Oracle insider: We're not walking the cloud talk

An unsolicited source inside Oracle blasts the company's cloudwashing -- and Oracle's habit of announcing cloud solutions way before their time

Oracle insider: We're not walking the cloud talk
Stephen Lawson

Last week, I wrote a post entitled "Yes, Oracle is finally serious about the cloud." Cloud was clearly the theme of Oracle OpenWorld, as a flurry of SaaS, PaaS, and IaaS announcements indicated. In my interview with Amit Chaudhry, vice president of public cloud, he stated that cloud computing was "very, very serious business" for Oracle and the company planned to fight "tooth and nail" against Amazon Web Services.

I got pushback in response to last week's post from an unexpected quarter: inside Oracle itself. This individual, who asked to remain anonymous but has been with the company for nearly a decade, opened with a zinger: "We'll be serious about the cloud when Safra [Catz, co-CEO of Oracle] lets us hire some developers to work on it." I checked the identity of this source and can confirm this person is well placed and not in a low-ranking position.

In my post last week, I mainly focused on Oracle's IaaS announcements, although I also mentioned existing PaaS and SaaS solutions. My source told me it may be a while before we see those IaaS offerings:

Obviously we just announced Compute Cloud, but in reality I don't see a true Compute Cloud in place for six months. Our announcements are always a minimum of six months ahead of the technology. This has been true of every single cloud announcement. ... In similar fashion, Java PaaS was announced in 2012, but we did not even make it GA [generally available] until this summer. ... It seems that we announce a new product and then start development.

Although these are strong statements, my source made clear the motivation in stepping forward was not to harm Oracle. On the contrary:

The larger issue here is whether Oracle is acting in the best interest of its customers or even itself. My impression is that we let the analysts drive our strategy. Five years ago, it was all about engineered systems; now, it's all about cloud. The fact is that cloud is not a viable option for many mission-critical systems and will not be for quite some time. ... I find it painful to have to push a cloud solution that is not a viable option for many customers.

My source also cited a Sept. 30 Forbes article written by Dan Woods entitled "Is Oracle cloud revenue for real?" In that story, Woods disputed analyst estimates that Oracle could claim $1.5 billion in cloud revenue in FY2015.

Woods questioned what that $1.5 billion really represented. He asked whether Oracle sales might instead be "directing client revenue toward cloud spending, through mechanisms such as 'cloud credits' without really achieving adoption." He added that an expert on Oracle licensing, Palisade Compliance CEO Craig Guarente, had confirmed this.

My Oracle source wanted to "clear up a few things" in regard to that Forbes article:

What the account teams are doing is seeding cloud deals within larger deals. So if a customer does a $10 million deal, we are throwing in $500,000 in PaaS. The rep then gets his accelerator of 5X or 3X on that $500,000. I have seen this on 90 percent of our large deals. ... It is still booked as a sale and goes through the appropriate approvals with account reps getting credit. But in reality it is being given away. Somewhat amusingly, the customer's IT staff are not even aware of the inclusion. The problem, of course, is that Oracle does not recognize the revenue until the credits start being burned.

In defense of Oracle, my source went out of the way to say that the company was not (as Guarente has suggested) using license audits to strong-arm customers into cloud deals. My source also noted that Oracle was in some cases "truly starting to deliver self-service" for cloud customers.

Somewhat whimsically, my source wished Oracle would "cancel OpenWorld for one year, because it takes us a year or two to catch up with the marketing announcements." In addition, my source maintained that none of these statements would be a surprise to anyone inside Oracle, nor to "discerning" customers.

For everyone else, my source had a message: "If I'm a customer, I should be asking slightly more hard-hitting questions. [Like,] when do you expect it to be GA?"

Obviously, Oracle is not alone in hyping vaporware, particularly when it comes to the cloud. That someone inside a tech giant saw fit to go public with what appeared to be loyal dissent is highly unusual, but it underscores the cost of getting too far ahead of reality for both vendors who indulge in it and their customers.

Copyright © 2015 IDG Communications, Inc.

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