{"id":6324,"date":"2018-02-01T12:42:50","date_gmt":"2018-02-01T17:42:50","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-digit\/submission\/the-oracle-that-couldnt-see-the-future\/"},"modified":"2018-02-01T12:42:50","modified_gmt":"2018-02-01T17:42:50","slug":"the-oracle-that-couldnt-see-the-future","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-digit\/submission\/the-oracle-that-couldnt-see-the-future\/","title":{"rendered":"The Oracle That Couldn\u2019t See the Future"},"content":{"rendered":"

Oracle has been amongst the most important Enterprise IT companies of the past 40 years. Its databases are running applications for nearly every large organization in the world and its business-critical applications are (along with SAP) the gold standard for any large enterprise. The company was not built on having the best technology \u2013 its relational database system is inflexible and its best-selling software such as Peoplesoft came through aggressive acquisitions \u2013 but rather Oracle was built on a large, ruthless sales organization that fostered a reliance for its customers on Oracle, while Oracle ensured every last dollar was extracted through its equally aggressive Licensing team.<\/p>\n

The inflection point that may ultimately topple the giant, however, came way back on September 25th<\/sup>, 2008, when Oracle CEO Larry Ellison asked financial analysts \u201cWhat the Hell is Cloud Computing?\u201d. Ellison\u2019s view on cloud computing flipped in 2012 when he announced Oracle\u2019s ambitious plans for cloud, but it may have been too late. Despite being a late entrant into the biggest fundamental change in enterprise computing in a decade, Oracle\u2019s revenues have continued to grow with huge contract renewals of larger and larger value. So, did Ellison really get it wrong?<\/p>\n

The Information reported on January 2nd<\/sup>, 2018 that Amazon and Salesforce would be moving away from Oracle databases in favor of open-source alternatives, despite Larry Ellison saying the opposite on his Q3 guidance call in 2017, bragging that Oracle\u2019s biggest competitors continue to rely upon it. Despite the obvious cost savings that would come from a switch to open-source for Amazon and Salesforce, their motivations run deeper. They are two of the largest cloud computing companies in the world, Amazon Web Services being the defacto IaaS (Infrastructure as a Service) company and Salesforce being the posterchild for SaaS (Software as a Service) with its CRM and related products.<\/p>\n

While Oracle\u2019s cloud growth has been impressive (fiscal Q2 ending Nov. 30, Oracle reported total cloud revenue of $1.5 billion, up 44%), it is mainly cannibalizing its own on-premises business. To exemplify Oracle\u2019s impending loss, we can look at Microsoft as a comparable. Microsoft was also a legacy Enterprise IT company, but Microsoft identified the opportunities in cloud much earlier, and is now competitive throughout the cloud technology stack in IaaS, PaaS (Platform as a Service) and SaaS. It has helping customers deploy AI and Blockchain technologies and is now the industry leader in cloud by revenue (forward-projected $20.4 billion annualized run rate the company released on Oct. 26).<\/p>\n

Microsoft also transcend the enterprise, having a huge consumer brand that makes it more marketable to the future workforce, who will one day start companies; digital disruption means many legacy companies, traditionally Oracle customers, will be displaced by newer, more innovative companies in their respective industries \u2013 businesses that are unlikely to have grown up with Oracle products.<\/p>\n

Oracle may consider itself a cloud enterprise company now; but its commitment to its legacy business means that it must maintain elements of its operational architecture. Aggressive Sales people driving long-term, inflexible contracts is what Oracle do best. Its existing channels, filters and strategies will not fit a new model predicated on modularity and dynamic resource pricing. Oracle\u2019s overhaul has been significant, but it has not been the radical innovation it required to remain relevant in the new computing age.<\/p>\n

References<\/h1>\n

Is Oracle Losing Its Mojo? \u2013 The Motley Fool – https:\/\/www.fool.com\/investing\/2018\/01\/10\/is-oracle-losing-its-mojo.aspx<\/a><\/p>\n

Oracle And Its Cloud Business Are In Great Shape–And Here Are 10 Reasons Why \u2013 Forbes – https:\/\/www.forbes.com\/sites\/bobevans1\/2017\/12\/18\/the-top-10-reasons-why-oracle-and-its-cloud-business-are-in-great-shape\/#7df3f7c8664d<\/a><\/p>\n

IBM Rocks The Cloud: Purists Moan But Customers Love Big Blue’s $15.8-Billion Cloud Business \u2013 Forbes – https:\/\/www.forbes.com\/sites\/bobevans1\/2017\/10\/18\/ibm-rocks-the-cloud-purists-moan-but-customers-love-big-blues-15-8-billion-cloud-business\/#4fd6f98b46e3<\/a><\/p>\n

 <\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Can Oracle compete in a new age of Enterprise Technology? 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