Big Shift: NetSuite Moving to Oracle Cloud Infrastructure

In recent years, Oracle has been intensely focused on its cloud strategy as the key to its growth. At Oracle Open World 2016, with the announcement of Oracle’s second-generation cloud infrastructure, Larry Ellison said, “Amazon’s lead is over.” It was an ambitious goal: At the time, Oracle’s cloud infrastructure (OCI) business was bringing in less than $200M per quarter.

Uptake of Oracle’s cloud applications is great, but when it comes to Oracle really competing with Amazon or Microsoft as a platform for independent software vendors (ISVs), the story is different.

The absence of multitenant ISVs on OCI is not because of a lack of capabilities. Oracle’s flagship database, since v12c was released in 2013, has built-in multitenancy in the form of database containers, which allow multiple tenants to share a single Oracle database, with individual containers assigned to each tenant. This approach puts the multitenancy into the infrastructure layer, allowing developers to focus their efforts on application development, not on the mechanics of multitenancy.

Oracle’s lack of commercial SaaS providers building on OCI is about to change.

Read the rest of this post on the Strativa blog:
NetSuite on Oracle Cloud Infrastructure: What It Means for Customers

Open Source Not a Panacea for Cloud Infrastructure Decisions

When it comes to cloud computing, do open systems win out over proprietary standards? My view is, perhaps in theory, but cloud computing--specifically public cloud infrastructure--has bigger problems right now than whether it's built on open source. Furthermore, open source cloud infrastructure providers have obstacles to overcome. 

I'm participating in an online video debate on October 29, hosted by IBM's Smarter Computing program, on "the pros and cons of open computing when it comes to cloud, big data, and software defined environments." This post outlines part of my viewpoint on this subject.

What's Not to Like about Open Source?

One of the problem in debating "open source" is that it is difficult to argue against the word "open" as a concept. For example, we all like to think of ourselves as open-minded, not close-minded. We admire top executives who have an open-door policy--have you ever heard of a manager with a "closed door policy?" In home-buying, sellers like to point out the open floor plan. Who ever advertised a house as having a "closed" floor plan?

So also, in computing, open just sounds better. Moreover, when it comes to cloud infrastructure, open source projects such as OpenStack and CloudStack have admirable goals, such as the ease of porting computing workloads from one cloud provider to another, promoting competition, and escaping the dreaded vendor lock-in.

The Larger Issue: Adoption

But, to me, it is premature to debate about whether open source cloud infrastructure is better. The larger issue today is the small percentage of corporate IT organizations that embrace public cloud infrastructure at all. In our Technology Trends survey at Computer Economics last year, we found that less than 10% of IT organizations worldwide have any use or plans to use public cloud infrastructure. Moreover, of these, only half claim use it, or intend to use it, for production systems.

If they are not using public cloud for production systems, then what are they using it for? Our survey found interest in public cloud for software development and testing, disaster recovery capabilities (such as backup and recovery), or for archiving older data.

In addition, I question some of those production uses of IaaS. Discussions with associates who advise data center managers confirm my suspicions. One associate, who works a lot in the entertainment industry, pointed out that one popular use of cloud infrastructure is in rendering animated film. In this case, animators require enormous amounts of computing power and storage to render even a few minutes of animation. As it turns out, cloud infrastructure is perfect for such a use, as it frees the IT organization from having to maintain those high levels of computing resources, which are only used sporadically. Furthermore, the risk is low. If the cloud provider goes down in the middle of a rendering job, the animator can simply resubmit the job. Nothing is lost.

But when it comes to production systems, such as accounting systems or royalty processing, these same entertainment industry decision-makers shun cloud infrastructure. It is not that they want to keep such systems on-premises, as witnessed by the fact that they have been outsourcing their data centers to managed services providers for years. As my associate remarked, "CIOs don't want to be in the data center business any more." But, rightly or wrongly, they are cautious about entrusting production systems to a cloud infrastructure.

Open Source Not a Panacea

Although the goals of OpenStack and other open source cloud projects are admirable, they may be a solution in search of a problem.

• Specifically, migrating workloads between competing cloud providers may not be as big a deal as open source proponents claim. Customer demands are already forcing competing cloud providers to recognize and support each other's APIs. For example, some members of the OpenStack community are urging support for Amazon's APIs.  If OpenStack fully goes this route, application systems written for Amazon's cloud will be able to be deployed on an OpenStack cloud without a lot of migration effort. Even VMware--the vendor with the largest stake in so-called private clouds--supports Amazon APIs and is also a contributor to OpenStack. Therefore, as far as I can tell, portability is not a major issue.

• Second, so far, it does not seem as if proprietary cloud providers are using their proprietary standards in order to extract higher fees from customers. Quite to the contrary, cloud infrastructure is a very competitive market. Whatever concerns IT decision makers have about public cloud infrastructure, one thing they cannot complain about is its cost. Leading cloud providers are not raising prices--rather, they are cutting prices, in some cases many times a year. IT decision makers are not holding on to their on-premises systems because they are concerned about the cost of public cloud--they are focused on risk. This was also a key finding in our Technology Trends survey.

If a cloud provider wants to overcome enterprise IT buyer concerns, it should focus on reliability, security, privacy, and offer a well-staffed support group. Many of the OpenStack providers are doing exactly that. It may well be that OpenStack providers, such as IBM, H-P, Dell, Rackspace and others, will be successful because of their value-added services, not because they embraced an open source infrastructure.

Incumbent Infrastructure Providers Have an Edge

Furthermore, proponents of open source cloud infrastructure may be underestimating the advantage that on-premises infrastructure providers have in moving their customers to the public cloud. Although, as discussed above, IT leaders have concerns about moving production workloads to the public cloud, one thing that does appeal to some of them is the ability to move seamlessly from on-premises system instances to cloud instances.

This is the so-called hybrid cloud infrastructure. CIOs may adopt a hybrid cloud strategy in order to move non-critical workloads out of the data center, freeing up system resources (e.g. the animation rendering application discussed above), or to "burst" to the cloud during period of high demand for system resources (e.g. during a major advertising campaign that strains an in-house e-commerce system).

Now, which provider has the advantage in helping IT organizations set up hybrid cloud capabilities? The provider that is already serving the on-premises data center (Microsoft, VMware, or Oracle, for example) or the one that would like the data center to replatform its on-premises systems to match the infrastructure of the provider's cloud infrastructure (e.g. OpenStack, CloudStack)?

The answer is obvious, which is why Microsoft, VMware, and Oracle are all providing public cloud services that require very little change to the customer's on-premises infrastructure. Unless an IT organization is building a data center from scratch, it is unlikely to want to standardize its internal infrastructure on a completely new technology--open source or otherwise.

Advocating for Cloud and Open Source

Nothing I've written here should be taken as an argument against cloud computing or open source. I've been blogging on these subjects since 2002 and consider myself as an advocate of both. In my view, one day nearly all systems will be delivered via cloud computing, and open source software has proven itself to be a viable business model for a variety of software categories, especially for lower levels in the technology stack. But in the case of public cloud infrastructure, I don't see open source cloud projects as dominating the market any time soon.

Update: The video of my IBM debate is now online. You can watch it by clicking the image below.

Related Posts

The Inexorable Dominance of Cloud Computing
Cutting Through the Fog of Cloud Computing Definitions

Photo Credit: Flickr, followtheseinstructions

Cloud Confusion on The Motley Fool

As I've written in the past, financial analysts may provide good advice for investors in the tech sector. But their analysis is not very useful to buyers of technology products and services. It's not that they don't have insights, but they are writing for a different audience: investors, not customers and prospects.

Some parts of the financial press are another story. Some financial media reporters so poorly understand the tech industry that neither investors nor prospective buyers should listen to them.  

I saw an example of this today on The Motley Fool, in a story entitled, Is Oracle's Cloud Really Fake? In it the contributor, Richard Saintvilus, takes issue with an Infoworld article by David Linthicum that criticizes Oracle's most recent "cloud" announcement as "faux IaaS."

The Motley Fool is a website aimed at the individual small investor. It provides both free content as well as paid subscriber material. It also makes money from advertising. Therefore, generating page views is a key objective, with much of its content generated by freelancers, as appears to be the case here. So, the quality of its content varies.

Apologies to in advance to Saintvilus, who reached out to me on Twitter after I sniped at his story. He asked for specifics, so here you go.

Oracle Late to the Cloud

Staintvilus immediately starts with a misconception, that Oracle was an early proponent of cloud computing. Here is his lead:

Wall Street loves a hot trend and had essentially decided four years ago that the cloud was next. With corporations needing all of the cost savings/productivity benefits the cloud offered, the timing was perfect. Oracle was one of the first blue chip enterprise companies to realize this opportunity. [emphasis here, and throughout, is mine.]

Sorry Richard. Even as late as 2009, Oracle's CEO Larry Ellison famously mocked the term cloud computing, calling it no more than a fashion statement. Furthermore, he not only mocked the term, he mocked the concept. To this day, Ellison criticizes multitenant applications, which are the cornerstone of most large scale SaaS providers. Only recently, as Oracle realized it was losing the war did Oracle embrace cloud computing, albeit with its own twist (either hosted single tenant applications, or multi-tenant applications with single tenant databases.) Industry analysts can argue all day about the relative merits of each approach. But none would claim that Oracle was anywhere to be found at the beginning of the trend to cloud computing.

Oracle Market Share in Cloud Services

He continues with a comment on Oracle's rising revenues:

The company [Oracle] is providing a service, of which there has been very few complaints -- at least not according to the rising revenues, which suggest it's stealing share from rivals such as salesforce.com. And Oracle is not the cheapest on the market, either. So, there's a reason why customers are willing to pay the premium. And it's not because these corporate CIOs are dumb.

Yes, Oracle's revenues are rising. But those of Salesforce.com are rising also, up 37% in 2012. Furthermore, while all of the revenues of SFDC are derived from cloud computing, only a small percentage of Oracle's are. So to impute on the basis of revenues that Oracle is taking market share from Salesforce.com is ludicrous. Certainly, in my own firm's work advising buyers in software selection, I do not see Oracle taking market share from Salesforce.com. In fact, in CRM, I see deals in which buyers want to look at Salesforce but do not even consider Oracle, especially in the midmarket.

As far as software pricing is concerned, neither do I see Oracle as commanding a premium price over Salesforce.com, or over other application vendors for that matter. In fact, Oracle is notorious for competing on price when it really wants a competitive deal, as it knows it can make it up on maintenance revenue in the future.

But the author wouldn't know that, because he does not advise technology buyers, nor is he in a position to see actual deals going down.

Oracle's Engineered Systems Are Not "Cloud"

He then confuses Oracle's new Exa-boxes with cloud services.

However, David Linthicum of InfoWorld thinks [CIOs are] idiots (I'm paraphrasing that a bit), which doesn't make sense. CIOs are spending billions annually with Oracle. But in Linthicum's recent article, he insists they don't know what they're buying: "Oracle is continuing its faux cloud strategy, adding to its private-cloud infrastructure offering the ability to rent for a monthly fee preconfigured application servers to be deployed in customer data centers. The available application servers -- what Oracle calls 'engineered systems'"

The author can be forgiven for this misunderstanding, as Oracle itself confuses this issue, which is the whole point of Linthicum's criticism. The basic point is that cloud computing is a "service," whereas Oracle's computer hardware (whether old school Sun commodity servers, or Oracle's new "engineered systems") is a physical product. Renting Oracle hardware does not magically turn the hardware into a cloud service.

Oracle's Engineered Systems Are an Old Concept

He continues with the impression that Oracle's Exa-boxes are somehow a new concept. 

Linthicum clearly has an ax to grind. While he's going all-out on Oracle's product portfolio, rival companies have been working hard to duplicate Oracle's offerings. For instance, IBM has a rival offering called PureSystems -- launched three years after Oracle's Engineered Systems, or ES. And, after Oracle has already deployed ES to more than 1,000 customers in 43 countries, IBM followed. Big Blue has gained traction, but not to the extent of Oracle. And I doubt that IBM would have followed a model it didn't think had sustaining potential.

The author appears unaware that Oracle is attempting to return to the IBM era of the 1960s. In fact, Larry Ellison has said so himself. The IBM mainframe at the time was a single integrated platform of hardware, operating system, database, and applications engineered from the ground up to work together. IBM's AS/400 series of machines (now called Series i) took this concept even further. What broke up IBM's dominance in the mainframe era was the fact that these boxes were all based on proprietary standards, and eventually low cost commodity hardware (whether IBM personal computers, or later, Unix boxes from providers such as Sun) could do the job much more cost effectively. The downside was that the new approach led to challenges in system integration, in making all the layers of the technology stack work together.

Oracle's strategy with its Exa-boxes is to return to this single technology stack from hardware through applications, engineered from the ground up to work together. Will Oracle be successful? Only time will tell. And, certainly the 1,000 customer number that the author mentions is not yet enough of a measure of success.

Regardless, what does any of this have to do with cloud computing? Absolutely nothing. Oracle is launching a public cloud offering, with its Exa-boxes as part of the infrastructure. Other providers can do the same using commodity hardware, as Google, Amazon, Microsoft and others have already done.

But the Oracle offering that Linthicum is criticizing and that the author is defending is not Oracle's public cloud service. Rather it is an arrangement whereby Oracle customers can, for a monthly fee,  rent preconfigured Oracle application servers and run them in their own data centers. Linthicum is absolutely right: this has nothing to do with cloud computing.

According to the NIST definition of cloud computing, there are five essential characteristics of cloud computing, and Oracle's hardware rental offering does not satisfy four of them. (See the link in this paragraph for a more complete definition.)

• On-demand self-service. Oracle's rental agreement does not allow the customer to unilaterally provision computing capabilities, such as server time and network storage, as needed automatically without requiring human interaction with each service provider.

• Resource pooling. Oracle's rental agreement does not pool computing resources for multiple customers in a multi-tenant model, with different physical and virtual resources dynamically assigned and reassigned according to consumer demand.

• Rapid elasticity. Oracle's offering does not allow computing capabilities to be elastically provisioned and released, in some cases automatically, to scale rapidly outward and inward commensurate with demand. As Linthicum points out, the customer has to pay extra for spikes in demand and there is no provision to ramp down demand, and cost.

• Measured service. Oracle's offering does not automatically control and optimize resource use by leveraging a metering capability. Customers do not pay as they go.  

Clearly then, Oracle's offering may use the terminology of cloud computing but it does not display the essential characteristics of cloud computing. You can call me a fish, but that doesn't make me one.

The List Goes On

I have neither the time nor the patience to go much further. Let me just list a few (and by no means all) of the remaining errors.

• "Linthicum is pretending to be an expert on something that is still in its infancy." Cloud computing may not be a full grown adult, but it is certainly not an infant. Providers such as Salesforce.com have been delivering cloud services for well over a decade, ancient history in the technology industry.  
• "Oracle innovates at the technology layer, thereby giving customers more leverage and independence from consulting fees." What exactly is the "technology layer?" Everything from bare metal hardware to business applications are "technology." Furthermore, talk to Oracle customers: I doubt anyone will tell you they have less need for consultants. 
• "Had Cisco contracted out its cloud services to Oracle, it could have remained focus on growing its business." The types of cloud services that Cisco offers, such as cloud network management, are not services that Oracle provides. Therefore, it would not be possible for Cisco to contract with Oracle to provide those services on behalf of Cisco. 
• "Even if Linthicum's pricing claims were correct, then it means Microsoft's Azure, which has a pay-as-you-go model, is also fake. But Microsoft has been reducing its prices because it can't compete." If Microsoft is lowering its Azure pricing, it's not because it can't compete, but because it can deliver cloud services at lower and lower costs over time, as it scales and the costs of technology drop (see "Moore's Law"). Similarly, Amazon lowers its AWS prices multiple times per year and no one in his right mind claims it's because Amazon can't compete.
  

Parts of The Motley Fool article are nearly indecipherable, especially toward the end. But I think this is enough to illustrate: parts of the financial press are poor sources of information on enterprise IT. By that, I do not mean to imply that all financial reporters are suspect. One would not expect to see a story such as this one to appear, say, on the pages of The Wall Street Journal or Financial Times.

Furthermore, none of my criticism should be taken to mean that Oracle is not a good company from either the investor perspective or customer perspective. As the author tweeted me, "Oracle is one of the best tech names on the market and it deserves fairness."

Yes it is, and yes it does. And because of that, it also deserves accurate reporting.  

Related posts

Enterprise IT Buyers: Don’t Listen to Financial Analysts
Oracle's Behavior Undercuts Its Own Cloud Accomplishments
Cutting Through the Fog of Cloud Computing Definitions

Photo Credit: NS Newsflash

2012 Technology Trends: Call for Survey Respondents

Over at Computer Economics, we've now launched our 2012 Technology Trends survey, and we're looking for qualified IT executives to take a 15-minute survey about their technology investment plans.

What's in it for you? If you complete the survey, we'll send you a complete copy of the final report (a $995 value).

Start the Technology Trends Survey Now 

In this year's survey we're asking about your organization's adoption and experience with 13 technologies:

• ERP
• Customer Relationship Management (CRM)
• Supply Chain Management
• Human Resources Management Systems (HRMS)
• Data Warehouse/BI
• Social Business/Collaboration Systems
• Legacy System Renewal
• Software as a Service (SaaS)
• Public Cloud Infrastructure (IaaS)
• Platform as a Service (PaaS)
• Unified Communications
• Desktop Virtualization
• Tablet Computers. 

Want to know more? See a summary of the final report from last year.

Cutting Through the Fog of Cloud Computing Definitions

In recent years, the term "cloud computing" has been used and abused by vendors and their marketing groups to denote just about anything the vendor offers other than on-premise systems. Analysts too have piled on, each offering their own definition of cloud computing. This 2009 Wall Street Journal article outlined the confusion. The result has been fruitless arguments over what is "true cloud" or "false cloud," as in the recent tit-for-tat speeches by Larry Ellison and Marc Benioff during Oracle Open World.

Such debates are likely to continue, but now there is at least one official source for the definition of cloud computing. The National Institute of Standards and Technology (NIST), an arm of the US Department of Commerce, has now published The NIST Definition of Cloud Computing. Though other standards bodies may (or may already have) published their own definitions, NIST carries particular weight as it is often referenced in U.S. governmental procurement. The NIST definition is vendor-agnostic and buyer-centric.

The NIST Definition

The NIST document is short--the body of the document comprises just three pages, with the definition itself taking up less than two pages. In it, the authors describe the essential characteristics, service models, and deployment models for cloud computing.

• The five essential characteristics are: on-demand service, broad network access, resource pooling, rapid elasticity, and measured service.
  

• They go on to then list three service models, which should be already familiar to most observers: software as a service (SaaS), platform as a service (PaaS), and infrastructure as a service (IaaS).

• Finally, they list four possible deployment models for cloud computing: private cloud, community cloud, public cloud, and hybrid cloud.
  

In my mind, the section that is most useful for distinguishing what is or is not cloud computing is the first one, the "essential characteristics." So, let me quote NIST directly (emphasis mine).

Essential characteristics:

• On-demand self-service. A consumer can unilaterally provision computing capabilities, such as server time and network storage, as needed automatically without requiring human interaction with each service provider.
  
  
• Broad network access. Capabilities are available over the network and accessed through standard mechanisms that promote use by heterogeneous thin or thick client platforms (e.g., mobile phones, tablets, laptops, and workstations).
  
  
• Resource pooling. The provider’s computing resources are pooled to serve multiple consumers using a multi-tenant model, with different physical and virtual resources dynamically assigned and reassigned according to consumer demand. There is a sense of location independence in that the customer generally has no control or knowledge over the exact location of the provided resources but may be able to specify location at a higher level of abstraction (e.g., country, state, or datacenter). Examples of resources include storage, processing, memory, and network bandwidth.
  
  
• Rapid elasticity. Capabilities can be elastically provisioned and released, in some cases automatically, to scale rapidly outward and inward commensurate with demand. To the consumer, the capabilities available for provisioning often appear to be unlimited and can be appropriated in any quantity at any time.
  
  
• Measured service. Cloud systems automatically control and optimize resource use by leveraging a metering capability at some level of abstraction appropriate to the type of service (e.g., storage, processing, bandwidth, and active user accounts). Resource usage can be monitored, controlled, and reported, providing transparency for both the provider and consumer of the utilized service.

Keep these key points in mind.

Cutting Through the Ellison/Benioff Fog

So, let's apply these characteristics to what Larry Ellison and Marc Benioff each describe as cloud computing. In my opinion, both are right and both are wrong.

Benioff's service, Salesforce.com, certainly meets the NIST definition of cloud computing, both in its CRM application, which meets NIST's definition of SaaS, and in its Force.com offering, which meets the definition of PaaS. He is also correct in criticizing the labeling of Oracle's Exalogic hardware as a "cloud in a box." By my reading of NIST's essential characteristics, one could construct a cloud service using Oracle's hardware, but the hardware itself should not be considered a cloud.

But if Benioff is referring to Oracle's newly announced Public Cloud Services as a "false cloud," he is wrong. Oracle's Public Cloud Services certainly meet the NIST definition of cloud computing. But it is primarily an IaaS offering, similar to Amazon's EC2. Assuming that Oracle will offer development capabilities on top of its Public Cloud Service, those would be PaaS, and if it chooses to run applications on top of its Public Cloud Service, such as Oracle CRM On-Demand, those would be SaaS.

On the other hand, Ellison is wrong to label Salesforce.com's PaaS offering as a "false cloud." Ellision's argument is that Force.com utilizes proprietary extensions to Java and other programming languages, which make it difficult to migrate applications to other cloud providers. But there is nothing in the NIST definition of cloud computing that requires interoperability between different cloud service providers, as desirable as that may be. Ellison is simply turning what he sees as a disadvantage of Benioff's cloud into an argument that it is by definition not a cloud.

Cutting Through the Application Hosting Fog

The NIST definition is also useful for cutting through vendor marketing efforts to label anything they do off-premise as cloud computing. In particular, application vendors that simply host their on-premise solutions in their own, or partner, data centers should not be labeling those as cloud computing. In particular, simple hosting of an application does not qualify as cloud computing because it lacks the essential characteristics (see bolded sections in the quoted definition above).

With a hosted application, the customer generally cannot "unilaterally provision computing capabilities, such as server time and network storage, as needed automatically without requiring human interaction." In addition, with a hosted application there is generally no "sense of location independence." Rather, the customer usually knows the data center and may even know the data center, cage, or rack in which his hosted application resides, even if the application is hosted on a virtual server. Finally, with a hosted application, computing resources generally cannot be "elastically provisioned and released, in some cases automatically, to scale rapidly outward and inward commensurate with demand." Rather, the customer must negotiate provision of additional computing resources.

Notice also that the NIST definition does not mention anything about how cloud services are contracted. Some vendors point to subscription pricing as evidence of their hosted applications being cloud offerings. According to NIST, how the customer pays for the service has no bearing as to whether the service is cloud computing. It could be subscription pricing, it could be a perpetual license, or it could be something else.

The marketing hype and confusion over cloud computing will no doubt continue. But at least now NIST offers a reasonable and objective definition.

Related posts

Salesforce.com: more than an itty-bitty application
The inexorable dominance of cloud computing
Lawson's cloud services: good start, but no SaaS
A game-changing play in enterprise software