Oracle's Sudden Jump Into The Cloud

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:

Oracle has built into its Oracle Fusion Middleware 11g stack a couple of important capabilities that are needed in a PaaS deployment. The foremost important one is real multi-tenancy. This means you can achieve multiple independent platform tenants, not only by the virtualized deployment of multiple installations, but also within a single instance. This brings significant additional flexibility and reduces further operations efforts. Some of the tools required for a real PaaS functionality will be made available over the next months under the 11g main release.

In contrast to Microsoft, Oracle will not host this PaaS stack on their own (to Forrester’s current knowledge). Oracle’s focus is to enable partners for cloud business models with their technology stack. This can be Amazon’s EC2 images, or eventually soon a multi-tenant Oracle installation at a hosting provider like Rackspace.

The immediate reaction from most Oracle partners (hosting providers and system integrators) I talked to was very positive. In contrast to Microsoft, Oracle enables them for future cloud business models instead of competing with them. Many of them are really disappointed about the current partnership relationship with Microsoft in this respect.

In additional to the enablement of partners in the public cloud, Oracle brings the same technology stack into private data centers. This is even the focus of the initial message to end users in the current roadshow. Oracle talks about the “private PaaS” which means the further evolution of their grid computing story. Now, complemented with typical private cloud tools and capabilities, the private PaaS looks similar to IBM’s private cloud approach. But again the multi tenant capabilities are a major differentiator to IBM, as the Websphere stack can only achieve this with a virtualization approach.

OraCloud The end-customer reaction to this was twofold. Some customers embraced the potential immediately and were very pleased about the final commitment of Oracle to the cloud business. The other group of customers were struggling to understand the disruptive difference from already existing Oracle scale-out mechanisms like grid and RAC. Some characteristics of private clouds are actually not primarily technology issues but are describing a new interaction model between the IT side and the business side on one enterprise. Pay-per use, self-service, high level of standardization, charge-back and immediate availability of an elastic service delivery can turn a private grid into a private cloud. Oracle needs to release the already planned tools within the 11g stack supporting these kinds of PaaS functionality to also convince the skeptics.

Long term, customers fear lock-in situations the most. While, for example, the Salesforce.com platform Force.com, locks the customer both into a technology and into a specific deployment model, the Oracle approach will allow customers to move applications between the cloud and their premises without many changes.

The SaaS application business with Siebel On Demand and E-Business Suite On Demand remains unchanged. However, Forrester expects that the upcoming next generation of Oracle’s ERP application (Fusion Applications) which are based on Fusion Middleware will support the multi tenancy of the platform. This will provide unknown efficiency to hosting models of the Fusion Application. As of today, we do not know if Oracle will mainly enable outsourcing companies or will compete with self-hosted Fusion Applications to their channel.

Regards,

Stefan

Comments

re: Oracle's Sudden Jump Into The Cloud

Stefan,
I'm not sure how this amounts to a "sudden jump" into the Cloud - isn't it more of an uncomfortable shuffle?
IMHO I read it much more that the PaaS enhancements are there to support the fusion project and Oracle's SaaS offerings... not that Oracle is going to make any kind of PaaS play in isolation (whether for "private deployment" or otherwise).
My 2p...

re: Oracle's Sudden Jump Into The Cloud

Seems like they are moving the Project Caroline research by Sun to a productized offering for Channel Partners.

http://blog.gandalf-lab.com/2008/10/comparing-appengine-ec2-and-caroline.html

I would hardly call it Sudden Jump since this was always expected via the sun aqui.

Seems like a sensible approach. If you want to be the GE in the Airline business manufacturing Jet Engines, you should not try to compete with the BOEINGs and furtherdown the Delta's of the world.

re: Oracle's Sudden Jump Into The Cloud

Hi Niraj and Neil,

thank for you comments.
The "sudden" really related to the hesitating marketing Oracle made around cloud before they started the recent roadshow. As Larry doesn't really like the C-word, the whole company was not able to position its capabilities related to cloud computing until now. I do believe that this is a sudden and good change now.

Related to the technology: One main differentiator is the until now not really visible multi-tenant capability of the Oracle Fusion Middlware stack. I've seen the beginning of these effort before the SUN acquisition and thus they are not related to Project Caroline for sure.

I am not familiar enough with Project Caroline, but I can imagine that some of this knowledge went into the to-be-release Fusion Assembly Manager.
This is a software tools, which helps to prepare standardized images of Fusion Middleware and applications. Similar to IBM cloudburst appliance.

Thanks again for reading Forrester's blog.

Stefan

re: Oracle's Sudden Jump Into The Cloud

Allow me to join with your discussion here.

I am just wondering why a sudden jump into cloud computing happened? Anyway, cloud computing is getting popular now.

re: Oracle's Sudden Jump Into The Cloud

Philam,

Oracle is "still" an engineering driven company, and not a marketing driven company. They tend to work hard an deliverables before they create a marketing buzz. With cloud, the competition is simply becoming too strong if they would have waited longer.

re: Oracle's Sudden Jump Into The Cloud

Philam,

Oracle is "still" an engineering driven company, and not a marketing driven company. They tend to work hard an deliverables before they create a marketing buzz. With cloud, the competition is simply becoming too strong if they would have waited longer.

re: Oracle's Sudden Jump Into The Cloud

Neil, I agree somewhat with your 'uncomfortable shuffle' assessment. The cloud is going to be governed by the small and medium sized software companies.

SaaS/Cloud has become a great software aqcuisition model for small businesses that cannot afford enterprise solutions and thus small software companies, that have direct access to clients in their immediate geographic area, will start appearing out of the woodwork due to the cheap cost of software development technology. They will have 'first-strike' capability to sell their cheaper services, while the likes of Oracle will need to resort to expensive marketing.

As more of these companies enter the SaaS/Cloud market, prices will be driven down to the benefit of the customers, but the detriment of those organizations with high overhead.

re: Oracle's Sudden Jump Into The Cloud

George,

agree on the pricing drop.
If you have a forrester.com account you'll see this in the market calculation mode of the PaaS market:
"Platform-As-A-Service Market Sizing"
http://www.forrester.com/rb/Research/platform-as-a-service_market_sizing/q/id/47483/t/2

Stefan