Oracle Embraces Cloud Computing, the New Consumption Model

The clouds have lifted at Oracle, one might say. In a series of briefings at the recent Oracle Industry Analyst World 2012, the software vendor set its sights on the cloud computing market, announcing a broad portfolio of products and services to enable public, private and hybrid clouds, in turn letting customers choose the right approach for them.

It's a change in direction for the company, according to some experts.

"It wasn't much more than a year or so ago that Larry Ellison was publicly deriding the notion of cloud computing as basically smoke and mirrors," says Charles King, president and principal analyst at Pund-IT. "Mark Hurd claimed recently that Oracle did $1 billion in cloud services business in the last year. It's interesting to try to sort out what the reality is from the public-relations positioning that's going on."

The shift comes as more users turn to the cloud: According to a new survey from Cisco, while only 5% of 1,300 IT executives surveyed use cloud computing to deliver the majority of the software applications in their businesses, the adoption rate is expected to grow to 20% by year's end. For a more bullish outlook on cloud adoption, Forbes just reported that on average, 34% of companies' IT budgets are now allocated to cloud computing solutions.

The whole issue with cloud-based services is trying to separate what might have traditionally been called a standard hosted application service from what's essentially a cloud service that's closely aligned with traditional data center management strategies.

"That was one of the reasons Ellison derided cloud in the first place," says King. "I think what we're seeing is Oracle repositioning hosted services that they've offered for some time as somehow being cloud-based. That doesn't detract from their quality or the company's success."

In a blog post on the subject, Mark Peters, a senior analyst at Enterprise Strategy Group (ESG), writes, "Oracle looks set ... to present a significant threat to the more entrenched 'whole-enchilada' systems vendors."

Oracle's Long-Term Cloud Strategy

Peters' colleague Brian Babineau, VP, research and analyst services at ESG, says Oracle's cloud computing plans bring together software-as-a-service (SaaS) and platform-as-a-service (PaaS) offerings with social collaboration tools, while accessing the database management technology for which the vendor is renown.

"They have a very good, long-term strategy, and they've made moves that way. With the acquisition of Taleo in the SaaS category, it brings that to the forefront," says Babineau. "They have essentially Oracle Database Express as a way to develop database-as-a-service almost in the market right now, and one would expect they've the ability to expand on that. They've also communicated they're going to try to transition some of their Oracle applications to be delivered as a service, as well."

Babineau says cloud computing is a consumption model that Oracle understands and respects as much as any vendor. It's through the cloud that Oracle will integrate its respective offerings.

"They have talent management, they have business intelligence, they have resource planning applications; the goal going forward is to leverage a consumption model that helps connect and puts those pieces together," he says. "Over time, the cloud consumption model will drive the need for these things to be integrated and connected, and Oracle gets it. They understand that through the cloud, because it's a new consumption model, more people will have access to this data, and they're not going to be selling isolated, stand-alone apps; these things are going to have to be put together."

Learn more about Strategy: Monitoring and Measuring Cloud Provider Performance by subscribing to Network Computing Pro Reports (free, registration required).