Last week’s Oracle OpenWorld show was quite an event with many different story lines including the tie-in to the Iron Man 2 movie.  In fact, in the main area outside the keynote hall there were three Iron Man suites along side their Exadata and Exalogic cousins.  So here is what we learned:

Cloud in a Box according to Marc Benioff and Larry Ellison.  There was quite a number of heated, yet humorous references to Marc Benioff’s (CEO at Salesforce) comments related to Oracle’s view of Cloud Computing that it has to reside in an Exadata box.  In fact in one session I attended, he even said that the Internet was not made of Cloud boxes that were even taller than Marc, and he is tall.  In the Sunday afternoon session, Larry was very dismissive of both Marc’s vision of the Internet and his book Behind the Cloud. If you have some time check out Marc Benioff’s OpenWorld keynote, very funny.

What is really interesting is that in many ways they are both right.  Larry is very famous about a his rant on Cloud Computing and that it is nothing more than a network, servers and software.  This is true, even the most Cloudy providers in the market like Amazon and Salesforce.com are dependent on a real infrastructure that can scale and is reliable and many of these firms are Oracle customers.

On the other hand, Marc is right that the Cloud is less about buying, building and maintaining this scalable architecture and more about leveraging a firm that provides their Infrastructure-as-a-Service.  This has been one of the main catalysts for the software industry’s move to a subscription business model or SaaS, just like Salesforce.com.

In some ways both companies are right, it just depends on your viewpoint.   I think that Oracle is thinking more like IBM and HP and Salesforce is more aligned to Facebook and Zynga. Even though Larry and Marc were both exchanging jabs last week, they are both customers of each other, and in the end that is good for all of their customers.

Mark Hurd looks like he fits in well with Oracle.  The keynote sessions where Mark presented, he was relaxed and really knew the material.   Given Oracle’s absorption of Sun, it is really helpful to have someone with Mark Hurd’s background helping Larry run the company.  The hardware business is quite different than running a software firm and Oracle was able to secure one of the best hardware executives in the industry from HP.

Oracle is really embracing the hardware world.  It was interesting to see the focus on the new Exadata and Exalogic products.  The company’s messaging revolved around performance, availability, security and management and not very much around applications or Cloud Computing.  A lot of discussion around hardware and software being engineered together to create these incredibly powerful database and middleware server platforms.  But does this approach raise concerns around ‘vendor lock-in‘?   This hardware-centric strategy makes sense because Oracle really views IBM as their biggest competitor and they need to monetize the Sun acquisition as well.

Fusion applications are coming at the end of the year, but not sure if anyone at Oracle cares. Larry told the crowd that the writing of the new Oracle Fusion applications for Financial Management, Procurement and Sourcing, Project and Portfolio Management, Human Capital Management, Customer Relationship Management, Supply Chain Management, and Governance Risk and Compliance.  These are the products that were promised last year at OpenWorld but they appear to be real at this point.  Although I didn’t attend the deep dive sessions for Fusion, others who did told me that they have done a good job.  At the Wednesday afternoon keynote, the demos of the products looked good and the user interface looks quite modern.

According to Larry the writing of the new Fusion applications was the biggest development project in Oracle’s history, it was interesting to see that there was little for no fanfare surrounding this major milestone.  As long as the Fusion applications sell more database and infrastructure software and more Exadata servers, I guess that’s what is important.   The successful roll out of the Fusion applications later in the year is going to be important for the overall software market but I doubt it will really impact the leading SaaS providers like Salesforce.com, Taleo, SuccessFactors or Workday.  It will be interesting to see how Oracle evolves its thinking about the applications market and it’s approach to the Cloud, because that is where all the growth will come over the next 5 years.

Seems like we were just here a few months ago but a lot of things have happened since the last Oracle OpenWorld in 2009.

It was great to see a full house of exhibitors that consumed most of the Moscone center in San Francisco. Walking through the two completely full tradeshow floors, which indicates some degree of growth in the broader technology market, especially after I saw a number of mega-booths with a lot of promotional events.

Fusion Applications

I didn’t see the Sunday keynote with Larry Ellison, but I heard multiple times that he announced everything at that session.  It appeared that area that SaaS followers were keenly interested in learning more about was Fusion and as one analyst mentioned to me it, ‘Larry mentioned a couple of the new Fusion Apps and then went Yada Yada Yada for the rest of them.’  His opinion was the anytime you Yada Yada anything that means you are not taking it seriously.  Well maybe.

It sounds like Oracle is taking Fusion serious, having invested close to $4B in R&D during 2010 alone,  in order to be ready to launch these next generation apps.  Oracle is offering 100 modules and over 7 different product families including Financials, Procurement, Sourcing, Project and Portfolio Management, HCM, CRM and SCM. We will see over the next few days if there is real detail and deliverables around all of this investment in Fusion or just more Yada Yada.

If Oracle plays this correctly, they will be able to cash in on the buying public’s shift to OPEX spending rather than traditional capital spending on software, which is no longer in vogue.  Fusion applications could be a viable alternative to smaller more risky best-of-breed application alternatives, but they need to be both pure-SaaS and functionally complete.  We will know over next few days.

Riding Hurd

I personally think that Oracle’s hiring of Mark Hurd was a true master stroke, and a major mistake on the part of HP for letting him go.  Mark kicked off the Monday keynote session and he looked like he had worked at Oracle for years, brimming with confidence and very comfortable.  It is also clear that having someone with his knowledge of the hardware world at the helm, is a major advantage, with all of the Sun technology now firmly part of the Oracle ‘Full Stack’ offerings.

We saw a fully buzzword set of presentations this morning; OLTP, Petabyte, threads, cores, and ZFS to name a few.  Speeds and feeds were the name of the game and Mark Hurd and John Fowler discussed the new Exadata 2 and Exalogic products.  Oracle loves fast products and breaking records, so owning the entire technology stack is going to be fun for Larry.   It is interesting that all of these really fast “Full Stack” products will be huge advances and will definitely improve the performance and scalability of future Cloud Computing services, offered by Oracle and others.

M&A in the Air

There have been a number of deals in the technology space over the past 30 days including HP purchasing both 3PAR and ArcSight for close to $4B.  In the HCM space there have been a very rapid spat of deals including one announced between SumTotal Systems purchasing Softscape, Taleo purchasing Learn.com, Kenexa buys Salary.com and Stepstone picks up MrTed.  One has to wonder if there won’t be a big announcement at Larry’s Wednesday afternoon keynote.  I have heard that Oracle might buy Netsuite, which is interesting considering that Larrry already owns about 65% of the company.  Considering Salesforce.com is speaking and exhibiting here at OpenWorld that might be sort of embarassing to everyone concerned.  It might also not be a ringing endorsement of Fusion either, but we will wait and have to see what happens.

More from OpenWorld tomorrow.

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I asked Rob Vandenberg, President and CEO a few questions about his business and view of the SaaS market in 2010.

Did you start out as a Software-as-a-Service company?

Yes, we started out as an online translation service. Currently our products are hosted on Amazon AWS but some of our customers, like the CIA, prefer their product to work on-premise. (That makes sense since the company was originally funded by In-Q-Tel, the venture arm of the CIA. By the way, the Q in the name is for “Q” from the James Bond movie fame.)

We worked through our business model over the past five years and finally got launched our platform about two years ago and were able to secure our first stage of funding from In-Q-Tel, as a way to put more translation control in the hands of the actual content owner.

Our web-based platform allows content owners to load up their content, which allows outside translators to actively participate in the process. This approach allows organizations to better manage a massive data stream of content that needs to be translated. Administrators can identify content that needs to be machine or human translated and then the translated content can be stored in memory for reuse or even train other services.

We have always thought that machine translation from software firms like Google and Microsoft offer good resources but only provide a very rough-cut type of translation. These services don’t produce translation results that are ready for publishing, that’s when you need more detailed post-editing that can only be done by a person. Machine translations are a good start but there is never a way to review and improve the translation, without involving people and that’s where Lingotek comes in.

Why do your customers buy from Lingotek?

Lingotek enables our customers to capture, grow, and re-use their linguistic assets, while achieving unprecedented control over the translation process.

We have deployments at some of the most innovative organizations in the United States, from Fortune 500 corporations, to government agencies, to small professional service firms. Some of our more recognizable customers are Cisco, Novell and Abobe.

Our software was designed to help content owners at larger organizations do translations more quickly and easily. The Church of Latter Day Saints has more than 14 million members who are doing family search and genealogy every year. These members to translate this content into virtually every available language use our translation software platform. The LDS members publish, tag content and domains, and then the community translates chunks of content.

Crowdsourcing is the answer to dis-intermediate traditional translation processes. Adobe has over 650 product user groups who are all generating and using content. The opportunity is to have all of these groups participate and focus on translation and creation of new content. What they have discovered is that their users are willing to translate and create content, which is what happened with their Russian Flex community. Lingotek really created our translation platform based on this work with Adobe.

The Lingotek software allows translators to act like freelancers who can do their work online inside of the platform, but also helps large organizations to overcome content language barriers. This approach is similar to other freelance work type of platforms such as eLance, Guru.com or oDesk. We also make is easy and affordable for these content owners at large organizations by using a software subscription pricing model.

Our software platform is very popular in China and India. We currently support 26 different languages, local dialects and regions.

What do you see as the key trend emerging in the SaaS industry?

Lingotek has formed a number of newer partnerships with firms like Jive Software and Microsoft (SharePoint), because they are large content containers that store a tremendous amount of user-generated content. This type of user-generated content is doubling every year but only about 2% of it is getting translated every year. This is a big opportunity for these types of firms and Lingotek can make it easier to get this content translated and deployed. Their users can nominate content to be translated and then the Lingotek community can work on translating it using a ‘follow-the-sun’ type of business model.

When our customers capture their linguistic assets, it makes it easier for them to go global with their products and services. By engaging both their internal subject matter experts and the Lingotek community, and getting them to actively participate in translations, this allows them helps break down the traditional language barriers for their offerings.

What is your outlook for 2010?

The translation market is a $15 billion a year market and there are many opportunities to expand our services to help our customers overcome language barriers for their products and services. Our next phase of growth is to work with these content container partners to create new tools to expand our services to these firms.