It is no surprise that this year’s OpenWorld conference continued to focus on Oracle’s cloud efforts. We dive in to discover if Oracle is doing enough to catch up to the competition of Amazon’s AWS, Microsoft’s Azure and Office clouds, and Google’s GCP.
Oracle announced impressive advancements in the underlying technology for its Gen 2 Oracle Cloud Infrastructure (OCI). These include multiple machine learning-enabled “Autonomous Services” that provide automatic…
The promise from Oracle is that customers can eliminate the DBA resource layer, removing human error from the database management equation. This offers cost savings, but more importantly, it provides a more secure and error-free environment.
Oracle also announced the availability of both a Shared Infrastructure (multi-tenant) public cloud environment and a Dedicated Infrastructure (single-tenant).
The big announcement was the unveiling of the Autonomous OS (Linux). Some key Autonomous OS items of note include:
Oracle Gen 2 cloud has implemented Perimeter Control Computers via Secure Isolation Zones to further isolate customers’ environments from attack or any shared visibility with all parties, including the cloud provider themselves. In contrast, Gen 1 clouds use a Shared Computer that shares code between the customer and the cloud provider; this has been eliminated in Oracle’s Gen 2 cloud.
The Oracle Converged Database is Oracle’s version of the database that does it all – used in more of a marketing fashion to differentiate Oracle vs. Amazon’s offerings in the DB market. Essentially, Oracle’s DB will handle all data types (relational, document, spatial, graph) and all application types (transaction, analytics, ML, IoT) within a single database, whereas with AWS, users would be forced to adopt multiple database products to achieve the same goals.
Oracle is finally opening its wallet and plans to vastly increase investments in its infrastructure investments. Oracle plans to build 20 new Oracle Cloud sites in 2020. Oracle currently operates 16 Oracle Cloud sites, so an increase to 36 is a meaningful increase. To provide context here, Microsoft Azure is available in 54 regions, AWS in 22, and GCP in 20. It is doubtful that the competition will stand still in 2020. However, Oracle is trying to close the gap and provide a more global presence, which is required for data privacy regulations as well as for DR and BCP redundancies to be practically enabled.
Don Johnson, EVP for Oracle Cloud (and not to be confused by the Miami Vice actor), stated, “Unlike other cloud providers, Oracle is committed to offering a second region for disaster recovery in every country where we launch Oracle Cloud Infrastructure services, a strategy that's aligned with our customers' needs."
In a refreshing, albeit unsurprising twist of fate, Oracle has reversed course and is now embracing partnerships with its cloud competitors. Larry Ellison, Oracle's founder, Chairman, and CTO, was initially adamant that Oracle’s cloud would stand alone and not allow data sharing or cross-cloud access with other cloud players. This position most recently spurred the departure of Oracle’s veteran head of Product of Development, Thomas Kurian, who has since joined Google as CEO of Google Cloud.
Going it alone in an increasingly multi-cloud world is not an option. Customers use multiple clouds and are demanding the ability to share workloads across applications and clouds.
In response, Oracle has announced partnerships with both Microsoft and VMware.
In the case of Microsoft, the partnership will now allow workloads to cross clouds in specific approved scenarios. For example, a workload running on an Oracle database can have the data run across Microsoft’s data analytics cloud application.
More groundbreaking is the Oracle–VMware partnership, which finally allows cross-platform support for Oracle workloads running on VMware. This is an interesting development as Oracle has stated it has the right of refusal to support Oracle customers with issues if the Oracle database is running in a virtual machine. It should be noted that this shift in policy does not modify any of the license requirements documented in Oracle’s non-contractual partitioning policy.
Oracle’s technological prowess with the autonomous cloud is cutting edge and leverages its late start to learn from the shortcomings of Gen 1 cloud. In essence, OCI combines the benefits of both generations of cloud to provide a serverless, elastic, autonomous, and highly secure cloud platform. It is ahead of the competition in many respects.
The issue is if Oracle can obtain critical mass adoption of its OCI technology. Current data indicates paying customers numbering 2k for Autonomous Database with an additional 3.7k of trials signed up in Q1 FY20. The problem is this equates to 0.5% of the install base, representing minimal adoption for what is arguably Oracle’s most important product and the key to its long-term growth.
Oracle must drive adoption with current on-premises customers and increase the total addressable market (TAM) by touting the easy-to-use nature of the product. Many customers have complained about Oracle's sales methods driving them to adopt OCI via tactics known as "ABC," which means Audit, Bargain, Close, or through "attach deals" where on-premises discounts are conditioned by an Oracle Cloud purchase.
Currently, Autonomous Database usage consists of: transaction processing is 20-25% of the user mix, with 93% of users being smaller companies and only 7% from the Fortune 500. 22% of use cases are developers and 43% for brand new workloads. It is likely only a matter of time before Oracle drops another heavy-handed tactic and starts to bring support for legacy database version end of life.
Both Oracle partners and customers view the developments with Microsoft and VMware as positive in nature; however, most partners believe any meaningful revenues to be derived from these partnerships will take years to accrue. Additionally, continued feedback around Oracle’s high license fees is a persistent issue for SMB customers and prospects. They continue to favor AWS’s affordable, albeit more cumbersome database offerings in response. Oracle’s offering of the Always Free Oracle Cloud product tier is a good step towards attracting this customer segment towards Oracle Cloud. However, Oracle needs to establish a different product and pricing tier for SMB. The majority of existing customers seem to be taking a lift-and-shift approach to migrating E-Business Suite to a hosted environment while net new clients are opting for Oracle’s Fusion applications, the cloud-based products.
Overall, Oracle's cloud efforts are a mixed bag. While Oracle’s Autonomous Database and Gen 2 infrastructure cloud seems to be an advanced offering, the overall adoption rate is low. On the other hand, Oracle’s ERP business is growing at a 30%+ rate and is undoubtedly the leader in cloud-based ERP, with NetSuite anchoring a 16k customer base overall. However, the future is cloud, and cloud growth rates are lagging the industry with SaaS at 15-20% and Paas/IaaS in the low 20% range today. The current lack of demand for Autonomous Database is resulting in weak license revenues (4Q19 @ 1-2%, 1Q-3Q19 @ 3%), despite Oracle's SaaS offerings maintaining higher growth rates. Add to this sagging hardware and services revenues, and Oracle has an uphill battle and will need to make some long-needed changes to how it conducts business and licensing with its customers.
Oracle is going to have to focus on the conversion of existing customers while simultaneously pulling in net new customers as opposed to wielding a stick that drives contractual adoption of Oracle Cloud, but no real technology adoption. It remains to be seen if Oracle will decide to compete based on its technology chops, which are leading edge. By comparison, current messaging suggests Oracle will continue to bash the likes of AWS and IBM/Red Hat instead of focusing on its strengths. Perhaps this is the result of the combination of coming to the cloud wars ten years late mixed with a recalcitrant and mercurial billionaire owner.
If Oracle can move towards becoming a supporter and builder of communities centered around open-source initiatives and truly embrace the "freemium" model (e.g. Always Free Oracle Cloud and Autonomous Linux), it may start making meaningful headway against the Cloud Titans.
Oracle E-Business Suite (SoftwareReviews)
Oracle Cloud Infrastructure (SoftwareReviews)
Source: Oracle Management Cloud at SoftwareReviews, Accessed October 30, 2019
Experiencing issues when using Microsoft online services? You are not alone. Capacity constraints were being hit, pre-COVID-19, and usage has surged in regions with enforced social distancing.
The impact of COVID-19, as it became a global pandemic in Q1 of 2020, has affected user sentiment toward software during a growing period of fear, uncertainty, and doubt. To analyze the impact, SoftwareReviews compared Satisfaction (willingness to recommend to a peer), ability to deliver Business Value (fair cost to value), and Likeliness to Renew prior to March 10 and post March 10.
Google has announced a premium support plan for its cloud customers, promising a 15-minute response to the highest severity tickets. Google’s cloud has long struggled with enterprise customers – especially when compared to giants Microsoft and AWS – and this announcement is the latest incarnation of Google’s push to better serve a critical constituency.
In January, Microsoft announced what it’s calling “the largest expansion of its Canadian-based cloud computing infrastructure” since 2016. Additional availability zones and services will increase capacity for cloud-hungry Canadians, and the addition of an Azure ExpressRoute site in Vancouver will guarantee security and performance in a regulated jurisdiction.
Microsoft’s announcement that server-side encryption with customer managed keys for Azure Managed Disks is now available is welcome news for security-minded public cloud customers. Managing one’s own keys in a cloud environment can be an important step in complying with regulatory requirements, and this new feature should open Azure Managed Disks to a wider group of customers who may have held back for this reason.
Amazon Web Services (AWS) has provided its customers with better options for Virtual Private Cloud (VPC) ingress routing. Customers will have to consider which works best for their needs.
AWS VPC Traffic Mirroring gives customers more visibility for out-of-band traffic inspection. This feature is another useful tool for monitoring in the AWS cloud.
Organizations have been running into capacity constraints on cloud infrastructure in regions with enforced social distancing due to COVID-19. Having a back-up plan will be critical to your business continuity plans.
Microsoft has added six months of additional support to Windows 10 Enterprise and Education 1709. This will help reduce pressure to upgrade and provide support in the interim as companies focus on business continuity plans due to COVID-19.