cloud computing vendors are nearly without exception international firms and a core basis for their cost-effective deployment lies in their global sourcing strategies. IT governance and legal compliance must also be developed to cloud governance and global provider governance.

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Oracle, Sun and the European Union

Jean-Pierre Garbani

The European Union is very cautious and thorough. Approving the acquisition of Sun by Oracle is a lengthy process where all grievances are examined an judged. Michael Widenius, the "father" of MySQL has been very vocal about the future of MySQL (that he sold to Sun) in an Oracle environment, claiming that Oracle will simply let the product die to maintain the revenue level of the database market. The proof in the pudding, he says, is that Oracle has requested an extension (until January 27, 2010) to present its case in front of the EU commission.

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The Next Decade

Jean-Pierre Garbani

2010 is arguably the beginning of a new decade (at least it's the beginning of my second decade as an industry analyst). Looking back at the past ten years, I realize the progress we have made in IT management software. Ten years ago, it was mostly about collecting data from infrastructure devices and managing infrastructures to find the right level of performance. The major progress of the decade was to shift the focus from infrastructure to services.

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HP Completes EDS Integration, But Major Challenges Remain

Pascal Matzke

When HP acquired EDS in May 2008 it was clear that in the short term the company would have to manage significant integration challenges before the medium and long term benefits of the acquisition would come to bear. Now, 18 months later, HP claims that the acquisition has been completed and so it is time to take a closer look at what has been achieved so far. 

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Jugaad and Your Global Innovation Strategy

Christopher Andrews

A recent post on BusinessWeek explored an “emerging” concept in Western-style innovation management -- one that has deep roots in India - called Jugaad.  The article mentions a meeting led by my former colleague (and still friend) Navi Radjou, and notes that jugaad is “an improvisational style of innovation that’s driven by scarce resources and attention to a customer’s immediate needs.”

Explore the term “jugaad” and you will find a range of enthusiasts and detractors.  Many - particularly those more intimately familiar with the terminology -- argue that jugaad is not, by its very definition, a robust innovation solution to complex business problems.  Rather, its just another way of saying “get it done whatever it takes” – meaning that innovation is done in an inexpensive manner, “on the fly”.   In this context, it seems like a tough way for a multi-billion dollar company to build an innovation practice.

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IT Service Customers Need More Effective Ways To Contract For Innovation

Christopher Andrews

Take a look at Forrester’s recent Enterprise IT Services Survey and you will find a data point that highlights an interesting challenge in the IT services marketplace.  When we asked North American and European IT services clients about their biggest challenges with existing IT services and outsourcing relationships, 52% said that “cost savings are lower than expected and 40% said “inconsistent or poor quality service”.   No real surprises here:  given the large number of companies that partner with service providers in an explicit effort to lower costs, many IT professionals simply underestimate the time and resources it takes to define and manage these relationships. 

But look at the #3 and #4 responses, and the data gets more interesting.   33% of respondents said that their biggest challenges were “lack of innovation and or/continuous service-level improvements” and 35% cited “inability of vendor/contract to respond rapidly to changing business needs”.   Don’t the first two responses, in some ways, conflict with the latter two?

These data point to a complaint Forrester hears all the time from professionals within the technology industry:  they know that their clients want a proactive business partner – one who can help the client drive innovation and business results – but they don’t know how to charge for innovation in a way that clients will be willing to pay for it.  Clients say they want greater level of business innovation from their IT service providers, but prioritize cost-reductions – which are more easily measured and which justify the investment in the IT services relationship.

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In 2010, your clients will care about more than just cutting costs

Christopher Andrews

Ask any business professional whether, as they look to 2010, they care more about cutting internal costs or whether they care more about driving new business-focused innovations, and you’re likely to get the response “yes…to both”.  In the wake of the 2009 recession, companies are struggling with these sometimes conflicting objectives – on one hand they know that cost cutting and operating efficiently is a mandate.  On the other, they must develop new technology –enabled product, service, and business model innovations or they risk falling behind. 

For vendors in the B2B technology marketplace, this means balancing the need to communicate the cost-effectiveness of your product or service with messages that stress the business value you provide.   I believe that far too many vendors think that only the lowest-cost provider can succeed right now, when proving strategic business value is still a critical priority for all professionals - particularly IT professionals.

For a company that gets it, look to GlobalLogic, the offshore product development firm.  Their Vice President Milind Patwardhan recently told me “cutting costs for clients is the ‘table stakes’ right now.  The best technology companies focus on reducing costs, but also seek to partner with clients to enable business results.”  While many vendors talk this talk, one of their client references confirmed the value: He told me that GlobalLogic worked with business executives on strategic planning, was willing to take on risks in order to strengthen the relationship, and proactively looked for ways to create innovation. 

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