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Oracle’s Cloud Strategy Takes a Dramatic Turn

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Readers who have heard me speak at industry events or continuously read Supply Chain Matters, know of my prediction that the B2B supply chain and its relationships to cloud computing options is by far the hottest segment of supply chain related customer interest.  Market dynamics are moving at warp speed and enterprise vendors are investing big bucks either in internal development or market acquisitions to insure that they have solutions to offer customers, or to outflank the competition. 

If readers wanted more evidence of the strategic stakes, consider what is occurring from Redwood Shores California, the home of Oracle. The need to dominant this market now transcends certain previous bitter competitive rivalries.

Last week, the enterprise software vendor announced its fiscal Q1-2014 earnings which did not impress Wall Street equity analysts. Other software competitors such as SAP were quick to comment on these results since Oracle was not shy about voicing its views on SAP’s claims for HANA based applications growth.  Similar to performance in the March ending quarter, software license and cloud computing results were disappointing to say the least.  In that quarter, blame was cast on sales force execution. But alas, another quarter has passed with almost similar results.  Oracle executives actually provided some encouraging words about the engineered hardware business about to turn the corner, but that was not the headline byline that permeated business media.

In the world of Oracle founder and CEO Larry Ellison, these events trigger a need for deferring the business media news cycle on to bigger developments concerning the hottest segment of the market. He did not disappoint.

On the fiscal earnings call last week, Ellison stated: “Next week, we will be announcing technology partnerships with the most important –the largest and most important SaaS companies and infrastructure companies in the cloud. And they will be using our technology, committing to our technology for years to come.” Sure enough, that is now unfolding in a series of announcements that has social media, business and industry observers like Ray Wang exclaiming that the did not see this coming. We add our Supply Chain Matters voice that we did not see this coming as well.

Yesterday, arch competitor Microsoft, and Oracle jointly announced a partnership that will allow Microsoft’s Azure cloud based customers to deploy Oracle software, including Oracle Java, Oracle Database and Oracle WebLogic Server will full support from Oracle.  To distill the IT speak, this allows Microsoft Azure and Windows Hyper-V IT development teams to fully utilize the outlined Oracle technology.  Since Microsoft caters to small and medium sized manufacturers and businesses, this has the potential to expose Oracle technology to a far larger universe of cloud-computing customers.  Microsoft technology also tends to dominant factory control applications and the potential to leverage the mentioned Oracle technology elements opens the possibility for more responsive shop-floor to supply chain business process integration. The announcement itself was significant enough to draw direct comments from Microsoft CEO Steve Ballmer.

Today featured the second announcement, a brief but stunning announcement indicating that Salesforce.com and Oracle have embarked on a partnership to integrate each vendor’s cloud infrastructure platforms.  Salesforce plans to standardize on the Oracle Linux operating system, Exadata engineered systems, Oracle Database and Oracle Java. This announcement was also significant enough to draw the comments of Salesforce Chairmen and CEO and long-time Ellison nemesis Marc Benioff.

The third strategic announcement is rumored to be with NetSuite.

What do these latest announcements have to do with functional product development, purchasing, supply chain and online fulfillment teams?

First and foremost, it will provide broader options for your internal IT and software partner development teams to support advanced analytical and information computing needs.  While the bulk of today’s cloud-based applications offerings cater to non-mission critical business process support, the potential for broader mission critical supply chain business process support is clearly on the horizon. 

Specifically for cloud, the real battle stems from advances in multi-tenant database architecture allowing your business along with many other businesses to run on the same infrastructure with access to specific advanced reporting and predictive analytics needs. Multi-tenant architecture implemented at the database layer addresses the overriding need for increased security of the information that is stored in a public or private hosted cloud. As we have noted in our commentaries related to SAP HANA, these advances are game-changing in the ability to integrate much larger volumes and scale of data and information and facilitate the ability to integrate planning and execution processes together as one continuous decision-support process.

Adoption of standardized infrastructure allows cloud vendors to integrate multi-application and multi-vendor data more seamlessly without the need for expensive and often time-consuming middleware. Faster integration opens the door for faster adoption and systems implementation cycles.

By our view, these Oracle announcements are noteworthy will surely motivate further announcements from competing enterprise cloud vendors the likes of Amazon, IBM, SAP and others.

For Oracle these announcements are noteworthy, but the fact remains that the market perception lingers that its technology stack is too expensive and costly in the long-run.  More attention beyond big announcements is required in this area.

Bob Ferrari

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