Cloud Fever Grips Oracle

Written by Sudhir Chowdhary | Updated: Oct 15 2012, 09:22am hrs
Cloud computing is hot these days; theres no denying it. And Oracle is taking the cloud for business very seriously.

It generates about $1 billion annual revenue from Web-based software solutions and boasts of 25 million users of its cloud products. It now wants to become a one-stop shop, offering operating systems, databases, computer programs as well as computing infrastructure over the Web. Emerging markets are integral to its growth strategy and the Silicon Valley tech major is moving aggressively in India in terms of investments and positioning its products and solutions for customers here

Not long ago, the founder and chief executive of Oracle, Larry Ellison, had famously mocked cloud computing, terming it as complete gibberish and a fad. His outburst came in 2008 to be precise, in response to repeated queries from trade analysts. Seasoned industry watchers attributed the tech billionaires annoyance to the hype and hullabaloo around cloud computing than the concept itself. That was then.

Cut to present. Cloud computing is hot these days; theres no denying it. And Larry is taking the cloud for business very seriously. The 68-year-old founder, who has led the company for over three decades, intends to make his $37.1-billion, 120,000-people strong enterprise software making firm a one-stop shop for cloud-computing products, offering operating systems, databases, computer programs as well as computing infrastructure over the Web.

He has put the iconic Silicon Valley company into a major reshaping mode to grab new opportunities in the marketplace. Smart managers have been deployed at strategic levels to give a strong impetus to his cloud dream. Oracle sales and marketing teams have been revved up to sell the new IT gear. Its R&D teams are working at frenetic pace to come up with new cloud offerings. Oracle had invested $4.5 billion on R&D last year; this year, it plans to invest $5 billion globally.

With a strong focus on emerging markets, Oracle is moving aggressively in India in terms of investments and positioning its products and solutions for customers here. Cloud computing has moved beyond early adopter stage to mainstream in India, says Sandeep Mathur, managing director, Oracle India (see interview). The setting up a datacentre here to cater to the regional demand for cloud computing is high on the agenda. But more on that later.

For the uninitiated, cloud computing is a broad term referring to the delivery of computer services via the internet from remote data centres. Chief information officers (CIOs) like the approach because it is faster to implement and has lower upfront costs than traditional software, which businesses need to install on their own computer systems.

Truth be told, Oracle was slow to embrace this trend. But the Redwood Shores, California-based firm subsequently introduced its own offerings in the rapidly growing area and also acquired several firms selling internet-based software as its corporate customers embraced younger cloud rivals including, and Google.

At its recently held users conference in San Francisco, Oracle unveiled new cloud products. It is offering the Cloud Infrastructurealso known as infrastructure as a service or IaaSwhich provides a complete selection of servers, storage, networking fabric, virtualisation software, operating systems, and management software to support diverse public and private cloud applications.

The global tech giant is adding a new line of business, cloud computing, to its traditional lines of business of selling hardware and software. It has a new cloud database, called 12c, which will feature support for multi-tenancy and provide superior security, control and efficiency for software services delivered from the cloud. The company also launched the latest generation of its Oracle Exadata Database Machinesthe Oracle Exadata X3 Database In-Memory Machine.

Arguably nothing is more important to a company than a CEO who understands both the market today and where it will be tomorrow. For companies to stay strong, it is vital to understand what the customer is going to want in future, maybe even before the customer knows it. With a deep background in the tech industry, Larry understands the potential of cloud computing and his new attraction is justified by healthy estimates from research firms as well.

The cloud services market is clearly a high-growth sector within the overall IT marketplace, says Gartner. Worldwide public cloud services revenue is on pace to total $111 billion this year. High growth rates will occur in emerging markets, including the top three growth countries of India, Indonesia and China. The public cloud services market in India is forecast to grow 32.4% in 2012 to total $326.2 million, according to Gartner. Software as a service (SaaS) is the largest segment and is forecast to grow to $115.6 million in 2012, while infrastructure as a service (IaaS) is forecast to grow from $35.2 million in 2011 to $42.7 million in 2012.

India is one of the largest emerging markets in the world for Oracle. Strengthening our market position in such high-growth markets is an integral part of our strategy to drive growth for the company, says Mark Hurd, president, Oracle. BRIC countries are important to us. China and India are our growth markets in Asiaboth these economies have significant scale for us to work best. In both countries, we have had a lot of growth in our sales force and most importantly we have development organisations in these countries. In India, we added thousands of jobs last year and it also houses one of our largest development teams outside the US, he adds.

Oracle employs 30,000 professionals in Indiathe maximum number of employees after the USacross its sales, support and development organisations. Steve Au Yeung, managing director and executive vice-president, Asia Pacific, Oracle, says that India is on the companys radar for setting up of a data centre to cater to the regional demand for cloud computing. Oracle has one datacentre in Australia and another one is being established in Singapore.

We want to help customers become more efficient and save money as we help them innovate, even as big companies adapt to a world of mobile devices, cloud computing and huge amounts of data, says Hurd, who was earlier the CEO of Hewlett-Packard.

Oracles four-pronged strategy is clearly defined, he stresses. Firstly, we want everything to be best-of-breed at every level of the technology stack. Secondly, we want to vertically integrate these pieces into our line of engineered systems to provide superior total cost of ownership. Further, we want to deliver next-generation cloud applications and finally to deliver this technology to any industry, to solve customers problems at the highest order of business value.

Cloud is a complex technology and two years ago, it was more of hype and cloudy. But Oracle has always believed in simplifying technology so that the adoption increases. At a time when there is an overall cautious approach to IT spend in the market, the company is very excited about cloud and is exuding confidence to succeed in the niche area.