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Sunday, September 19, 2010

Oracle, Cloud & Enterprise

I read with interest that observers of Oracle Open World 2010 brought out while reviewing the agenda : Oracle executive vice president Thomas Kurian's keynote was originally scheduled to showcase Fusion apps, but will now be all about "Oracle and Cloud Computing" and his company's role in the cloud "throughout the application lifecycle—from development and deployment to management and self-service administration. . . . Oracle's cloud solution spans all layers of the cloud, including infrastructure as a service (IaaS), platform as a service (PaaS), and applications or software as a service (SaaS), and this keynote focuses on how Oracle products enable cloud computing." Am headed later this evening,to Mascone to listen to Larry Ellison talk about the much delayed and much awaited Fusion Apps launch besides others like Exadata, Java, MySql and ofcourse about Mark Hurd.

There are compelling reasons for both large and medium-sized enterprises to be interested in cloud computing. For medium-sized companies, the top reason they are looking at cloud computing is that it's so much faster and cheaper to get started. Medium-sized companies may not have sophisticated IT departments nor the money to invest in upfront capital expenses, so using a public cloud provider may be very attractive. For larger companies, using an external cloud vendor may enable small teams or departments to get a new application or a development/test environment running in minutes instead of months. The self-service aspect of public clouds means that small teams can avoid a long wait for IT departments to approve project requests, procure servers, find room for them in the data center, install software, configure software, etc. Also, some applications have a limited lifespan of a few weeks or months, perhaps for a marketing campaign, event or special project. Pay-for-use and being able to return IT resources to the pool is perfect for these situations. Some enterprises, especially larger ones with economies of scale, are implementing "private clouds" for their own exclusive use. Large enterprises are interested in building their own private cloud to get the agility, efficiency and quality of service advantages of cloud computing, while mitigating concerns about public clouds, such as security, compliance, performance, reliability, vendor lock-in and long-term costs.

While we assess cloud adoption inside enterprises, we can overlook the fact that there really is a perfect storm in IT. Cloud computing, open source and Enterprise 2.0 are complementary technology shifts that threaten incumbant vendors, offer innovation & cost benefit opportunities (&risk) while challenging IT. It may be more profound than the introduction of PCs or Web 1.0 in business.

While I mull over all these topics, I was just seeing the state of adoption of Cloud/SaaS and the mindset amo0ngst enterprise buyers in moving to the new model. While I have written about how the cloud will disrupt all the stakeholders here, here and here, I wanted to look at the inhibiting factors for cloud adoption inside enterprises and what can be done about it.

Survey after survey lists key adoption concerns of users revolving around, legacy environments –stakeholder interests –in terms of ownership, governance ,legacy environments –protecting investments, Status quo maintenance in respect of leagacy apps – why tinker with it if its performing at acceptable levels. In many places, IT and Business are thoroughly underprepared to do the generation climb – they may have to revisit all the important decisions that they have lived woth in respect of system of records, security practices, integration mechanisms, business rules and process orchestrations, master data management etc. Revisiting all these things would call for mammoth preparation from IT and Business . Arguably, this is a very overwhelming proposition for IT inside enterprises. Business would tend to believe this move into clouds/SaaS may simplify their operations but in reality expectations may be overrunning reality and with the result the list of needs keep expanding adding to the burden on cloud/SaaS adoption.

Business need to look at their portfolio and arrive at a right solution that fits their need, Oracle with its very rich and highly capable consulting and system integration partners can help customers work through this terrain towards adopting Cloud/SaaS model starting from planning, contracting, migration approaches, implementation, integration and ongoing support. But,what Ellison announces today would be very important as it will in many ways shape enterprise adoption of cloud.Oracle is a profoundly influential force in the market today, and the strategies it pursues and the positions that it takes and its view on the ecosystem influences everybody across all those constituent sets of customers and prospects and partners and stakeholders and, perhaps most of all, competitors. Through various public announcements, Oracle has indicated that Fusion Applications' technical underpinnings, which include Oracle Fusion Middleware and the JDeveloper toolkit, may result in change for many users of Oracle's existing ERP (enterprise resource planning) products, which include JD Edwards, PeopleSoft and E-Business Suite. In terms of commercials, Oracle has indicated that Fusion Applications will obviously be sold in on-premises form as well as via hosting services like Oracle's own On Demand division, But it may be up to partners to deliver the software as true multi-tenant SaaS, which provides cost savings and cuts management chores, since multiple customers share the same application instance. Oracle has indicated in the past that upgrades could be “'like-for-like” meaning, if customers are upgrading from [E-Business Suite] financials to Fusion financials that should be a no-cost upgrade. But if it's a new module, that will be additional cost.

So far Oracle has revealed its cloud computing approach in three parts:
1. If you want an internal, or private, cloud, Oracle will sell you the hardware and/or middleware to build it.
2. If you want to use Oracle’s software on a third-party cloud, Oracle supports Amazon Web Services and Rackspace Cloud today, and will support other clouds in the future.
3. If you want to rent rather than own Oracle’s business applications, Oracle will provide those apps under a hosted subscription model.

This calls for too much of IT assembly and what’s needed is multitenant solutions across the oracle platform with a clearly articulated strategy . Rolling out more SaaS products is a good start point that will help simplify Oracle's offerings for customers. But Oracle also needs to define packages of its hardware and software components - similar to IBM’s notion of a “cloud in a box” and/or Microsoft’s Business Productivity Online Suite (BPOS). I am also keen to find out how much across the stack Oracle intends to support external products say DB2 or other virtualization platforms. All eyes are on what Larry will announce about Oracle’s cloud strategy tonight and the various cloud sessions planned in the next three days.

From information made available so far, What I see is that Oracle's strategy on public clouds remain very hazy( may be it is emerging or kept as a top secret pending an announcement in the session tonight), while their partners are Iaas/Paas partners are seen more of an additional channel. While private and hybrid cloud look to be a good starting point for enterprises to adopt, I see that the destination may be to have federated clouds and fully embracing public clouds. Also transitions to private clouds, may not be so easy as one tends to believe before venturing into the journey. Oracle's cloud approach needs to provide answers to these scenarios. I will be there talking to Oracle to find out more answers.

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