Thursday, June 07, 2012

Oracle's Behavior Undercuts Its Own Cloud Accomplishments

Oracle held a much anticipated "Oracle Executive Strategy" update event for its Oracle Cloud services yesterday. With Larry Ellison leading the presentation, there was much thunder and lightening--but not much rain. This is unfortunate, because Oracle has put together an impressive set of cloud services. Ellison's inability to resist slamming the competition led him to overstate what Oracle has actually delivered, and to minimize the success of Oracle's competitors.

This post serves as a summary of the key points I gleaned from the webcast and from an analyst question and answer session afterwards with Thomas Kurian, Oracle's EVP of Product Development, who is always a pleasure to listen to.

Is There Anything New?

On Twitter and in back channel Skype conversations with other analysts, many of us were questioning: what exactly is being announced today? Nearly everything presented had been previously been presented at Oracle Open World in 2011.

Reading carefully through the pre-event summary document and scanning through my notes, I can only come up with two things that are new:
  1. Oracle is announcing new Oracle Fusion cloud applications and services in addition to those  announced during Open World (which were CRM, HCM, Social Network, Java Service, and Cloud Service). Larry Ellison indicated that Oracle now has 100 cloud applications and services.
  2. Oracle demonstrated some of the social marketing functionality from its Vitrue acquisition, which Oracle announced in March. 
Other than that, it's difficult to find anything that Oracle had not announced or presented earlier. So the event was largely a re-presentation of Oracle's cloud services, some demonstration, and a healthy dose of competitor-bashing.

Essentially, the 90 minute event fell into a pattern of presentation that is becoming all too familiar in the past several Oracle Open World conferences. There are too many issues to list individually, but I'll point out what I see as some of the things I found most troubling in Oracle's presentation.

Oracle Exaggerates Its Cloud Apps Availability

Oracle claims 100 Oracle Fusion cloud services but provides no list of the applications. Seeing that Oracle announced five during Open World, it's difficult to understand how it is now claiming 100, unless it is talking about very small pieces of functionality. During the post-event analyst briefing, I believe Tom Kurian did promise to deliver a list--so we'll have to wait for that. Update: Oracle has provided the list.

Furthermore, not all of the capabilities that Oracle showed or referred to during the event are in general release. Tom Kurian did review what products were generally available, but I was not able to capture that information. Again, we'll have to wait for some public clarity from Oracle on what customers can buy today and what is still waiting for general availability.

Oracle's Developer Cloud Still in Controlled Availability

Specifically, Oracle Java Service and Database Service are not yet available via customer self-service, as shown in the screen shot below. With a public cloud infrastructure service, you should be able to walk up to the website, submit a credit card and gain instant access to a development environment, run it for a few hours or days, then shut it down. Amazon Web Services has offered this for years.

A quick test on the Oracle website shows that if you try to sign up for cloud services, you are led to a screen as shown below, where you can leave your contact information. The message on that page reads,
When you submit this form, your information will be placed into a queue for access to controlled availability services. We will be provisioning Java and Database services in batches over the next several months. Our Fusion Application services will be made available shortly after that. You will be notified by email when your instance is ready.
I questioned Tom Kurian on this point and he indicated that this is a temporary measure during the ramp-up period. He said that Oracle is currently signing up about 150 development customers a week for its Java and database services and that by the end of August, the sign up process should be available entirely on a self-service basis. But today-there is still friction at the point of sale.

Ellison is Rewriting History

At the beginning of his presentation, Ellison claimed that Oracle began to rebuild all of Oracle's applications for the cloud, calling it Project Fusion. But some of us have a long memory, and we've written blog posts on Oracle's Fusion program over the years.

At the beginning, Oracle did not pitch Fusion as a cloud program but as an integration strategy for its disparate applications. Fusion would be the successor to Oracle's E-Business Suite, PeopleSoft, J.D. Edwards, and Siebel systems. As Oracle made many acquisitions, it needed a strategy, using middleware, to integrate these applications with one another and a successor set of applications based on the best features of each of its acquisitions.

See my many posts at the end of this post, and try to find one where Oracle ever used the word "cloud" in talking about Fusion. Oracle has not been working on cloud applications for seven years. It has only been in the past year or two, as and Workday began eating Oracle's lunch that Oracle responded with its own cloud pronouncements.

I have heard off-the-record that the early leaders in the Fusion group made sure to architect the product to allow cloud deployment. But Ellison's early presentations indicated that Fusion would be a traditional sold-as-a-license product, deployed on-premises, not a cloud service. To now claim that Fusion was a 7-year cloud development effort is simply not true.

Ellison's Characterization of Competitors is Out-of-Bounds

For example, Ellison claims that SAP has done nothing in the cloud except for its acquisition of SuccessFactors, and that it will have nothing otherwise in the cloud until 2020. He conveniently overlooks SAP's five or seven year effort to develop Business ByDesign, a full-suite multi-tenant cloud ERP system, which SAP has has sold to over 1,000 customers.

Whether SAP has met its objectives for ByD is not the point: Oracle has by its own numbers claimed only 200 sales of Oracle Fusion. So, even by Oracle's own numbers, SAP has sold more cloud customers with its own developed products. (Ellison also conveniently ignores SAP's own cloud-based line-of-business applications.) SAP may have its own problems in transitioning its business to the cloud, but Ellison's mockery of SAP is simply unfair and inaccurate. 

Ellison's slamming of the competition continued with a mis-characterization of Workday's in-memory technology and a straw-man argument that other SaaS providers tell customers "not to worry about security." Can Ellison point to any cloud competitor that has told its customers "not to worry about security?"

Oracle Exaggerates Adoption of Fusion Apps

Oracle claims just 200 sales of Oracle Fusion Apps, and it refuses to break down that number into how many are CRM, HCM, and so on. Although Oracle will not release that information, I have reason to believe that most of those sales are for HCM and that there have been few new sales of Fusion CRM.

Tellingly, there were no customers on stage with Ellison or Hurd. Except for a couple of slides with logos of companies that Oracle claimed as wins over its competitors, there were no customer mentions, no customer testimonies.

Oracle Customers Choose Cloud Because of Fusion Complexity

Back-channel discussions indicate that nearly all Oracle Fusion application sales are for cloud deployment, not on-premises. It appears that this is the case not because Fusion can only run in the cloud  (like or Workday) but because Fusion technical requirements are so complex that virtually no organization wants to deploy Fusion Apps on-premises. It is easier to simply turn over the infrastructure and application management activities to Oracle.

On a Positive Note

The dissatisfaction felt by many of the event attendees is unfortunate. Oracle does have an impressive array of cloud services, although some are still in the process of roll-out.
  • Specifically, I like the fact that Oracle is offering a full and complete IaaS platform, similar to Amazon's (although Oracle's is limited to Oracle technologies).
  • I also like that everything in Oracle's cloud is based on public standards, such as SQL, Java, and HTML5. 
  • I like that customers can freely move applications (Oracle's apps, or custom apps) from Oracle's cloud to on-premise deployment, or to other public clouds such as Amazon's--without modification. I questioned Kurian on this point, and he confirmed that there is no intent to lock in customers to Oracle's cloud. This is, in fact, a differentiator against as a development platform, which because it is based on proprietary languages, does not offer portability. 
  • Finally, the user interface or Oracle Fusion Application is cutting edge. From what I saw in the Ellison's demonstration, along with other Fusion apps I've seen demonstrated, Oracle has set a high bar for ease-of-use, embedded BI, and integration.
Oracle has fallen into a pattern in its public events of overstating its successes, misrepresenting its competitors, and touting statements-of-direction as accomplishments. This is unfortunate because it causes observers to discount what is in fact some very impressive technology. I hope that, in the future, Oracle will take a more understated approach that will do justice to its people, products, and services. 

Related Posts

Oracle's roadmap for Fusion Apps (2009)
More on Oracle's Fusion strategy
Oracle's Fusion strategy: clear as mud
Fusion to build on Oracle's E-Business Suite
Oracle going dark
Oracle's new reseller strategy and speculation on the future of JDE
Is Oracle's Fusion really half complete?
SAP slams Oracle's strategy as, Project Confusion


Anonymous said...

You're wrong about the history rewrite. The main goal of Fusion applications was to combine (not integrate) their acquisitions. But the original design was for a multi-tenant application suite that would run as well in the cloud (or "on demand") as it did on premise. I had a number of conversations with Oracle strategists as a customer on the Fusion strategy council, and I am 100% certain that their original intention was to enable Fusion applications to run in the cloud.

Larry was simply emphasizing a feature that he may not have emphasized in the past. He was not rewriting history.

Dennis Howlett said...

Doesn't matter what you say you know, what matters is what LJE has put out in the public domain over time. Quite frankly, this ducking and diving between facts/fiction has got to stop. It does LJE no favors, confuses customers and does a dis-service to the many smart people the company employs.

Anonymous said...

LJE has a way of conveniently hijcking the topic to suit his latest needs.
In the recent past he defined cloud as "computers and network". Now that he has acquired a few SasS company's he found relgion in "Cloud Computing". See for yourself :

clive boulton said...

Back at the Churchill Club on 9.21.2009 after I asked Larry Ellison about Cloud Computing and got a consultants slippy answer. Ed Zander told me LJE would be working on Cloud but would never let on to customers before he had product to sell. As the head of Oracle Development only LJE can claim to know Fusions ultimate roadmap.

esteban kolsky said...

I am one with the commenters that say that Fusion was not an integration play. it existed before the acquisitions and it was done at the same time that SAP presented the idea of NetWeaver, PeopleSoft presented their framework (the name escapes me, but it had the coolest vision at the time)

As a matter of fact, all these frameworks were intended to pave the way to "cloudify" the existing apps (this was early days of SOA and Web Services, we did not know back then as much).

When the acquisitions were announced, the early word was that the fusion framework wold allow for easier integration between the platforms (which later turned out not to be true - mostly due to Fusion delays and architecture complexity).

Fusion was always intended to be used for cloud. Alas, I don't believe that Oracle (or even LJE) figured out what cloud meant until maybe 4-5 years ago going by their moves and development of products and such.

Clive is also making a huge point - Oracle never leads the market with released products, but they are always early on with projects and working on how to use the latest technologies: they did it with cloud, did it with social, and even with collaboration. The distinctions is between R&D and GA -- and they will never likely be first to GA: their core market is the late adopters and laggards - where most of their money is made. They don't need to be pioneers -- they need to be good followers, but also to understand the inflection points in the market -- which is why they do all these small projects to understand the market better.

of course, i could be wrong -- but that is what my notes (and memory) on the subject say...

Good read, just wanted to contribute to the timing argument on clouds.