What Cloud Is Larry On?

As he launched Oracle’s Cloud strategy last week Larry Ellison said:

‘Very few technology companies cross the chasm from one generation to the next’

This made me wonder whether this statement might come back to haunt Oracle’s colourful founder and CEO.

Whether it was over-hyped or not, I think few people would now disagree that the Cloud represents the new generation of computing. You would have thought that for the old generation of tech companies, the way to stay relevant in the face of this transition would be to get into the new market early and commit a good deal of focus and resources to it.

Ellison finally launched their Cloud strategy last week, many years later than most of the companies they will be competing with. As usual, Oracle’s larger than life CEO had allot to say on how great their Cloud strategy is, confidently claiming that they have ‘the most comprehensive Cloud on planet earth.’ He said that, though Oracle may have come into the market late, they have done it right and will leave the competition trailing.

For me the brash talk had more of a hollow ring to it this time and I wonder whether Oracle’s delivery will live up to their leader’s hyperbole.

Ellison claims that the company has been working on the Cloud strategy for seven years. Industry observers can’t remember any reference to this, or their Cloud brand name ‘Fusion,’ until the last year or two. Indeed, up until this launch, the Oracle CEO was much more interested in dismissing the Cloud as over-hyped and ‘gibberish’ and saying it was more of a fashion trend.

At the same time as the launch, Larry fired off his first tweet that was also focused on the Cloud:

‘Oracle’s got 100+ enterprise applications live in the #cloud today, SAP’s got nothin’ but SuccessFactors until 2020’

Checking through all the marketing information for the new ‘Oracle Cloud’ it is difficult to count more than around 15 applications that they are now offering and most of these are from recent acquisitions that have made, including RightNow, Taleo and Vitrue – something that Larry is accusing SAP of!

What is for sure is that Oracle is coming into the Cloud market fairly late. You could argue that this is because that were waiting for the market to mature and also that it took them several years to really do it right.

But I think it was more about holding off as long as possible while they milk their traditional software business for all it is worth. They now realize that the market is becoming too big to ignore any longer and are racing to catch up. It all feels poorly thought out to me.

Don’t get me wrong, Oracle has a chance to really dominate in the Cloud like they do with enterprise software. They have the brand, the distribution and the potential to offer end-to-end Cloud-based applications that are both integrated and secure. But I don’t see it happening for two reasons.

First, Oracle are so dependent on their legacy business of selling enterprise software licenses that it will be virtually impossible for them to commit the necessary levels of focus and resources to build a new business, especially one that in many ways will cannibalize their major cash cow.

Second, a Cloud business is entirely different to selling software. It’s about selling and delivering an open, highly available and secure service to millions of people. Essentially, the Cloud is an operational discipline. It’s so fundamentally different from developing proprietary software and pushing it out through your well oiled distribution channels and relying on highly paid rainmaker sales people to win the business on long sales cycles and even longer buying cycles.

There’s no example, to my knowledge, of a traditional software business transforming itself successfully into a market leader in the Cloud. Obviously, you can go some way through acquisitions but then you have all the integration challenges. I don’t believe all these acquisitions will really deliver value without the acquiring company having an existing Cloud business of its own that has been built organically, and can serve as the foundations for the new companies coming in.

So will Oracle do what very few technology companies have been able to do and cross the chasm from one generation to the next? I’m not so sure.