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August 24, 2017

Oracle is rushing to catch up in the cloud business and is becoming a threat to AWS

By GlobalData Technology

Owing to its dominance in business software, Oracle chief executive Larry Ellison snubbed the cloud early on, but now the company is changing its tune as public cloud giants Amazon, Google, and Microsoft encroach on Oracle’s core business.

A latecomer to the cloud market, Oracle is pressed to differentiate among agile rivals that deliver low-cost cloud development and multiple environments.

Oracle’s primary strengths stem from mature integration technology for securely extending apps across platforms.

Oracle has just turned up the heat in the public cloud space by extending its hybrid cloud offering for large customers to include additional integration between its developer platform services and business applications — where AWS dominates.

Oracle’s new combined platform-as-a-service includes its traditional platform services – including app development, database, analytics and identity management, alongside flagship software-as-a-service apps that run in customers’ data centers.

Cloud competitors whose services are built on infrastructure-as-a-service foundation cannot compete with this breadth of the cloud stack, instead requiring numerous and complex third-party services to achieve similar capabilities.

Nevertheless, Oracle’s emerging cloud strategy is driven by its core business.

The integrated as-a-service proposition runs on expensive Oracle hardware, removing third-party options and undercutting the flexibility and affordability it seeks to champion.

This strategy will work, at least for now, as Oracle’s enterprise-grade cloud development platform with integrated security and database access makes it a clear choice for its customers.

This is why traditional application platform players including Oracle, IBM, SAP and Red Hat should not be dismissed.

They have a deep advantage over public cloud players owning to their massive installed base — large customers that are nervous about moving mission critical apps across public clouds sans traditional security and integration.

While Oracle’s market share in the cloud is in the single digits, it is firming up its strategy to transition its legacy software into cloud opportunities, making its greatest threat to AWS its ability to cut new cloud deals with its existing customers.

Oracle’s also projecting that as much as 80 percent of corporate IT budgets will be earmarked for cloud services by 2025 in an attempt to get customers moving to the cloud as early as possible.

Oracle’s future cloud success, however, isn’t guaranteed.

This year’s Oracle OpenWorld in the autumn will be a good opportunity to demonstrate that it is able to out-innovate cloud rivals with next-generation development architectures.

Oracle needs to play a bigger role in emerging development capabilities, including microservices frameworks and serverless computing, as well as application lifecycle management technologies, such as application performance management.

Offering modern developers these advantages will help prove Oracle finally has its head in the cloud game.

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GlobalData tracks real-time data concerning all merger and acquisition, private equity/venture capital and asset transaction activity around the world from thousands of company websites and other reliable sources.

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