Five Ways to Prepare for the Enterprise Cloud
This week I attended my first in-person presentation by Larry Ellison and Oracle. I’d seen presentations from Ellison streamed and taped before, but you really don’t get the full sense of something when it is streamed. Ellison remains one of the few founders still in position from the firms that developed during IBM’s dominant years in computing. All of the other firms are gone or their founders have long since retired.
Ellison clearly doesn’t have retirement on his mind and Oracle continues to grow surprisingly well in a world that has vastly changed from when it was first formed. Oracle is the only enterprise company at scale that is effectively run by sales rather than engineering. Engineering companies tend to be very conservative in regard to what they claim to be able to do, but sales-led companies tend to promise things that at the time they can’t deliver and present prices that are lower than what you’ll actually pay. On the other hand, engineering companies tend to fall in love with technology and lose track of customer needs, while sales-driven companies love customer needs and will structure events like this around them, which is a vastly more successful sales tool.
Let’s talk about some of my impressions from this presentation.
Oracle Stands Alone
One of Ellison’s claims is that Oracle largely stands apart from the major firms; he doesn’t see IBM, HP or any of the other traditional firms competing with him in cloud services. He sees Salesforce and Amazon as competition, but they can’t run on-premise, so they really don’t broadly compete with Oracle, which has a powerful hybrid solution (on-premise and in the cloud). According to Ellison, this has allowed it to grow new customers—from 400 to 1,500 new customers in the latest reporting quarter.
Conversely, I haven’t seen Amazon talk about Oracle as a primary competitor yet. This may be because both firms approach enterprise sales very differently. Amazon tends to be brought in by line organizations while Oracle traditionally comes in through IT.
Cheap Cloud Storage
I’d doubt I could ever legitimately use the words “cheap” and “Oracle” in the same sentence when discussing solutions, but Ellison did. He argued that cloud storage from traditional competitors is up to 400 times more expensive and Amazon Web Services is 10 times more expensive. If true, this would make Oracle the segment leader—at least with respect to price—but beating Amazon by this massive magnitude crosses over into unbelievable territory. Amazon and EMC provide very different cloud services. And given that there was no real breakdown as to the total cost incurred, his claim suggests that the price he is referring to is offset by a cost that he didn’t disclose in the presentation or that there is some other undisclosed data point that explains this massive delta.
Or, to put it differently, if Oracle could profitably undersell Amazon by this magnitude with an acceptable solution, that should translate into a storage market advantage both in-cloud and on-premise that would effectively wipe out the rest of the market. Since that doesn’t appear to be happening, there is something else we are missing that significantly offsets this point price advantage. I’d be curious to find out exactly what that is.
This is often a problem with aggressive claims.
Prepped Audience
I first saw the “prepped audience” practiced with Apple and have seen it over the years with other vendors like AMD. At an event, the first rows of the auditorium are taken by employees or fans that have rehearsed along with the speaker and are trained to cheer and clap at the appropriate times. This practice drives energy into the presentation and the applause and cheers often spread to the rest of the audience, creating a very high energy and helping assure a positive impression.
Given how well this works, I’m kind of surprised that it isn’t done more often, but that practice was evident at this event, and there were far more people paying attention and far fewer checking email as a result. (Although, connectivity sucked at the venue, so the smartphone distractions were much reduced anyway.)
Oracle on Oracle
The Oracle executive who presented after Ellison argued that Oracle runs best on Oracle cloud services. This is likely true, because any company can generally tune their software to run best on their own hardware and cloud services while it is under development. This is often common in a sales-driven company.
In such a company, there is much more focus on connecting all of the products together so that each product sold provides a better argument for buying more from the firm’s portfolio. Engineering-driven companies are more likely to silo products and argue a stronger mix and match strategy but, in so doing, they are more likely to operate at cross purposes and get in each other’s way. However, if any part of the solution is weak, in a sales-driven approach, this will more likely weaken the entire portfolio, because the weak link is locked into a critical path.
Oracle and the Cloud
All in all, this was one of the more impressive cloud presentations I’ve attended in terms of breadth. However, under a sales-driven model, it is likely that a number of elements presented currently don’t integrate or work as promised and are in progress. The event was very long on claims, but very short on actual proof points. In addition, Oracle uses a “lock in” model, which often leads with attractive initial prices that are eventually replaced by far higher pricing once you are locked in and facing a very high switching cost. This makes reference accounts and legal departments particularly important here, as the first must assure what you are buying actually exists and works, and the second ensures that the sales contract doesn’t include any unexpected sales escalators or other surprises.
Oracle is clearly very serious about the hybrid cloud approach to Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS) and its presented breadth was impressive. Oracle is right to focus on Amazon as the segment leader and it has a powerful advantage over Amazon in that it is an entrenched enterprise-class vendor with far deeper roots than Amazon has yet acquired. However, from the standpoint of belief, Oracle asked the audience to jump from a position where Oracle could hardly spell “cloud” to it being a bigger power than Amazon. Even if true, that is simply too big of a jump for most of us to comprehend.
Wrapping Up: Final Thoughts
A sales-focused company tends to showcase an offering based on benefits rather than technologies. This makes the solution far easier to fit into customer needs and results in a presentation that is more of a solution rather than a catalogue of parts. That is not only refreshing, but also surprisingly powerful. From a personal perspective, it’s also far more interesting. More firms should attend Oracle’s presentations and learn from their presentation processes, both good and bad, because a pitch that is all claims but little proof, while more entertaining, may not be believable. And the best pitches are more of a balance of customer-focused claims and proof.
Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm. With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+
