Thoughts on the Cloud, IT Vendors and Enterprises

IT Vendors and Enterprises are in a middle of a generational change, as computing moves from On-Premise (from lots of customer data centers) to a smaller number of “super” Data Centers of IT Vendors: the Cloud.

This means that the IT as an Industry has caught up with other Network services e.g. Water or Electricity Networks where the production happens at the utility and else taps into the Network to consume the service. This allows taking advantage of the Economy of scale, commercialized labor leading to a better service at a lower price.

At the end of this change Enterprises will consume the data and IT from Utility Computing providers where all the complexity of running servers etc. is hidden behind a simple device such as the desktop Browser (similar to other Network providers using a water tap or power socket).

The Cloud provides all three layers: Applications (SaaS), Platform and Infrastructure as a service for consumption and more and more Enterprises are moving from buying on-Premise and Hardware to buying Cloud. This has been pioneered by Amazons.com’s AWS which provided basic computing services like storage and Servers in the beginning.

However, basic computing/storage (excl. Security and Reliability)has become a commodity like electricity. When buying commodities cost is one of the most important decision factors since there is no much differentiation. The major differentiation of Clouds is on the Platform and Application layer where the cost of these services can be looked at two days: the acquisition costs on day 1 or a more complex calculation of the TCO (Total Cost of Ownership) which is the cost of owning & running for a certain period of years. E.g. the TCO would also include estimated costs for the required integration of two or more Cloud applications.

A decade of Coexistence and a Unique differentiator for Oracle

For many of the Enterprise customers, the journey to the Cloud is increasingly combining on-Premise and Cloud Solutions and Oracles ability to promote a long term co-existence Strategy is a unique differentiator in the marketplace.

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Matching the 3-Tier Application model to the Cloud

For those Companies who already use the Cloud, the Terms IaaS, PaaS & SaaS are understood as 1+1. For decades where Software System have been installed in a local Datacentre the 3-Tier Application model was the norm. Consisting of 3 Tiers for the Application, data storage in a database, Business logic Layer holding the main source code e.g. in Java or C# or any other programming language and a Presentation Layer for the Business User to interact with. While the Cloud essentially takes the local Datacentre to the Software Vendor Datacentre location and the Internet, some new terms emerged: SaaS,IaaS,Paas. For reference, these new “Cloud” terms can be matched to the “classic” 3-Tier Application model:
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Crossing the chasm

Both, software vendors and customer’s Organizations are facing a new model, where Software is not delivered as a on-Premise installer, but as a Service, the Cloud.

crossing chasm

While large Software Vendors such as Oracle or SAP still provide a very feature-rich on-Premise version of their Software there are two real advantages for a Cloud delivery model: 

Agility of Software deployment: With many on-Premise Applications a new release takes approximately 2 Years until the software becomes generally available and another Year to upgrade and actually deploy the new release within the customer’s Organization. Currently a new release of the Oracle Fusion Applications (currently Vers. 11) takes approx. 6 Month and this will be shortened to approx. 3 Month until CY17. The Cloud allows to provides the innovations much faster to the Market and the customer to consume the innovation much earlier. Additionally, the downtime associated with new Releases is targeted to be also reduced by half.

Real customer Feedback: Since most customer within the use the public Cloud, the development (Engineering) Organization has access to real application usage patterns of the Customers using the software. For most Oracle’s on-Premise software there was also some form of Feedback from Customers e.g. Market Requirement Documents (MRD) or the Customer Advisory Boards, but this has the actual accuracy of the real interactions from the Users with the Cloud. This feedback provides the data to improve the areas of the product which get used the most.

Combining the feedback and agility (speed to market) also to improve the software much faster then in any other model.

For Oracle, the strategy remains to provide a complete set of SaaS Business applications as modules such as ERP, CX or HCM in the Cloud. Additionally a Marketplace is available where Independent Software Vendors (ISV) or Partners may provide additional software packages or point solutions:

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Oracle’s Cloud also supports a wide spectrum in terms of deployment and use of the Cloud. A customer might also choose to migrate a bespoke legacy application in the Oracle Cloud using the IaaS or PaaS. This can also be used within large transformational programs where not all functionality can be provided from the Oracle Cloud. Certain bespoke applications can be moved to the cloud to be blended together with other Oracle cloud modules.

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Together with the Customer Success and Customer Management team, Oracle has a very good understanding of how the software is actually being used and where the software needs to be improved e.g. which features are performing well and which features are not being utilized.

With Cloud Projects, customers also engage differently with a Consulting Organization, they expect to be pro-actively guide through all phases of the cloud Journey, anticipate their needs and Best Practices.

Oracle now provides pre-scoped services at every stage of the customer cloud lifecycle:

  • enable usage of SaaS Subscriptions -> Core Implementation Packs for Fast Go-Live
  • if using but not fully exploiting the Subscription -> Advanced Enablement Packs (e.g. Optimize usage)
  • if they want to do more with Saas -> Add-On Packs for Integrating with other cloud modules and other business extensions with PaaS