Act III - The cloud changes everything - Oracle and NetSuite with a Touche of Deloitte

Holger Mueller

Vice President and Principal Analyst
Constellation Research

Holger Mueller is VP and Principal Analyst for Constellation Research for the fundamental enablers of the cloud, IaaS, PaaS and next generation Applications, with forays up the tech stack into BigData and Analytics, HR Tech, and sometimes SaaS. Holger provides strategy and counsel to key clients, including Chief Information Officers, Chief Technology Officers, Chief Product Officers, Chief HR Officers, investment analysts, venture capitalists, sell-side firms, and technology buyers.  Coverage Areas: Future of Work Tech Optimization & Innovation  Background: Before joining Constellation Research, Mueller was VP of Products for NorthgateArinso, a KKR company. There, he led the transformation of products to the cloud and laid the foundation for new Business Process as a…...

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Continuing the spree of expected announcements, it was the unveiling of the Oracle and NetSuite partnership today. True to the leak from the Q4 earnings call last week Thursday, this week we saw Oracle partnering with Microsoft on Monday, Salesforce.com on Tuesday and now NetSuite on Wednesday. What will Thursday bring?

We have shared our takeaways from the Microsoft and salesforce.com partnership announcement already so let's dissect this one:

Takeaways from News Facts

Oracle and NetSuite announced a strategic alliance focused on plans to deliver integrated HCM and ERP Cloud Services for mid-size customers.

My POV
Surprisingly this partnership is all about HCM - and no mention of any Oracle technology products. Something that was more or less expected after the earlier announcements of the week. But then using Oracle technology at NetSuite does not come at a surprise, as the company has been closely held by Larry Ellison and has been using the Oracle tech stack extensively in the past. Instead the focus on HCM is an exclusive enterprise application focus. 


But ultimately the HCM topic is also not surprising since HCM took a lot of space at the last NetSuite user conference, only that back then NetSuite planned to partner with a number of different HCM vendors, tribeHR being the most prominently featured one. And this may still be the direction going forward - only that now there are Oracle HCM products in play. 

Traditionally NetSuite has focused on small and medium businesses (SMB) - not the focus for Oracle HCM indeed Oracle partners with NetSuite for SMB business. We will have to see how the Oracle HCM offering can scale down both process and cost of ownership wise.

Deloitte plans to work with Oracle and NetSuite to develop a practice with highly skilled practitioners specializing in tools and implementation services to help customers adopt the soon to be integrated SaaS technologies faster and more seamlessly.

MyPOV
And then there is the touche by Deloitte - pun intended - which has one of the largest HCM practitioner and consultant teams - providing the necessary implementation services for the combined offering. This puts Deloitte in the driver seat as in regards of getting a piece of the implementation business for the new combined offering. I would expect Deloitte to provide also a significant number of hands to build the integration. This will aide Deloitte's credibility and help NetSuite on the resource side, where I see their product development team stretched quite thin (see findings from SuiteWorld here).  

Additionally, Oracle plans to develop a product integration and go-to-market strategy with NetSuite for Oracle HCM Cloud and NetSuite Cloud ERP to deliver a single, integrated solution that seamlessly connects HR and finance systems for mid-size customers. 

MyPOV
And finally true to yesterdays announcement with salesforce.com, which pleaded for the pre-integration of SaaS solutions, created and maintained by the vendors - the same is provided in the NetSuite and Oracle HCM case. 

Takeaways from Alliance Section

Mid-size customers can gain a competitive advantage by quickly implementing SaaS solutions at a lower cost.

Oracle HCM Cloud including Global HR and Talent Management, combines advanced technology, tight integration, best HR practices, and social capabilities.  From recruiting and managing talent, to accurately forecasting future workforce needs, Oracle HCM Cloud enables companies to proactively manage HR operations while focused on strategic business initiatives.

NetSuite Cloud ERP offers an integrated solution that connects a business across financials, sales, service, and fulfillment.

MyPOV
No surprises here. Just expected NetSuite to also mention manufacturing, which was a big push back at SuiteWorld

For large organizations where Oracle HCM is already deployed, two-tier deployments of NetSuite in smaller subsidiaries will easily connect with its Corporate HR system.

MyPOV
This is to be interpreted that the two tier ERP pitch with NetSuite being used for smaller subsidiaries of larger corporations, who run Oracle in the large organizations - is alive and well. But it also makes clear, that HCM in the case will be run centrally and globally. Certainly a cost advantage, but as mentioned, we will have to see, that Oracle HCM is not a to expensive solution to implement for the smaller subsidiaries. And then it may pose some interesting integration challenges between Oracle HCM and NetSuite in the subsidiaries. 

Deloitte has a business-driven HR approach, global reach, functional depth and SaaS experience to accelerate both the business value associated with HR and ERP transformations, as well as process and technology cost saving efficiencies.

MyPOV
Ok - this translates into a preference for Deloitte doing the first integration work, but I am sure if customers insist on an other SI, that would not hinder a deal from being closed. SI differentiation - even with an early placement in a partnership like this - remains a challenge for the SIs. 

Takeaways from the quotes

"Driving the development and retention of the right talent, and getting strategic data around HR practices can help mid-size companies transform their business operations," said Oracle President Mark Hurd. "NetSuite and Oracle are now working together to provide access to Oracle's leading enterprise-level cloud-based HR & Talent Management solutions that are integrated with NetSuite's Cloud ERP suite applications. With Deloitte implementing these integrated solutions, mid-size companies can quickly gain access to an incredible new level of HR management that can help impact their bottom line."

MyPOV
No HCM event without retention and flight risk mentioned in 2012 / 2013. There is a touche of Deloitte in this - but no exclusivity statement. 
Side comment for the PR pros - this press release comes from NetSuite - so it's unusual for the partner to be quoted first, usually the issuing entities executive has the first quote. 

"We are excited to work with Oracle to bring customers an integrated solution that combines NetSuite's solutions that automate business processes with Oracle's suite for managing people processes," said Zach Nelson, CEO of NetSuite. "Customers will benefit from the commonality of the products' underlying Oracle-based architecture and the enormous investment in R&D and customer service that both companies bring to the table."

MyPOV
While Hurd did not use integration, Nelson uses it once, like Benioff yesterday. Nothing compares to Ellison who used it three times in its quote yesterday. But yes integration is key and customers expect it these days, out of the box. 

Interesting Nelson states the commonality - which is hard to see today. For a business user that usually means user interface - but these are differing quite extensively today. If both Oracle and NetSuite wanted to change that - it should have been announced. Behind the scenes commonality usually means architectural harmony - and though both NetSuite and Oracle HCM are build on the Oracle technology stack - some harmonization in utilized products and versions would have to occur. This is equally a point both companies should have mad clear today. 

"Mid-sized companies are looking for solutions that allow them to be nimble and respond quickly to market opportunities," said Jim Moffatt, CEO of Deloitte Consulting LLP. "This newly integrated solution will help these organizations deliver better service at a lower cost, ultimately giving them an edge in the war for talent and a true competitive edge."

MyPOVIt's somehow ironic, that the two product executives - Hurd and Nelson - leave it to the service executive to stress lower cost of ownership and better service from an integrated solution. In the past these service provider involved offerings usually have not materialized in too much business for the involved service provider - but we will see how well this works for Deloitte in this case. Let's not forget Deloitte has been partnering with Workday for a while.

Absence of technology and hardware

To some point surprisingly there is no reference to any Oracle technology products. In my view that's not a bad thing, as the expectation is, that NetSuite is using these to the best of their capabilities already. So mentioning here may have been degrading to their reputation. But there is also the possibility that the technical nature of the integration is not sufficiently hashed out yet.

I noticed gladly that the Twittershere and pundits did not lament the lack of hardware related commitments in this announcement - as it is the same as with salesforce.com - if needed NetSuite will use Exaxxx to their advantage. No need to add to this press release. 

Workday angle

A lot has been written and said about Oracle doing all these partnership to isolate Workday. Not so much in my view. Workday has not focused on SMB like NetSuite and the companies did not partner for any offering. And I don't see how it is easier for NetSuite to sell against Workday given the partnership with Oracle for Oracle HCM. Customers will decide which of the two is the better HCM product - Oracle HCM or Workday - irrespective of NetSuite. What NetSuite and Oracle could do (like SAP and Infor, too) - is to provide enterprise process level differentiators out of the box, that combine HCM and other enterprise processes. Workday would have to enable the same via interfaces. 

But HCM is hot and drives enterprise automation

Across enterprise automation - HCM  is certainly the hottest area. We know that since SAP and Oracle invested into buying SuccessFactors and Taleo. So vendors without a HCM strategy - need a HCM story quickly. See salesforce.com yesterday, see NetSuite today. And market pressure most be so high, that NetSuite could not afford to wait for their many partnerships announced at SuiteWorld, to come to fruition. And certainly integrating six and more partners is also a bigger product investment.

MyPOV

While Oracle is now being understood as a provider of cloud technology, today's announcement makes Oracle also a provider of critical SaaS functionality. If you will, the partnership week started with technology only (with Microsoft) to a mix (with salesforce.com) to an applications only (with NetSuite. The salesforce.com partnership certainly can question Oracle's investment in CRM products. But don't expect for a second that Oracle would stop CRM investments. Instead Oracle is working hard to provide the next generation of CRM tools in the area of customer experience and marketing. 

For NetSuite this alliance fills the current void in the HCM area, that was something the company only was able to close through partnership - given the recent love and with that investment focus of manufacturing.

So overall again a good move by Oracle and a good outcome for Netsuite. We look forward to learn more on the nature and extent of the integration and of Deloitte's role in detail. 

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Act II: The Cloud changes everything - Oracle and salesforce.com

Holger Mueller

Vice President and Principal Analyst
Constellation Research

Holger Mueller is VP and Principal Analyst for Constellation Research for the fundamental enablers of the cloud, IaaS, PaaS and next generation Applications, with forays up the tech stack into BigData and Analytics, HR Tech, and sometimes SaaS. Holger provides strategy and counsel to key clients, including Chief Information Officers, Chief Technology Officers, Chief Product Officers, Chief HR Officers, investment analysts, venture capitalists, sell-side firms, and technology buyers.  Coverage Areas: Future of Work Tech Optimization & Innovation  Background: Before joining Constellation Research, Mueller was VP of Products for NorthgateArinso, a KKR company. There, he led the transformation of products to the cloud and laid the foundation for new Business Process as a…...

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This morning, as expected, the next partnership announcement of Oracle came out, after Monday's partnership announcement with Microsoft (our analysis here and here), it was Salesforce.com's turn today. It was expected to happen this week as Oracle's CEO Larry Ellison pre-announced these partnership during Oracle's Q4 earnings call last week. 

Here are the takeaways from the short press release: (all emphasis added)

MyPOV
Ellison and Benioff mention integration four times in their short statements, Larry beating Benioff 3:1, not surprisingly as Oracle has been honing the integration message much longer than salesforce.com. But we think that both CEOs are on the right path - customers expect simplicity (Benioff), rapid low cost implementatoins and out of the box working integration (Ellison).

Oddly Parker Harris gets an unusual 3rd quote in the short press release, as these are usually balanced afairs - but he raises the key value drivers that in our view have led to this partnership: More efficiency and ultimately lower Total Cost of Ownership (TCO) to run a cloud infrastructure.

So why?

Oracle must have something, that these days every cloud company seems to want - a reliable database, an attractive technology stack and first of all a very attractive TCO. 

At OpenWorld in 2012, when Oracle unveiled 12c, this slide caused some uproar in the database community:

There was a reasonable debate if the use case was realistic etc - but at the end of the day, if with 12c savings from the confusingly multitenancy labelled feature are only 20% of what Oracle claimed, then Oracle 12c is a huge TCO saver. The famous no-brainer to implement. And very compelling for Oracle customers (like salesforce.com) or vendors with a database problem when turning to the cloud (like Microsoft). 

And while the rumor is out there, that this is a 9 year deal and salesforce.com is paying something in the area of 300M US$, it's still a good deal financially for salesforce.com. Quick back of napkin calculation: 9 years are 108 months, let's make it a 100 months for easy math, meaning salesforce.com pays about 3M US$ per month for using Oracle's Database, and more. Assuming it would just be the database - not a bad number, if you look at the alternative (see below). And salesforce got more - Java Middleware, probably some Exadata and possibly even the usage of the Fusion Apps. 

The alternatives for Salesforce.com were limited

Of course salesforce.com could have staid where they are today. But then it would have surely spend more on running its current cloud technology stack. And the Oracle part of that would be aging quickly. And salesforce.com has always been on the lastest Oracle database releases as soon as they could be confident to run the release. And there is a benefit to be current.

From the scale that salesforce.com runs - with north of 1B transactions - the only option would have been IBM. But similar to Microsoft  which faced a similar due diligence questions - it ended up with Oracle. Like in yesterday's post - the praise goes to Andy Mendelsohn and his team.

Market implications

Oracle gets a design and marquee win - the largest SaaS vendor in the market. And a potential reseller or joint sales engagement partnership at SAP customers, where salesforce.com is very successful at selling into. At the same time Oracle is the database of choice in all large clouds, but one (Google). 

Salesforce.com can put away some key technology decisions, they are taken for the next 9 years and likely longer. And it gets an cloud ERP option to counter enterprise scale arguments in competitive engagements with SAP. Personally I would expect the salesforce.com account manager to have the roadmap for the joint salesforce.com CRM and Oracle Fusion App in every slide deck when competing with SAP. 

Customer implications

When two larger cloud players agree to better integrate their products their customers win. When they choose solid technology as their foundation, and when the products of that foundation get hence more usage - customers win again. 

It will even give SAP and Infor customers (just to mention the other 2 players out of the Top 4 enterprise application vendors) - more options on what to deploy for their enterprise automation products. And an overall positive trend when the CEOs of two key cloud players see lower operating cost and pre-built integration as key trends they need to address going forward. 

MyPOV

We have seen act II for the Oracle composed The cloud changes everything piece. Who would have thought the sudden amicable relationships respectively for Oracle and Microsoft and salesforce.com would come up - ever. Even though behind the scenes these companies have long standing support and development relationships. 

The cloud seems to make a lot possible these days. 

Have a look at my colleague's take of this, Frank Scavo - here - he sees the great detente. And I always enjoy Dennis Howlett's take on this over at Diginomica.

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How Design Thinking Can Make You a Better Leader

This is a summary of Tom Kelley's keynote speech at Constellation's Connected Enterprise 2012, Beyond Innovaton: Design Thinking. Register for this year's Connected Enterprise for more inspirational keynotes: REGISTER

We're all familiar with design thinking whether we know it or not. As citizens of  the 21st century, we have all touched, seen, purchased a product created via the design thinking process. Design thinking is a method of production that employs design principles to turn out products that are notoriously intuitive, attractive, functional, and ergonomic. Apple products, for example, are a product of design thinking. 

Great. So design thinking turns out amazingly functional products. But can the same principles responsible for great products also produce great leaders? 

According to Tom Kelley, co-founder of IDEO design consultancy, yes, they can.

Applying design thinking to leadership

Creativity, according to Kelley, is a trait essential to success in any industry. In 2012, a survey of chief executives revealed creativity to be the most important trait of leaders today--and everyone possess it. While everyone possesses creativity, only 25% of survey respondents feel they have reached their creative potential. This means the business world is sitting on a creativity reserve of 75% of the whole! Enter design thinking. Design thinking enables leaders to unlock creative confidence to become more effective leaders. Leaders with creative confidence possess, both, the ability to conjure new ideas and the courage to test those new ideas. When a leader unlocks their creative confidence, the effect is contagious--teams led by creatively confident leaders are empowered to be creatively confident themselves. The infectious nature of design thinking transforms teams into agile, open, and innovative groups - thereby making their leader a great one. 

Cultivating creative confidence in 3 easy steps

Creative confidence is the ability to conceive creative ideas coupled with the confidence to act upon those ideas. Here are Kelley's three steps to cultivating and instilling creative confidence. 

1. Always start with empathy. A classic design thinking practice. Approach every situation with empathy for context to ensure you're on the path to solving the right problem. Tom suggests you focus on analyzing the behavior of an individual rather than a group. 

2. Take time to daydream. Ever heard of the shower theory? Your most striking moments of genius can come to you when you're completely relaxed and disconnected. Tom keeps a whiteboard marker in his shower so he can capture ideas during these moments. He suggests taking five minutes every day to daydream. 

3. Defer judgement - of others and self. As a leader, hone your encouragement and constructive criticism skills. The last thing you want is to discourage your team from bringing you new ideas. If an idea seems half baked, "master the art of squinting" - squint to uncover the bones of a good concept, and allow your team to flesh out the rest of the idea. Encourage where encouragement is merited--you'll see more ideas. 

Now go forth. Create, ideate, encourage, and lead--innovatively. 

Watch Tom Kelley's full keynote address at Constellation's Connected Enterprise 2012

Tom Kelley - Connected Enterprise 2012 from Constellation Research on Vimeo.

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Oracle and Salesforce.com: The Great Detente

President, Computer Economics and Strativa, Inc.
Computer Economics and Strativa, Inc.

Frank Scavo is skilled at formulating and communicating IT strategy, developing the business case for new systems, and facilitating the selection of enterprise systems, such as ERP, CRM, and supply chain management. He is also an expert in benchmarking IT spending and staffing levels for end-user IT organizations. Frank was one of the first tech bloggers, beginning in 2002 with his launch of the Enterprise System Spectator providing independent analysis of issues and trends in enterprise applications software and the strengths, weaknesses, advantages, and disadvantages of the vendors that provide them. Frank has been quoted as an IT expert in numerous business and industry publications such as the New York Times, Wall Street Journal, Computerworld, CIO Magazine, ZDnet, eWeek, Datamation,…...

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Salesforce.com and Oracle today announced a "new strategic partnership." For their mutual customers, the announcement represents a welcome thawing of relations between the two companies. But it remains to be seen whether it represents a strategic change of direction for Salesforce.com.

Not a Radical Departure for Salesforce.com

The press release is quite short, just five paragraphs, outlining five points of partnership:

• SFDC will standardize on Oracle Linux.
• SFDC will deploy Oracle's Exadata engineered systems in its data centers. 
• SFDC will deploy the Oracle Database and Java Middleware Platform as part of its cloud infrastructure.
• Oracle will integrate salesforce.com's cloud apps with Oracle’s Fusion HCM and Financial Cloud.
• Salesforce.com will also implement Oracle’s Fusion HCM and Financial cloud apps for its own internal use.

So, what exactly in this announcement represents a fundamental change in direction for Salesforce?

• SFDC's infrastructure is already based on Linux, so standardizing on Oracle Linux is a minor change.
• SFDC's applications already make use of Oracle's database as the lower-level physical data store.
• The press release provides no detail on how SFDC will make use of Oracle's Exadata boxes. If they are merely used to replace commodity storage devices, there would not be any change to the basic architectural design of SFDC's infrastructure.
• Oracle's integration of Fusion HCM and financial system with SFDC is merely an application integration initiative. 
• SFDC's implementation of Oracle Fusion HCM and financial applications is a routine "win" announcement. 

The second bullet could potentially be the most radical departure for SFDC. Oracle's new database release, 12c, could provide the capability for SFDC to run multiple pluggable databases (one for each customer) within a single container database. This would represent a fundamental shift for SFDC away from its single multi-tenant database architecture in favor of Oracle's pluggable database approach.

Nevertheless, the fact that there is no mention of 12c or pluggable databases in the press release makes me seriously doubt that SFDC intends to fundamentally change its platform architecture. I have a question pending with SFDC on this point and will update this post if and when more information becomes available.

Thawing of Relations

What I do find significant in this announcement is that Oracle and Salesforce.com have apparently buried the hatchet, at least for now. For their mutual customers, now and in the future, this is good news.

Customers are not well-served by vendors sniping at each other, and the verbal tiffs between Benioff and Ellison over the past few years, frankly, have become annoying. Hundreds of customers have interfaced Oracle Applications with Salesforce.com's cloud apps. But until now they have done so without the explicit support of Oracle. Customers will be pleased if the two companies can cooperate in providing standard integration. Hopefully, both parties will start acting like adults and doing what is in their joint customers' best interest.

Workday Is Odd Man Out

If there is a competitive target in this announcement, it has to be Workday. SFDC will implement Oracle’s HCM and will integrate its Sales Cloud with Oracle’s HCM and also with its Fusion Financials product. This puts Workday in an awkward spot in that Workday leverages Force.com for its platform-as-a-service capabilities. It will be interesting to see how Workday reacts to this détente between Oracle and Salesforce.com.

While the use of Oracle Fusion within SFDC doesn’t mean much to SFDC customers, it does give bragging rights to Larry Ellison against Workday. Interestingly, NetSuite's CEO Zach Nelson was recently taking pot-shots on stage at Workday during NetSuite's Suiteworld conference. At the time, I took it as a sign of Workday's competition with NetSuite in financial applications. Now I see it as part of a wider competitive alignment. Both Zach Nelson and Marc Benioff are Oracle alumni and both have close ties to Larry Ellison. The three now seem to be joining in solidarity against Workday and validating that Workday is a threat to all three.

Regardless of the competitive posturing by these major enterprise technology providers, the Oracle/Salesforce detente is welcome news for customers.

Update, 11: 30 a.m. PDT. Dennis Howlett spoke with Aneel Bhusri, co-CEO Workday, who says that he doesn't anticipate any impact from the Oracle/SFDC announcement.

Update, 12:15 a.m. Salesforce.com replied to my inquiry indicating they are unable to provide additional details at this time on the announcement.

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News Analysis: Oracle’s Cloud Strategy - Revisionist History or Cloud Genius?

R "Ray" Wang

Principal Analyst and Founder
Constellation Research

R “Ray” Wang is the CEO of Silicon Valley-based Constellation Research Inc. He co-hosts DisrupTV, a weekly enterprise tech and leadership webcast that averages 50,000 views per episode and blogs at www.raywang.org. His ground-breaking best-selling book on digital transformation, Disrupting Digital Business, was published by Harvard Business Review Press in 2015. Ray's new book about Digital Giants and the future of business, titled, Everybody Wants to Rule The World was released in July 2021. Wang is well-quoted and frequently interviewed by media outlets such as the Wall Street Journal, Fox Business, CNBC, Yahoo Finance, Cheddar, and Bloomberg. Short Bio R “Ray” Wang (pronounced WAHNG) is the Founder, Chairman, and Principal Analyst of Silicon Valley-based Constellation Research Inc. He…...

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Holger Mueller

Vice President and Principal Analyst
Constellation Research

Holger Mueller is VP and Principal Analyst for Constellation Research for the fundamental enablers of the cloud, IaaS, PaaS and next generation Applications, with forays up the tech stack into BigData and Analytics, HR Tech, and sometimes SaaS. Holger provides strategy and counsel to key clients, including Chief Information Officers, Chief Technology Officers, Chief Product Officers, Chief HR Officers, investment analysts, venture capitalists, sell-side firms, and technology buyers.  Coverage Areas: Future of Work Tech Optimization & Innovation  Background: Before joining Constellation Research, Mueller was VP of Products for NorthgateArinso, a KKR company. There, he led the transformation of products to the cloud and laid the foundation for new Business Process as a…...

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This is a joint post with my colleague Holger Mueller who looks at IaaS/PaaS and Future of Work technologies for Constellation Research.

At a press conference on June 24th, 2013 with Microsoft’s CEO, Steve Ballmer, and Oracle’s President Mark Hurd announced a cloud partnership where Azure customers will be able to run Oracle Database (no version mentioned, but Constellation expects this to be 12c), Oracle Weblogic, and Java.

Oracle also announced availability of Oracle Linux for Azure customers. Constellation believes that the deployments of the Oracle 12c, Weblogic and Java stack pieces will be deployed on Oracle’s Linux.  Should this be true, the approach makes sense, as this is a tested and proven hardware and software combination. Further, Microsoft has already begun to run parts of Azure on Linux.

The partnership alliance poses significant implications for both vendors and more importantly customers moving to the cloud for three reasons:

• Java comes to Azure, a sign of pax in the .NET vs Java wars. For Applications to run on Azure, they needed to be built in CLR generating programming languages. Now, with the licensing of Java by Microsoft as part of this partnership, Java applications will run on Azure. This opens doors for Java applications on the Azure cloud, as well as general more portability for Java applications. And Azure becomes a friendly cloud for the 9 million+ Java developers out there.
  
  Point Of View: Microsoft and Oracle strike a win-win here.  Microsoft gains more language derived potential for expanding Azure and Oracle adds a marquee cloud stack to support Java.  Given the substantial overlap of enterprise customers on both Microsoft and Oracle, customers will benefit from more cross cloud compatibility for Java while supporting Azure for IaaS.

• Azure will run Oracle Weblogic and the Oracle Database. Microsoft will support Oracle Linux in Azure as the foundation to run the middleware and the database stack.  Though the press release and the press conference did not specify which Oracle database, Constellation speculates this is for Oracle Database 12c. In addition, Oracle announced license mobility for customers who want to run software on Azure and bring Oracle Linux to Azure..
  
  (POV): Interesting enough when Larry Ellison spilled the news for this announcement during the Q4 Oracle earnings call, this was not about the Oracle Database, but very specifically about Oracle 12c. It’s not clear why 12c is not specifically referenced in the press release – but with the ORacle 12c general availability slotted for June 25h, 2013, this moment may not have been the time to steal the thunder.  Of note, it is not only the database, but also the Weblogic application server which will be deployed on Azure. This comes as a surprise at first, but given the work Oracle has done to integrate the former BEA flagship product with 12c and Java – it was a question of taking whole technology building and avoiding too many interfaces. Why run Java apps through Biztalk to an Oracle database?  Constellation views this as a smart move by both companies, as it allows Azure customers to utilize more of the Oracle products, that are more and more entwined due to the Fusion and Exaxxx products.

• The hypervisor is where Microsoft and Oracle draw a line in the sand. Oracle will support Microsoft’s hypervisor Hyper-V to be the demarcation line between higher level application code and the Oracle products that now run in Azure.  The combined offering will be running on Hyper-V, which creates some headaches for Oracle on the hypervisor level as Constellation predicted, and will be supported by Oracle support as running on Windows Azure. .
  
  (POV): This poses some engineering work for the Oracle hypervisor teams, but nothing impossible to achieve. And the benefits are tangible, Hyper-V built applications will now be able to run on the Oracle Database (12c, and on Oracle Linux). This will give a lot of performance critical (think Dynamics) applications that were limited by SQL Server scalability before, new breathing room.  Microsoft was able to protect higher level applications of its technology stack with this agreement and at the same time Oracle benefits from a whole ecosystem of Hyper-V compatible applications. The cost of supporting Hyper-V for Oracle, which is tangible, is however dwarfed by this additional market potential. And it gives Mircosoft an important leg up against VMware’s vSphere.  Constellation believes this has significant implications in the cloud stack wars among Amazon, Google, HP, IBM, and VMware.  In unusual candidness for these  Oracle listed the current and future deliverables for the alliance in an blog post here.

Why did this happen?

As previously mentioned, this would have been a very good April Fool’s headline – even back on April 1st 2013. So this alliance comes as a surprise pretty much to all industry observers, at least we have not seen anyone claiming to see this one coming.

Constellation can only speculate what has driven Oracle and Microsoft to become frenemies and co-opitors. But the usual drivers are customers and technology. Customers could be the biggest driver for this alliance (e.g. a large public sector client that has standardized on Azure but requires Oracle, maybe for security or scalability reasons).  Why? Oracle has achieved significant and game changing elasticity through the de-coupling of metadata and user storage in Oracle 12c. In the due diligence process Microsoft must have looked at this design point and it must have been clear, that SQL Server would not be able to match this. It will be interesting to see in the months to come, what the real drivers to this alliance have been.

Lastly it necessary to mention that primarily Microsoft, but to a certain point also Oracle are interested in differentiating their cloud offering versus Amazon’s AWS and Google’s GCE. And this alliance certainly helps in this process.

Implications for the market

Over the past decade, Oracle has emerged as the laggard in the cloud market.  VC’s had advised their startups not to build on Oracle to avoid the cost overhead and legacy database technology.  Yet Larry Ellison remains the rare master of Sun Tzu’s Art of War strategies.  In this latest effort, he shows his determination to serve as the arms dealer for cloud infrastructure.  Announcements on partnerships with Amazon,  Dell, now Microsoft and soon with Salesforce.com and NetSuite show his determination to remain relevant in the cloud, albeit very late to the party.

The irony is that it all comes back to the original view of Ellson – that the cloud is nothing else than servers connected to the internet. And to a certain point that is what the Oracle Linux machines with running Oracle 12c, WebLogic and Java will do. Only they will be more elastic than other commercial database offerings, but we will have to see what happens on more detail at the 12c announcement tomorrow.

For the overall cloud market this forms a positive development as amongst the dedicated cloud stack vendors – AWS, Google, Microsoft and Oracle – this forms a level of reuse and commonality that previously has not been thought to be possible. Java applications now run on all of the four aforementioned cloud stacks. The Oracle database runs in all but Google. As does Oracle Linux (we assume that’s also how AWS deploys Oracle). So we are not at all at a time of interoperability – but this alliance is certainly propelling the cloud further in these terms.

The Bottom Line: The Irony is the Database Back Again?

At the end of the day two veterans of the enterprise software industry, Hasso Plattner and Larry Ellison are re-inventing their companies through database innovations. It looks like enterprises still want and need to store data reliably and efficiently. May it be in memory with HANA or may it be with better overall elasticity for 12c. No mention of cloud. Remarkably both innovations would have been beneficial for their respective companies even in a pre cloud era. So yes, the database is back. And with that a chance to rebuild and re-invent the whole enterprise technology stack upwards.

Our POV: The Cloud Wars Have Just Begun, Customers Poised To Win

This is the positive announcement expected over the weekend. The cloud sure makes strange bedfellows, and is the real driver and winner. Both Messrs. Nadella and Hurd clearly identified that. With the addition of Java to the overall mix, more interoperability has been achieved than customers would have expected and overall this is good news for the cloud, and more importantly, for Microsoft and Oracle’s customers and partners.

Before customers can rejoice, availability, pricing and customer successes must come first.

Your POV.

Ready for the Microsoft – Oracle Alliance?  Will you run Oracle in Azure?  Are you waiting for SQL Azure?  Add your comments to the blog or reach me via email: R (at) ConstellationRG (dot) com or R (at) SoftwareInsider (dot) com.

Resources

• Oracle 12c: End of multitenancy as we knew it
• How the cloud can make unlikeliest bed fellows

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Although we work closely with many mega software vendors, we want you to trust us. For the full disclosure policy, stay tuned for the full client list on the Constellation Research website.

* Not responsible for any factual errors or omissions.  However, happy to correct any errors upon email receipt.

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Digital Ad Spend Grows But What About the Investment?

Gavin Heaton

Founder
Disruptors Co

Gavin is the Founder of Disruptors Co, one of Australia’s leading independent strategy and innovation companies. Gavin advises firms on strategy, marketing, product development and innovation. He is also a member of the Orbits program, the influencer network of award winning analyst and advisory firm, Constellation Research. Gavin advises boards and leadership on innovation strategy, marketing, data-driven product development and corporate venturing. Gavin is on the board of Vibewire, a youth-led social enterprise based in Sydney, Australia and on the Technology Advisory Group for Good2Give – the workplace giving platform. ...

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When I look at infographics, I am looking not just at the facts and figures (boring) – I am looking a the underlying story. I want to understand what is taking place behind the numbers. I seek insight and connection between the sources of information, the behaviours of the industry and opportunities for the future.

So this infographic from Invesp, fired up my neurons.

Summarising the state of play for the digital advertising industry globally, it shows just how dominant Google remains in the face of challenges from social networks. A staggering 42.6% of ad spending finds its way into the search giant’s coffers, while Facebook, Yahoo! and Microsoft duke it out for less than half of that combined.

From an industry point of view, growth in digital advertising indicates a certain level of health. It shows that digital has firmly moved out of the experimental mode and is now a core part of a marketer’s arsenal. But it also raises significant questions – after all, if spending is increasing, are we also seeing a rise in investment? And by investment I mean:

• Evaluating and implementing marketing platforms and technologies: Pumping more budget into digital is going to also shift the focus towards digital engagement. After all, a digital call to action can result in a click, a download, a sale and so on … and if that is the case, what investments are marketers making in terms of marketing platforms and systems of engagement? Which platforms are you evaluating for marketing automation or social media management? How are you tracking conversion, monitoring the velocity of online conversation and improving rates of conversion? CMOs should evaluate their marketing processes and look for automation opportunities.
• Building the capacity and experience of your teams: The digital marketing skills gap continues to widen. For decades, marketers have been forced to do more with less – and now as the demand for digital skills accelerates, many CMOs find themselves responsible for teams who have transitioned from into “digital” from more “traditional” marketing fields. This has resulted in teams with limited or poor digital experience, basic skills and little time to build capacity. CMOs should carry out a Digital Skills Audit as a matter of priority.
• Investing in customer engagement strategy: Much of our marketing strategy is built around maximising the value of channels. It’s time to stop this nonsense. We need to map customer journeys and then invest in engagement that adds value to the customer experience at key “moments of truth”. This means stepping away from the channel. Even if that channel is “digital first”. 

Have your say

What have I missed? What have I mis-read? What else needs to be improved?

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Analysis of Intuit's Acquisition of Elastic Intelligence

Alan Lepofsky

Vice President & Principal Analyst
Constellation Research

Alan Lepofsky - VP and Principal Analyst, Constellation Research. With almost two decades of experience in the collaboration software industry, Lepofsky helps organizations improve the way their employees work together to get their jobs done. Lepofsky’s primary research area The Future of Work, focuses on: integrating collaboration and business processes (Purposeful Collaboration), structuring work via Social Task Management, leveraging analytics and digital assistants to work more productively, the strategic impact of mobile computing on business transformation, and measuring workforce culture based on Digital Proficiency instead of age. Twitter: @alanlepoLinkedIn: https://ca.linkedin.com/in/alanlepo     , Title: Big IdeasIntelligent Collaboration: The Intersection of…...

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Holger Mueller

Vice President and Principal Analyst
Constellation Research

Holger Mueller is VP and Principal Analyst for Constellation Research for the fundamental enablers of the cloud, IaaS, PaaS and next generation Applications, with forays up the tech stack into BigData and Analytics, HR Tech, and sometimes SaaS. Holger provides strategy and counsel to key clients, including Chief Information Officers, Chief Technology Officers, Chief Product Officers, Chief HR Officers, investment analysts, venture capitalists, sell-side firms, and technology buyers.  Coverage Areas: Future of Work Tech Optimization & Innovation  Background: Before joining Constellation Research, Mueller was VP of Products for NorthgateArinso, a KKR company. There, he led the transformation of products to the cloud and laid the foundation for new Business Process as a…...

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Late last week the news came out, that Intuit had acquired Elastic Intelligence, maker of the Connection Cloud product - one of the few cross platform, cloud enabled BI solutions in the market. Intuit will use Connection Cloud to complement capabilities of their QuickBase solution.

 

We look at this event from the Future of Work, Data to Decisions and Consumerization of IT perspective - respectively through the lenses of our analysts Holger Mueller and Alan Lepofsky. Click here to navigate down to the Advice and Point of View sections.

 

The Collaboration Take

 

One of the basic tenets of enterprise collaboration software is that it allows people to work together to achieve a common goal. Example goals include planning an event, creating marketing material, closing a sales deal, or any one of a thousand other use-cases where people work together to get their jobs done. Without a consistent structure for entering information, the data in these collaboration platforms becomes difficult to search, filter and report on. Products that use form-based entry solve this issue by having people enter information into specific fields rather than into a blank wiki page, blog entry or community forum.

 

Intuit QuickBase has been around for more than a decade, allowing people to create applications without having to be an application developer. The acquisition of Connection Cloud and its future integration with QuickBase should allow people to integrate data from other enterprise systems into the QuickBase applications they create.

 

For example, an organization may be able to create an application for the Sales team that pulls in data from both their CRM and their ERP system, allowing them to get an account overview that is not available in either of those systems on its own.

 

The SaaS Take

 

Software as a Service (SaaS) is the growth engine for enterprise applications in general. The unique nature of QuickBase is its capability to get end-users to build and maintain surprisingly elaborate business application. The extensive library of partners and building blocks gives QuickBase users a powerful but end user manageable arsenal of onality.

 

SaaS vendors need to continuously expand their capabilities and the addition of business intelligence functionality is a key value add for QuickBase.

 

The BigData Take

 

One of the biggest challenges for enterprises today is how to create value from big data projects. Though Connection Cloud does not necessarily fall under a big data play - the result of using the product can likely result in one. With the capability of using many of the leading SaaS OLTP products as a data source, Connection Cloud is one of the few products to provide out of the box cross SaaS product business intelligence... and with the combination of multiple OLTP sources - data volumes could quickly  move to (lower end) big data volumes.

 

It will be interesting to see if Intuit can capitalize on the big data trend - especially in the light of maintaining end user ease of use.

 

The  Enterprise Take

 

One of the most interesting developments in enterprise applications has been end user programming - for quite some time now. No vendor has really tackled the challenge with a workable solution - but Intuit is one of the closer vendors to successfully address the topic with QuickBase.

 

Through the combination of the existing applications and the capabilities of Connected Cloud, which enable more business intelligence content, Intuit’s lead in this area will be solidified. And it makes a whole new set of applications possible. While previously all OLTP vendors had a  lock on BI and reporting solutions to run on their own application and product framework - it may now be possible to build QuickBase applications on top of that. This gives QuickBase a new value proposition to build applications.

 

Another possibility is, that Intuit will not use Connected Cloud solely for the pedestrian reporting and BI needs - but to extract more data from the SaaS OLTP applications. This would make the integration of QuickBase with SaaS OLTP easier and again open new dimensions of QuickBase application scope.

 

However, like before - Intuit will have to address the write back problem. Right now QuickBase makes it easy to build one way applications, in the sense that you take data from another system, import it and work on it in QuickBase.

 

Likewise it supports island applications with self contained data storage in QuickBase.  What Intuit needs to address are circle applications that will allow users to start in 3rd party applications, provide value through a QuickBase application and then return that back to that (or another) 3rd party application. Or better for QuickBase - start there, hand over data to 3rd party, process something there, and then return to QuickBase. It  matters in enterprise applications where business processes get started and lead to final outcomes.

 

 

Advice For Customers

 

This is good news for QuickBase customers, who get key capabilities added to the product. It’s time to re-evaluate scope of your existing QuickBase applications and see how the additional capabilities will add value to these solutions. Likewise, with the expanded capabilities it’s time to see which new applications you may decide to build with QuickBase.

On the flipside - the formerly amicable relationship between Elastic Cloud and SaaS OLTP vendors, may now change given QuickBase’s competitive status for the overall enterprise applications landscape. So monitor how many connections the Connected Cloud product will have when run by Intuit.

 

Advice For Partners

 

This is exciting news and as customers revisit their application portfolio, you should review your product roadmaps and service offerings. How can the future additional capabilities of QuickBase make your offerings stronger and more attractive in the market, how can these capabilities help address new automation areas? These and similar questions should be addressed quickly.

 

Advice For Competitors

 

You should not be surprised, as Intuit will keep investing into QuickBase. You will need a strategy to address the power of end user programming and the disruptive nature of that trend to the conventional enterprise applications space - may they be SaaS or classic on premise applications. Intuit (and others) have not fully figured out this one yet - but someone will come along sooner than later and you need to be ready. While Elastic Intelligence enhances Intuit’s integration capabilities, they are still weak on collaboration/enterprise social networking features. In today’s “social business era”, vendors than provide a strong set of collaboration features such as Liking, Commenting, Rating and Sharing should utilize this as a competitive advantage.

 

Advice for Intuit

 

This is a great move, you will have to make sure you integrate the more complex BI capabilities in a user friendly way into QuickBase - and make them configurable, usable and extendable by a skilled business end user. Likewise you need to address the circle natured applications we mentioned earlier. Intuit’s next acquisition should focus on improving their enterprise social networking capabilities, enabling people to create, collaborate on and share information in QuickBase applications.

 

OurPOV

 

A good acquisition by Intuit, that helps further differentiate QuickBase. Adding new additional scope to its current application scope with business intelligence capabilities, provides  QuickBase with extended usage attractiveness to both customers and partners. Keeping QuickBase easy and intuitive to use is the emerging challenge. We look forward to hearing more details on roadmap, pricing and availability.

 

Data to Decisions Future of Work Tech Optimization Innovation & Product-led Growth New C-Suite SaaS PaaS IaaS Cloud Digital Transformation Disruptive Technology Enterprise IT Enterprise Acceleration Enterprise Software Next Gen Apps IoT Blockchain CRM ERP CCaaS UCaaS Collaboration Enterprise Service Chief Information Officer Chief Technology Officer Chief Digital Officer Chief Data Officer Chief Analytics Officer Chief Information Security Officer Chief Executive Officer Chief Operating Officer Chief Experience Officer

How the Cloud can make the unlikeliest bed Fellows

Holger Mueller

Vice President and Principal Analyst
Constellation Research

Holger Mueller is VP and Principal Analyst for Constellation Research for the fundamental enablers of the cloud, IaaS, PaaS and next generation Applications, with forays up the tech stack into BigData and Analytics, HR Tech, and sometimes SaaS. Holger provides strategy and counsel to key clients, including Chief Information Officers, Chief Technology Officers, Chief Product Officers, Chief HR Officers, investment analysts, venture capitalists, sell-side firms, and technology buyers.  Coverage Areas: Future of Work Tech Optimization & Innovation  Background: Before joining Constellation Research, Mueller was VP of Products for NorthgateArinso, a KKR company. There, he led the transformation of products to the cloud and laid the foundation for new Business Process as a…...

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When revisiting the Oracle earnings call of this week, it is pretty obvious that Oracle is trying to position Oracle 12c pretty much everywhere as the cloud database of choice. And not only position and try to sell – but make it an integral part of the cloud tech stack of well-known partners (NetSuite), lesser known partners (salesforce) and even competitors (Microsoft).

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Is Oracle 12c the end of multi-tenancy as we knew it?

Holger Mueller

Vice President and Principal Analyst
Constellation Research

Holger Mueller is VP and Principal Analyst for Constellation Research for the fundamental enablers of the cloud, IaaS, PaaS and next generation Applications, with forays up the tech stack into BigData and Analytics, HR Tech, and sometimes SaaS. Holger provides strategy and counsel to key clients, including Chief Information Officers, Chief Technology Officers, Chief Product Officers, Chief HR Officers, investment analysts, venture capitalists, sell-side firms, and technology buyers.  Coverage Areas: Future of Work Tech Optimization & Innovation  Background: Before joining Constellation Research, Mueller was VP of Products for NorthgateArinso, a KKR company. There, he led the transformation of products to the cloud and laid the foundation for new Business Process as a…...

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Oracle released it's Q4 numbers, and the usual strong but entertaining statements on achievements and the competition were heard on the earnings call. Andrew Nusca over at ZDNet has done a great job to extract the 25 striking things from that call, you can find it here. You can find the webcast here and a transcript here.

During the call Larry Ellison also gave a preview of events scheduled for next week in regard to the next Oracle database release, Oracle 12c. Oracle 12c was announced back at OpenWorld in 2012 - as the first pluggable database that would separate user data from metadata and allow multiple tenants in the same database.

Multi-tenancy Confusion

There is  now some confusion around the term multi-tenancy. Though in general there is agreement that multi-tenancy means the co-existence of multiple tenants for shared resources - there are now two interpretations of the term.

The classic multi-tenancy term was related to the database sharing data elements (or records) across tenants. That design was critical for the first and early SaaS vendors - as they needed to share precious data base resources. Often this is referred to as a tenant striped database. 

The Oracle view on multitenancy is that user data becomes the tenant - and as you can run multiple user data stores (or containers as Oracle calls them) in the same database - you have a multi-tenant database. Oracle complements this by separating the metadata from the user data and can point multiple user data stores to a common set of metadata, thus achieving better hardware utilization and with that better elasticity of the database. Or in other words - you can run more database on the same server with 12c.

The key advantages of 12c

As already mentioned above, the separation of the user data from the meta data allows 12c to use less resource than its predecessors and with that a better hardware utilization. Better hardware utilization with putting  more user data on the same machines is better elasticity of the offering, which is key for anything cloud these days.

But there are  more key advantages to this tenant concept. First of all, the standard tool you may want to run on the database are still available to run - with no changes to the the security model. A BI tool like e.g. .SAP's Business Objects can just run on the 12c database - with no modification. To the user its just looking at the database as with no multitenancy. In the striped multi-tenancy case the unmodified tool would give access to all tenants data - something clearly not desirable if you want to stay in business as a SaaS vendor.

Moreover you can move and copy the user data more easily. And you can change the schema both on the metadata and user data separately - and then just point upgraded versions to the right partners of metadata and user data. Big advantage for upgrades and high availability.

And finally most enterprise software needs some way to customize it. With the striped multi-tenancy model this was very limited - as all tenants were on the same schema. With the new multi-tenancy architecture - more can be done to the individual schemas of a tenant. Theoretically anything and independent from the tenants - but of course with a price when upgrading, no discussion needed.

Is this new?

Not really - most SaaS and PaaS vendors today will store one tenants data in a separate database, often even on separate servers. The advantages are  mentioned beforehand - and often database scalability even drives to that design (more about that next week). But these vendors pay the price with a higher operating cost -- all their databases run with the overhead of a one to one relationship of user and metadata - which results in a larger footprint and with that higher cost to operate and less elasticity. 

Oracle's innovation is to provide the separation of meta data and user data from each other and achieving better elasticity for the offering. If Oracle will be able to make the upgrade to 12c transparent in the sense that a pre 12c Oracle database user may take advantage of 12c easily and e.g. be able to unstripe the older usage - will remain to be seen. It will make adoption of 12c much easier.  

Big expectations

Larry Ellison mentioned events next week to provide more details on 12c - and the endorsement of NetSuite, salesforce and... Microsoft. And while NetSuite was hardly a surprise - salesforce was more surprising. But Ellison had almost kind words for Marc Benioff. Now what Microsoft may do here - will be very interesting - expect lots of speculation till the event.

MyPOV

Oracle was not shy to tout 12c back at OpenWorld and now in the Q4 earnings call. With missed earnings - maybe a diversion strategy - but when 12c ships - it will change multi-tenancy as we knew it. And can't wait for the partnership announcements Oracle said the company would make next week. Heightened expectations. 

My latest take on Oracle overall can be found here - takeaways from the Oracle analyst summit. 

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