I honestly thought I was going to have to wait longer to hear anyone from Oracle talk about seriously focusing the company’s hardware and software lines on the Cloud. True, they’ve been saying cloud-like things for a couple of years but the pronouncements were features and functions that added something to the cloud discussion without going “all in” as some others in the industry have said. But last night CEO Larry Ellison did what I’d forecasted last week in a way that is uniquely Oracle but nevertheless a good, defensible (and somewhat debatable) position.
Here’s what I said last week in my forecast,
It seems this family of hardware (Exa-hardware) is built and optimized for very big jobs involving terabytes of data and gazillions of users. That’s exactly the kind of stuff the growing cloud computing movement might gobble up. Currently data centers are masses of commodity servers in racks running feverishly but without a layer of sophisticated management that would optimize their utilization and reduce costs…
The next logical step would be to endorse the Exa-hardware as a sustainability tool for a power hungry planet. I’m looking for some sustainability messaging from Oracle and it could even happen…
Sustainability is not alien to ideas like mobility, cloud, social and analytics, you can’t separate them. I think if Oracle wants to maintain its leadership position with many of the largest companies in the world, it needs to put a stake in the ground and become a thought leader here…
So last night, Ellison took aim at the cloud and announced Oracle 12c a database for the cloud that supports multitenancy, if you want it, and he announced the Oracle Private Cloud running on Exa-hardware and delivered as a tight bundle to customers who want to get to the cloud, simplify their lives, and not fret about managing all that stuff. He also announced Exadata 3, which can hold up to 26 TB of data – “All your databases.” The cool thing about Exadata 3 is that the 26 TB is all silicone based memory, it doesn’t count the spindles that are rapidly becoming secondary in a high performance enterprise environment.
He made some traditional arguments about the cloud being more efficient and economic and at some points came close to claiming credit for inventing it. Truth is he did have a hand in inventing modern cloud computing as a very early investor in Salesforce and NetSuite and as the Zen master for Benioff and Nelson. But his skin in the game had been relatively minimal.
Now, while there is plenty to like from a sustainability perspective, it should be acknowledged that what got announced is a bunch of half steps designed to get enterprise data centers into the cloud without much disruption. I think this means that Oracle, for the moment (which will be about a decade) will not be aggressively selling the virtualization that comes with multitenancy and as a result there will still be a great deal of wasted power and underutilization in some cloud data centers.
But in a decade we could see a switch flip and everyone will get religion about power consumption and pollution and the switch to virtualization will happen very quickly because some very large companies will have been prepositioned for the change.
Actually a decade might be a long time and 6 or 7 years might be more like it simply because Oracle has many competitors going to the cloud, most notably Salesforce, and that will accelerate the timetable.
The next step, which has to come this week, will be for the company to shift gears to software – cloud based software – that makes the cloud even more attractive. Look for this to happen especially in the CX Summit or whatever they are calling it, on Wednesday. That will be the day that Anthony Lye talks a lot about how the companies he bought last year – like RightNow and ATG and others – are making the Oracle cloud a serious competitor.
Achilles’ heel is still Fusion. What’s up with Fusion?
Finally, many, if not most of the big cloud computing companies are running fault tolerant data centers using conventional racks of blade servers and disks. That’s giving us 3 to 4 9’s of reliability but I think before we can hope to get to the 7 to 9 9’s that will make cloud truly ubiquitous and universal utility grade computing we’re going to need some re-architecting. Regardless of what you might think of Oracle’s approach to the cloud, the hardware is an appealing approach for that alone.
Oracle likes to message that 20 out of 20 of the top banks/pharmaceutical companies/whatever, use Oracle and it wouldn’t surprise me if they’re going for 10 of the 10 biggest cloud companies. That will take some work and given the multiple levels of competitiveness and lack of love between the players, that might take even more than a decade to happen.
Dreamforce hasn’t even happened yet and I am already wishing it was about double the time it’s set up for. I’m arriving in San Francisco on Monday, two days before Marc Benioff’s keynote kicks everything off and I am already running late.
As has become customary, many Salesforce partners are holding user group meetings just before Dreamforce to keep their customers’ expenses down and have maximum impact on them. This is an unintended by-product and benefit of being in the ecosystem. To that end I’m attending Subscribed, the user meeting of Zuora, which would be worth the trip all on its own.
I have no more time for meetings and some of those on the calendar are looking dicey. There are too many parties, dinners and coffees to possibly make all of them and there is a full calendar of really good keynotes and other meetings for analysts to attend sponsored by Salesforce. Give me two more days!
Salesforce will be briefing me under NDA about the big news that will come out of the show so I can’t help you with anything semi-official other than to direct you to a piece by Chris Kanaracus in NetworkWorld.
According to statements made by CEO Marc Benioff, at TechCrunch on Tuesday, we can look for important announcements about a new service that’s like Dropbox, an identity management system, more information on the company’s integration with Workday and the company’s new Marketing Cloud.
That sounds like a full plate but curiously it doesn’t seem like enough. Back in 2004, Benioff had a George W. Bush impersonator walk on stage and disrupt the proceedings with a short speech to “this Fundraiser, Thanks Marc.” But that was because Dreamforce was held on election day if you can believe it.
This year I don’t look for the same kind of stunts because this year there is too much information to get across. Consider my schedule for Thursday — Sales Cloud Keynote, Work.com Keynote, Service Cloud Keynote, Chatter Keynote, Platform Keynote, Data.com Keynote, Marketing Keynote, SMB Keynote. And that’s just the MORNING! You don’t have a keynote without making an announcement of some kind so that’s why I think Benioff’s remarks at TechCrunch were useful but they’re just a teaser.
We could easily have two more days of this because unlike other shows where I could totally miss some ERP or other sessions that are not in my wheelhouse, everything at Dreamforce is relevant and important to cover. So it might sound strange with Dreamforce still in the future but I already want more, maybe not more information but more time to absorb it.
“Almost seven years of relentless engineering and innovation plus key strategic acquisitions. An investment of billions. We are now announcing the most comprehensive Cloud on the planet Earth,” said Oracle CEO, Larry Ellison. “Most cloud vendors only have niche assets. They don’t have platforms to extend. Oracle is the only vendor that offers a complete suite of modern, socially-enabled applications, all based on a standards-based platform.” Larry Ellison, CEO, Oracle
Mixing metaphors and technology yesterday Oracle chief, Larry Ellison further defined Oracle’s vision for cloud computing. Years? Billions? Me thinks the man protests too much.
It’s a sure sign that a competitor is coming from behind when he tells you that everything the competition’s been working on and inventing for over a decade has now been eclipsed. The billions and planets and years — not to mention the billions in acquisitions — might have been better spent in competition rather than mounting what amounts to, but no one said, a Manhattan Project to pull your bacon out of the fire because you left your business model to stagnate for too long.
I am a fan of some of the pieces of the Oracle cloud though I see yesterday’s announcement more as a set of checkboxes with “me too” written all over them than words like innovative, groundbreaking, out of the box and the like. Let’s take things in order.
I am a big fan of any infrastructure that can raise everyone’s game from however many 9’s of reliability they have at present, to AT LEAST 7. With seven 9’s you get something like a bit over 3 seconds of downtime per year and that, or better, is what it will take to get us all off the fairyland ideal of cloud to the more prosaic, pragmatic and utilitarian concept of utility computing. The vision has always been computing delivered like telephone, electricity, natural gas or water and those utilities have much better than seven 9’s but seven is where it starts to get interesting.
So, Oracle’s use of all of its Exa-themed Sun devices for infrastructure makes a lot of sense. There’s a good deal of reliability built into Exa but not necessarily enough to deliver the cloud vision unless you also talk about redundancy and failover. They’re expensive too.
The alternative that even an Exa-box supported cloud will need to contend with is a well managed multiple site redundant hardware infrastructure with failover capabilities. Other utility services have failover and IT should be no different. So the hardware is nice but is it cost competitive with the alternatives?
The rest of Oracle’s announcements, which I thought were repeats of earlier announcements, spanned from database services to sites to various developer, analytics, social networking and document sharing services. In short, all the stuff that Salesforce has been dripping into the market for many years.
But what’s missing is telling. The Oracle announcement, while impressive, still lacks vision. There’s no hint of a changing of the guard and no advice to customers that the world that will use these products is vastly different from the one where the previous generation of on-premise Oracle applications held sway for so many years. Instead the message seems to be, here’s our erector set that you can use to approximate the Salesforce.com environment that your users are increasingly asking for. This, plus a bolus of consulting dollars, will help you beat back the barbarians at the gate.
Again, there’s a lot of good stuff in Oracle’s announcement, Ellison’s hyperbole aside. But there’s a widening gap in the market that has nothing to do with technology per se. It’s between vendors that get it and those who are still just pushing product out the door in the hope that customers will figure it out. Real cloud, social and mobile companies are not pushing product.
I moderated a panel discussion this morning, something that goes with the job I do. It was with the Massachusetts Technology Leadership Council (Mass TLC) and the event went really well. People were engaged, there were good audience questions and the panelists gave well considered answers.
The title of the session was “Finding the Right Way to the Cloud: Measure, Manage and Monetize for Success” and I was told it would focus on the financial and business model aspects of becoming a subscription company which it did for the most part. What interested me and what motivated this piece is the quality of the discussion about technology.
In a discussion that was supposed to be about business there was a lot of technology talk. We were ostensibly talking about metrics for managing the business like churn, deferred revenue, recurring revenue, renewals and more. But the technology discussion was also about monitoring API calls in a public cloud and other things that never come up in discussions about companies like Salesforce, NetSuite, Oracle, SAP, and Microsoft because those SaaS applications hide all this complexity form the user.
I don’t pretend to understand the significance of an API call and the costs involved, but the panelists seemed to. In the middle of this I began thinking that this is the price you pay for going for an infrastructure as a service solution. I suppose there are situations when a company might want or need a bare bones hardware solution. But it seems counter intuitive to me that anyone would give up a data center only to take on this level of complexity. What is saved or gained with this down in the weeds approach?
Every year around this time I write two columns one on the year that was and another on what I expect the new year to bring. There is no methodology for this process and I believe this lack of method is important. I take a blank screen and fill it up with what has been on my mind for the last year and what made it out through my posts. Here are a few ideas that bubbled up.
We lost Steve this year and the outpouring in the media was inspiring. For some reason, many people felt the need to try to reconcile Jobs’ fastidious and demanding personality with the beautiful products he inspired. One who did not was Malcolm Gladwell who placed Jobs in a long continuum of people who did not invent original products but who tinkered with and improved them significantly. The world needs all kinds. That might have been true for the GUI but Jobs still gets high marks for things like iPod (an improvement on Walkman) and especially iPad, iTunes and the store for which there was little if any precursor.
A quote from a Time Magazine (July 10, 2011)review of GM executive Bob Lutz’s book from 2011 “Car Guys vs. Bean Counters” http://amzn.to/sZEwaq
makes an important point: “It’s interesting to note that the one area of the U.S. economy that’s adding jobs and increasing productivity and wealth is also the one that is the most relentlessly product- and consumer-focused: Silicon Valley. The company off Highway 101 that best illustrates this point is, of course, Apple. The only time Apple ever lost the plot was when it put the M.B.A.s in charge. As long as college dropout Steve Jobs is in the driver’s seat, customers (and shareholders) are happy.” Thanks, Steve.
Social, mobile and analytics plus cloud
On deck to assume the Jobs niche in the tech industry and beyond may be chairman and CEO of Salesforce.com, Marc Benioff. To be clear, Benioff and Jobs are very different people in most respects but Benioff has the same blue ocean strategy that Jobs had and a knack for entertaining his customers. Benioff also likes to invent things. He has driven the rest of the industry to embrace social, mobile, analytics and cloud much faster than it would have left to its own devices. This combination of attributes is really all any Martian would need to know to understand the market upon arriving here. The drive to embrace these technologies first is what separates Salesforce from all other conventional CRM companies and is a big reason for the Silicon Valley quote above.
We’ve been hearing about cloud computing for many years already and interestingly 2011 was a year of a dramatic demonstration of its power in reverse. Target Stores pulled its web site from the cloud into the premises in time to launch a huge marketing campaign featuring Missoni brand clothing. The campaign was so successful that it clobbered the site and crushed the ambitions of any other IT leaders who might still think on-prem will be a workable strategy as we go “all in” on social, mobile and analytics. Right?
The Missoni fiasco gave me a chance to showcase curation software from Storify. Curation products enable anyone to find and bring together relevant content from the web to produce a one of a kind package of related information that is greater than the sum of parts. Curation plucks gems from the torrent of things rushing by in the digital river (pun!) and it will be an important part of how we use the web in the future.
The Subscription economy
With cloud computing more valuable than ever we see a new idea taking shape called the subscription economy. You probably recognize it and consider it old by some measures. But the interesting thing about the subscription economy is that so far it has been at best held together with bailing wire and spit. Old style ERP systems have been a major impediment to subscriptions and many of us never realized it. I quoted others talking about how ERP has held back business innovation but also about Zuora and others who are pushing the envelope with billing and payment systems that enable subscriptions like never before. Zuora announced its series D round of $36 million recently and I look for them to be a major IPO in the next 24 months.
Blue ocean strategy
In a press conference early in 2011, Benioff said he had no interest in developing an ERP system to complement his company’s growing front office footprint. Without using the words blue or ocean in the same sentence he let us know that there is too much untapped potential in the front office, often in the form of applications of social concepts and business processes that have still not been invented or fleshed out. By the end of this year that approach seems to have put Salesforce into a category of its own as most of the ERP players I watch seem to be focused on re-selling their legacy bases.
Oracle and Salesforce
One such ERP company is Oracle, a self described fast follower, that has nonetheless made big investments in the front office. In 2011 Oracle acquired ecommerce provider ATG for one billion bucks and followed up about six months later with a $1.5 billion acquisition of RightNow. We’ll miss RightNow but Oracle seems to have blue ocean plans of its own regarding retail in the future. Watch this space.
Dreamforce and OpenWorld
We got an eyeful of how competitive the atmosphere is in San Francisco and Silicon Valley when Larry Ellison disinvited Marc Benioff to speak at OpenWorld. At first it looked like a bizarre move by Ellison but later it looked liked improvisational comedy by a couple of masters. It was certainly entertaining. Ellison used the opportunity to announce his own cloud computing and social strategies though true to form I was not shown much product or given a date for general availability for some parts of the product line.
Speaking of entertainment, Paul Greenberg got the industry organized around the Idol theme in the first annual CRM Idol competition, which I was part of. The concept is still rough around the edges — one wonders how entertaining business ought to be — but it brought the industry together across most of the world’s landmasses and fun was had by all. We discovered some very interesting companies and at least one, Assistly, was bought before the competition even finished. I think Idol has legs if we can get a better set of pre-conditions in place to screen out some companies that are clearly not competitive. Just sayn.
What’s going to get the economy moving again?
Over the summer there was fear of a double dip as the economy seemed to slow but that scare seems to have passed and the tepid recovery continues with job growth in the last 21 months and counting. Not enough jobs to erase a big unemployment number mind you, but progress, slow and steady.
Marketo CEO Phil Fernandez offered his own prescription for recovery saying that the revenue performance management (RPM) methodology that he and others (Eloqua, Cloud9) are promoting could generate as much as $2.5 trillion in new revenue globally. Maybe he’s right, but…
It’s all about energy
In May I was in Chicago to give a talk and noticed the prices for gas were almost hitting the five-dollar mark. The cost of energy, transportation and raw materials all derived from petroleum, hold the key to recovery (and, yes, European bankers and politicians). There’s no longer any slack in the petroleum production system and when demand spikes so do prices and when that happens, the economy cools. We’re in for some uneven performance as long as that is true.
Books I have read recently such as, “The End of Growth” by Richard Heinberg http://amzn.to/vYJesf and “World on the Edge” by Lester R. Brown http://amzn.to/sv0pvy, tell the same story. Nothing grows forever and on a finite planet there are finite resources, which ultimately places a cap on many things. That doesn’t mean doom and gloom but it does mean we need to think about our next steps as a species. Global warming isn’t going away on its own.
All the technologies we’ve been debuting in the last few years will be an important part of the next strategy, especially as we are required to pivot away from dead plants as our energy sources. That’s one vantage point from which I will be evaluating our industry in the new year. The business processes we use are directly related to the technologies we have to work with — the subscription economy is a case in point. Along with helping us make money, our great new technologies must serve our need to get carbon and costs out of our business processes ASAP.
But for now let me simply say thanks for reading my column this year and for your many good observations and comments. I hope you enjoy your year-end celebrations, however you do them.