How can Oracle Corp. differentiate in the cloud market? There are multiple answers. But one of the most critical ones involves ISVs -- independent software vendors. That's where David Hicks enters the picture.
Hicks is VP of worldwide ISV, OEM and Java business development. During an interview with ChannelE2E today, he described a straightforward plan to expand Oracle's cloud business while working closely with channel partners -- particularly ISVs.
Even before Oracle Public Cloud arrived, the company had strong adoption among SaaS providers -- where 19 of the top 20 SaaS businesses leverage Oracle's software in their respective data centers. Somewhat similarly, third-party cloud services providers (CSPs) and hosting providers have often built their businesses using Oracle's platform, middleware, database and application software, Hicks notes.
Oracle Cloud: Target ISVs
Still, the big thrust going forward involves Oracle's own cloud -- which is pursuing three types of ISV engagements.
1. Existing ISVs: Here, the company works with thousands of software vendors that write on-premises applications that run atop Oracle's operating systems (Solaris, Oracle Linux) and databases, or integrate with Oracle's applications.
Only about 5 percent to 10 percent of those on-premises ISVs have gotten really serious about true, multi-tenant cloud computing, Hicks estimates of the overall software market (not just the Oracle ecosystem).
"We have thousands of Oracle ISVs that are certified to run on Oracle," he asserts. "And a lot more .embed or run our technology inside their solutions. We want to make sure they understand Oracle's cloud offerings. We have to make sure those people have access to our technology experts and our technical environments to continue their cloud journeys. And we want them to leverage Oracle's market expertise to take their cloud solutions to market."
2. Net New Partners: Here, Oracle wants to attract ISVs from rival or neighboring ecosystems -- like Microsoft's partner base and various open source communities.
3. The Entrepreneurs: Here, Oracle wants to spot and engage entrepreneurs and ISV startups that are just starting to bubble up to the surface. That includes working even more closely with universities that have late-stage startup programs. "We need to double down and make sure these folks are looking at Oracle as a partner from the beginning."
Oracle Cloud vs. Microsoft, Amazon
Overall, Oracle sees at least three clear ways it will compete against Microsoft Azure and Amazon Web Services for ISVs. They include:
1. Technical Know-How: As more workloads shift to cloud computing, the days of ISVs talking to Oracle salespeople are gone, Hicks concedes. Instead, the ISVs want access to Oracle's technical people -- the experts that can help ISVs architect cloud applications to address key security, privacy and compliance considerations.
2. Overall Cloud Technology: Amazon had early mover advantage, he concedes. And Microsoft has platform and infrastructure capabilities. But Oracle's cloud offerings have caught up with those rivals, Hicks asserts, while pointing to the company's own portfolio of enterprise-class SaaS applications.
3. Go to Market Guidance: Hicks believes this is a major point of differentiation. A 10-person software startup doesn't have the marketing or sales prowess to aggressively promote cloud applications. Instead of starting from scratch, the ISVs can leverage Oracle as a sales and marketing springboard to jumpstart customer engagements.
Indeed, Hicks sees opportunities to connect the dots between Oracle's 420,000 customers, and ISVs that run on Oracle's cloud.
Oracle Cloud Customer Adoption
No doubt, Oracle is making progress with its cloud strategy. But some Wall Street pundits are hoping for even more momentum.
When Oracle unveiled Q2 2016 fiscal results on December 16, the company said:
- Total cloud revenues were $649 million, up 26% in U.S. dollars and up 31% in constant currency.
- Cloud software as a service (SaaS) and platform as a service (PaaS) revenues were $484 million, up 34% in U.S. dollars and up 39% in constant currency.
- Cloud infrastructure as a service (IaaS) revenues were $165 million, up 7% in U.S. dollars and up 11% in constant currency.
Some pundits are calling on Oracle to make a dramatic move -- perhaps acquire Salesforce.com -- to further accelerate the cloud business.
Buy ISVs -- Or Empower Partners?
Oracle has acquired its share of large ISVs over the years. But ChannelE2E suspects the wiser strategy involves tuck-in deals that further strengthen Oracle's overall cloud strategy. A prime example: Oracle's recent buyout of StackEngine, a Docker and container management startup.
Buying up every promising startup or SaaS giant certainly isn't practical. Instead, Oracle's strategy to empower ISVs atop the company's cloud platforms is quite logical.
And the cloud strategy certainly won't end there. Oracle is connecting the dots between cloud ISVs and certified partners that can help customers with various cloud projects. Many of those Oracle channel partners are buying each other in order to gain economies of scale for cloud projects. Key examples include:
The key takeaway: ISVs and channel partners have reached an inflection point as on-premises workloads give way to cloud options. Instead of allowing those partners to walk forward alone, Oracle wants to guide them into Oracle Public Cloud.
