Does Big Data Going Mainstream Present a Real Threat to Oracle?

Contrary to the expectations of some analysts, Oracle is not threatened by Big Data going mainstream. Oracle has a comprehensive cloud portfolio that consists of IaaS, PaaS, and SaaS platforms. This will help the company meet the needs of a diverse range of Big Data clients.

Apr 2, 2014 at 1:00PM

The battle to take big data mainstream is gaining momentum, with start-ups such as DataStax, Lotame, Hortonworks, Couchbase and Vertica ostensibly looking to upstage legacy providers such as Oracle (NYSE:ORCL) and SAP (NYSE:SAP).

Peter Goldmacher of Cowen & Company's analysts recently offered up his findings about big data going mainstream.  He says that cloud start-ups are spending heavily on self-promotion and the promotion of big data and in the process they have made people aware of the role that Big Data can play at the average organization, not just at large blue-chip companies. Mr. Goldmacher stressed that legacy providers Oracle and SAP face the biggest threat from these upstarts.

Oracle seems to be lagging behind
In a way, Mr. Goldmacher had a point, particularly in regard to Oracle, the market leader in ERP, or enterprise resource planning, solutions, and CRM, or customer relationship management, software. If you track the latest developments at the major enterprise cloud-computing providers, nearly all of the major players, with the exception of Oracle, seem to have made loud splashes recently. Here are some of the notable ones:

  • Salesforce.com unveiled a changing of the waters for its fresh cloud platform ExactTarget Marketing Cloud last December.
  • Amazon (NASDAQ:AMZN) underscored its pole position as the IaaS leader with its Amazon Web Services at its re:Invent event last November.
  • Microsoft elevated the leader of its cloud business Satya Nadella to chief executive in February this year.
  • SAP introduced its 3.0 mobile platform built on the HANA cloud platform at its TechEd conference last October.
  • IBM unveiled several cloud platforms early this year.

Therefore, it looks like Oracle is just swimming along on the cloud while its rivals move full steam ahead. However, that perception is false because the company is busy working quietly behind the scenes. Mr. Goldmacher's assertion that Oracle will have a hard time competing as big data increasingly becomes mainstream might be a bit extreme, and it is predicated on the assumption that Oracle's cloud offerings are not as robust, or as competitive, as those of its rivals. Big data and the cloud are almost synonymous, since the platform provides a convenient way to handle, manipulate, and store massive swathes of data.

Doing it the Oracle way vs. the AWS way
A deeper look into Oracle's cloud offerings reveals that the company has a well-developed and diverse cloud portfolio built on three distinct platforms: Iaas, or infrastructure-as-a-service, SaaS, or software-as-a-service, and PaaS, or platform-as-a-service.

Amazon's Amazon Web Services is considered the leading IaaS platform, and it is, perhaps, better-known than Oracle's IaaS platform.

However, Oracle's cloud approach seems to be quite different from that of AWS. AWS is 100% driven by its SLA, or service level agreement. It supplies the virtual infrastructure and hosts a wide range of technology services for its users, some of which it offers itself while others come from the marketplace. Users sign up for various services at specified service levels, after which they are left to use the platform all on their own.

The biggest problem with AWS is that it's essentially a digital service warehouse. Oracle has taken a different approach. The company's main goal is to help its customers with an easier transition into the platform. Cloud adoption by businesses and organizations is still very low at the moment. According to a January Gartner report on cloud adoption, only 2% of businesses have moved their ERP software to the cloud.

Cloud Adoption Plans by Companies

Percentage

Already Done So

2%

Within the Next 3 years

26%

Between 3-5 Years

19%

Between 5-10 Years

4%

More than 10 Years

2%

Unlikely to Happen in the Foreseeable Future

30%

Don't Know

17%

Source: Gartner, January 2014

While Oracle also plans to sell its IaaS services using the SLA method just like AWS does, it will go a step further and show its customers the ropes, and it will even operate customers' clouds for them. This will help demystify the whole mystique that surrounds the cloud, and, perhaps, help to accelerate the move into the cloud by businesses.

Oracle has, arguably, a more complete cloud portfolio than do most of its rivals: Amazon with AWS, Microsoft with Azure, or IBM with SmartCloud.

Let's now look at different Oracle cloud platforms that have proven successful.

1. Oracle cloud hits
Oracle's SaaS has a thoughtfully laid-out portfolio design. In the past, Oracle and its main rival SAP focused on developing 'suites.' Oracle has reconfigured its entire SaaS portfolio to reflect the logical groupings of various apps commonly used by enterprises. Oracle has financials, enterprise performance management, project management, procurement, and governance/risk/compliance, or GRC, applications in its ERP portfolio.

Unlike it had in the past, this portfolio does not include CRM, HCM, manufacturing, or SCM.

2. SaaS with PaaS
Oracle now works on the assumption that every SaaS implementation will require some form of customization. All of the Oracle home-grown SaaS apps now use the same Oracle Cloud PaaS. Customers can customize their apps using tools found in Oracle Cloud PaaS.

3. Oracle 12c and Database Cloud Service
Oracle offers Oracle Database 12c for both private and public clouds. The company plans to offer a RAC version soon. The company's Oracle Database Cloud Service helps developers align Oracle REST Services with two-tier browser-to-database apps. Some of the company's future offerings on this platform include Oracle-managed databases.

Foolish bottom line
Contrary to the assumptions of Mr. Goldmacher, Oracle is very well-placed to reap the benefits of enterprises moving their ERP and CRM software to the cloud. The company's well-developed cloud portfolio gives it an edge over its rivals, which mostly have narrower cloud offerings.

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Joseph Gacinga has no position in any stocks mentioned. The Motley Fool recommends Amazon.com and Salesforce.com. The Motley Fool owns shares of Amazon.com, International Business Machines, Microsoft, and Oracle.. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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