Smart SaaS

This year’s OpenWorld conference was really big, with more than 50,000 attendees and a number of venues across downtown San Francisco.  The big news wasn’t the size of the show but the sharpening of Oracle’s strategy as it relates to the Cloud.

Larry Ellison has long stated that the hype over Cloud Computing was ridiculous, considering it is basically the same infrastructure that supports the Internet and their customer’s internal infrastructure.  You still need data centers, servers, firewalls and database software to power the Cloud.

Cloud Strategy

What was clear at this year’s OpenWorld was that there was much less focus on Oracle’s ‘Exa’ hardware and more around the company’s broad application and infrastructure product portfolio and how they fit into their overall Cloud business strategy.  Mark Hurd’s keynote touched on Oracle’s 4 point product strategy:

• Offer Best-of-Breed Solutions – Focus on open and standards-based products including Java, Linux, and Solaris
• Vertical Integration of Solutions  - The Exastack products are a good example of this approach (Similar to Apple’s philosophy)
• Next Generation of Applications – Modular, multiple deployment options, ability for customers to mix-and-match products
• Deliver Products Through the Cloud

This is a more evolved way of looking at their product portfolio and rationalizing it for their next generation of Cloud solutions.  It is also a realization that not only market enthusiasts are pushing them for more SaaS-based offerings, but Oracle customers are also keenly interested in ways to move more of their compute into Cloud.  These customers are not the SMB crowd but the large Fortune 500 and Global 2000 companies that are looking for flexibility and cost efficiencies, rather than just going along with the next IT fad.

Infrastructure-as-a-Service

Although the Oracle Cloud was announced last year, the strategy has now evolved to more of an Infrastructure-as-a-Service offering that provides secure, virtualized compute and storage services. For this new IaaS Oracle will use it’s Exa hardware, Linux or Solaris operating systems, Fusion middleware and Oracle database as the foundation of it’s Cloud platform.

The other provider who is often mentioned by Oracle, who is offering a similar offering is Amazon’s EC2 platform.  AWS has definitely been a revolutionary player in the Cloud but their solutions have typically met the needs of small ISV’s or development and testing projects.  Oracle continues to focus on delivering an enterprise-grade solutions for the Cloud that will meet the complex needs of ISV’s and larger global organizations. The Oracle Cloud is built on top of ten data centers spread out globally, to meet the security and availability needs for their customers using its new IaaS offerings.

The Oracle Cloud infrastructure can be installed not only on top of Oracle’s infrastructure but also in their customer’s own data center.  Over time, Oracle customers can move their applications from traditional custom and packaged on-premise applications (e.g. PeopleSoft, Siebel, Hyperion, etc) to Fusion SaaS applications and back and forth, whatever makes the most sense for their business.  We think that over time, customers are looking to simplify their IT infrastructures and probably won’t be creating complex hybrid environments.

SaaS Products

Oracle is investing $5 billion a year on R&D and more on in M&A to fuel their Cloud innovation, which is allowing them to continue to play a leadership role in the Software market.  Oracle now claims to have more SaaS applications than any other provider in the market including:

• Human Capital and Talent Management (Fusion and Taleo)
• Sales, Marketing and Customer Support (Fusion and RightNow)
• ERP, Financials and Procurement (Fusion)

Today they have hundreds of customers on their Fusion and acquired SaaS  products but next year they anticipate having thousands of customers running their new SaaS-based applications.  An interesting statistic that was shown is that of the Fusion applications currently deployed:

• 9% are On-Demand (Managed environment)
• 26% are on-premise and
• 65% are SaaS-based

The early SaaS Fusion customers included Brocade (Fusion Talent Management), Elizabeth Arden (Core HR and Fusion Talent Management), Graco (Oracle Marketing Cloud), Hitachi Data Systems (Oracle Talent Managment, Taleo), Key Energy Services (Fusion CRM), KLM (RightNow), Overstock.com (RightNow), Red Robin (Fusion ERP, SCM and HCM) and UBS (Fusion Core HR and Talent Management).

These are all large organizations that only have a few Oracle Cloud products today and given the broad portfolio of applications and services, there appears to be a large opportunity to upsell and cross-sell these customers their new, modern SaaS products.

Conclusion

Oracle is actively evolving their Cloud strategy.  Look for more services and products to be made available in their Cloud in the near future.

What Oracle really needs now is better marketing around their offerings, because it is now a giant Chinese menu of components and most SaaS buyers are looking to buy a meal, not all of the ingredients and then have to cook it themselves.

If Oracle could templatize their Cloud offerings and wrap them up with value added business process services, they would be filling a big gap in the market.  Currently, neither large SaaS players or Systems Integrators can currently help buyers to build a successful SaaS business or efficiently deploy a complex SaaS set of products.

This is in Oracle’s wheel house and could be the real silver lining in their Cloud strategy.

Other Items of Interest

Release: Oracle Unveils Expanded Oracle Cloud Services Portfolio

Video:  Larry Ellison OpenWorld Keynote

Videos:  Larry Ellison OpenWorld interviews with CNBC’s Maria Bartiromo – Part 1 , Part 2,  and Part 3.  Really good interviews and very informative.

Article: Oracle OpenWorld by the Numbers, Rachel King – ZDNet [Infographic]