The Oracle Cloud paradigm is centered around the fact that data must be the focus around which an enterprise builds and runs it’s IT and processes. To that end, they have been offering a very differentiated and business-specific set of cloud solutions that are a healthy mix of SaaS, PaaS, IaaS and what they fondly call Data As A Service too. Although they were not the first or early movers in the cloud game, they have been working over the years with a clear strategy that now sets them apart from the other cloud players very significantly. I will try and demystify this a little here.
To match the needs of the soon-to-be data-driven economy, Oracle is offering a full stack of enterprise cloud offerings, from the applications layer down to the platform and infrastructure tiers. Having spent the last 10 years building its SaaS portfolio, and the last two creating what it labels as “generation 2 cloud infrastructure,” Oracle is determined to become the premier one-stop-shop for cloud services for the enterprise customer. This is according to a recent IDC report.
Oracle’s second-generation infrastructure offers enhanced capabilities that include bare-metal servers, cloud migrations, and container services. The bare-metal service is designed for heavy-duty and mission-critical workloads, such as that of YellowDog. The service is positioned as an ideal match to Oracle database services. Oracle’s bare-metal service is currently available in Phoenix and will be in the Eastern U.S. in late 2016, and then it was offered in EMEA in the first half of 2017.
Oracle announced its 3Q FY17 results on March 15, 2017, with the key metric of SaaS plus PaaS revenue up 74% (in constant currency) from the previous year at $1.0bn. IaaS revenue, an area in which Oracle is ramping up its presence through a global network of second-generation data centers, was up 19% in constant currency at $178m. Total revenues were up 3% (in constant currency) at $9.2bn. In an executive briefing for Ovum following its earnings announcement, Oracle chief executive Mark Hurd highlighted that the company is now on a $5.0bn annual run-rate for non-GAAP cloud revenue, and is seeing overall growth in both its application and database businesses.
Given the fact that they entered the cloud arena a tad bit late and the fact that they are not running the race to have a flurry of data centers all over the globe to serve clients, this is indeed very good. The availability of Oracle services and products that can be tailored to the T to different verticals without much effort is also a big plus for them.
So I sat down with Mitesh Agarwal – VP and India CTO , Oracle to try and decipher the cloud strategy, plans and what the whole cloud paradigm means to Oracle. Here are key excerpts from the chat.
When did oracle effectively become a cloud player and what was the driving thought process behind that decision?
Sometime in 2005, Thomas Kurian who is President for Product Development went up to Larry and said people are going to consume our software very differently. He didn’t use the term cloud or data center sharing explicitly but that was the thought process. The central concept was to leave customers to customize every aspect of any solution or product that we have to offer and let them do it in a way that the OS they use or the scale that they want to go with does not change the way they go about solving the problem and deploying the solution to the world . The other key driver in the conversation was about the imminent change in the mode of consumption of products and services by end users. From a predominantly PC based model, today we have a predominantly mobile based model. With these two ideas, we went back to the drawing board and first abstracted the OS layer out of all the solutions and products we have. Then we evolved into a cloud model with clear planning and steady execution from there on. As a result, we came up with human capital management, ERP on the cloud, enterprise performance management on the cloud and human capital management on the cloud.
How is the Indian ecosystem warming up to the cloud now? How much of Oracle’s cloud share is from India?
We can’t go into exact numbers. India is big when it comes to HCM. So, every single customer is very, very keen to attract the talent, retain the talent, nurture them, so the entire recruit to retire part that people speak about, that is very, very big in India. So that is seeing huge interest. The second area of interest that people are seeing is ERP on the cloud, this could be attributed to a certain extent to GST forcing them to do it. The entire startup ecosystem is bustling with young people looking to disrupt things at a really fast pace and they are sure that the cloud is the way to go. When they get on the Oracle cloud, they know that they can focus on solving whatever they set out to solve without worrying about the platform, infrastructure or software. This drastically alters their go to market time and makes it really fast. Continuous integration becomes a big reality and code divergence is no longer a problem. Given all this, India is ramping up quickly into a key theater for us and we are ready to serve and grow with India.
How are your sales and marketing teams dealing with the shift to cloud? On-Prem was a big deal for Oracle
So, our HCM teams, our CX teams on SaaS and our EPM teams, the performance management teams, they only sell on SaaS. We don’t sell an on-prem product. When there are specific and valid reasons like compliance and security we give them the private cloud option with the ability to burst into the public cloud as and when they need it. I must also mention that if you are an existing public cloud user with us, switching to private is also easily doable and does not involve major risks. So we go with an open mind and a lot of data that we have accumulated from decades of working with clients in various verticals. We also now have the ability to quickly demo the cloud solutions to prospects where they can touch and feel. This helps us a lot in effective conversions on the field.
How is the partner and system integrator ecosystem reacting to this paradigm shift?
I will say the ecosystem is reacting very positively, there really is only one way going forward and that is the cloud. What most people do not get is that it is not about cost benefits but more about go to market and time to roll out improvements. There’s a bunch of large SI partners who also have a very strong on-prem ecosystem economy with them. So, for them also, it’s about letting it go. I mean, they also don’t want to let go of the maintenance that they were getting as part of it. But they also realize that if they don’t do it, their survival is in question. So, some are moving faster than the others and then there were whole bunch of new cloud native partners that we’ve got. They are just born in the cloud partners. They don’t care about reselling our license, reselling our cloud product and so on. They are only interested in implementation. And they’ve developed their entire strategy around Oracle cloud.
How is Oracle looking at India say for the next year and a half?
I know for a fact it’s very, very positive. So, if you look at the investments that we are making, huge amount of investments, A, not only in terms of people, infrastructure and so on. The more important part is if you look at… GST is a basic thing. Huge localization opportunity for us. Opens up the door for immense amount of customers and solutions. And the best part is that this is happening at a pace that is giving other regions a complex. Disruption everywhere and Oracle is invested in India for the long run. India is not just another office or location for us, it is one of our high growth and high potential markets the way we see it. So our investments, execution strategy and even acquisitions are in line with this thought. India is key and we are here – that’s the theme.
That discussion clearly told me that Oracle is in for the long haul and given their depth in verticals and solutions over the decades, they are already a force to reckon with in the cloud space. Digital India is definitely going to be powered by Oracle in many ways. Will be watching them keenly going forward