Larry Ellison: Oracle's Strategy To Provide Cloud Choices

Oracle Executive Chairman and CTO Larry Ellison kicked off this week’s Oracle OpenWorld user conference by laying out how Oracle is taking a different approach to cloud services and strategy than its cloud rivals Amazon, Microsoft, Salesforce, and Workday.

For example, Ellison explained that Oracle is building its cloud services with open standards so that its customers can choose where they run a given workload—on Oracle’s cloud, in a company’s own data center, or even on a rival cloud. “It means we have to work hard to keep you as a customer, because you have choices,” Ellison said in his keynote Sunday at San Francisco’s Moscone Center.

Ellison described the move to the cloud as “a generational shift in computing no less important than our shift to personal computing.” Here are six ways he described Oracle is differentiating its cloud offering in order to win over customers during this historic shift.

Oracle competes in all three layers of the cloud—software, platform, and infrastructure. Microsoft’s the only other company that does this.

Companies might start by buying cloud apps for discrete functions, but they soon want to integrate them with other apps, or build some additional functions that extend those apps. Oracle’s cloud platform includes Oracle Database Cloud Service, and tools for integration, app development, big data management, and more, that help them accomplish these objectives.

“If you want to be serious about the SaaS business, I contend you really need a platform that allows you to extend and integrate your SaaS applications with other applications,” Ellison said. Smaller SaaS companies can’t offer a platform for integration, development, and database services as Oracle does. Salesforce offers a platform but not infrastructure, and its platform is not based on an industry standard, which means customers can’t move apps from that platform to another without significant recoding. Amazon doesn’t have enterprise applications. Workday doesn’t offer a platform or infrastructure. Microsoft has all three layers, but has a much different application portfolio.

Oracle has more cloud applications than any company. And cloud apps are hard work to build.

Oracle has more than 1,300 ERP customers, for example, which puts Oracle ERP far ahead of ERP rival Workday. Ellison also introduced the latest additions to its unrivaled portfolio of cloud apps, including apps that customers can use to manage manufacturing and a module incorporating both customer service and e-commerce services in one. Oracle started rewriting all its software for the cloud 10 years ago, and it has almost completed that journey, Ellison said, citing capabilities ranging from order management and logistics to procurement and product data management, as well as industry-specific apps such as telecommunications billing or pharmaceutical clinical trial management. Oracle has about 5,000 customers each for its CRM and human capital management cloud.

“This is a huge effort. This is a lot of software,” Ellison said. “This is not taking our existing software, lifting it up, and hosting it. …This is 100%, every line of code rewritten on top of Fusion middleware.”

Oracle keeps adding innovative products to what’s already the largest cloud product portfolio.

In addition to the manufacturing and e-commerce/customer service cloud apps, Ellison announced a new release of its Oracle Database 12c, a cloud platform tool that lets non-technologists use drag-and-drop capabilities to create new extensions for their apps. He also announced new cloud infrastructure offerings, and cloud services for big data preparation, discovery, and data visualization.

All these cloud services come with user interfaces inspired by consumer services such as Facebook, Uber, or Airbnb, accessible by smartphones and tablets as well as laptops. “That's what people expect. They expect a very simple, highly visual, intuitive user interface,” Ellison said. “And that's what we endeavor to build.”

Oracle has new competitors in the cloud, and almost never sees IBM or SAP.

SAP remains the world’s largest business application company, but in cloud apps, Oracle virtually never sees SAP, and competes primarily against Salesforce and Workday, Ellison said. In infrastructure, where IBM is Oracle’s historic rival, Amazon leads the competition, along with Google occasionally.

“This is how much our world has changed,” Ellison said. “Our two biggest competitors, the two companies we watched most closely over the last two decades, have been IBM and SAP, and we no longer pay any attention to either one of them.”

Oracle has six 'design goals' that shape the Oracle Cloud.

Ellison said six design goals inform the development of Oracle Cloud software, platform, and infrastructure products. Oracle Cloud aims to provide the lowest total operating cost, deliver reliability, offer the fastest performance, rely on open standards, provide compatibility to move between cloud and on-premises, and build-in always-on security.

Security is such a pain point for cloud customers that Ellison plans to devote an entire keynote Tuesday afternoon to Oracle’s unique approach of building security deeper into the cloud stack, such as at the database or even the chip level.

“The early cloud companies, and even the most recent cloud companies, they put security in the application. Not where it belongs,” Ellison said. “Security should always be pushed down in the stack. You're much better off with security in the database than in the application. You can just do a much better job.”

Oracle will help companies 'gracefully' manage the coexistence of clouds and on-premises systems.

We're 15 years into this shift to a new generation of cloud computing, Ellison said, but on-premises computing will remain significant for companies for another decade or two, even as it becomes a smaller piece of the pie.

Companies will use both cloud and on-premises systems for a lot of reasons—doing app development and testing in the cloud and deploying them in-house, for example, or running production systems in-house and backing them up to the cloud. Oracle plans to offer the applications and platforms for however IT chooses to manage this historic transition.

“We have to handle that transition gracefully,” Ellison said. “And we'll be able to handle it gracefully if we have compatibility between the systems that are running in your data center and the systems that are running in the cloud.”

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