Larry Ellison - Openworld 2015 keynote

Oracle Corp. executive chairman Larry Ellison opened his company’s major OpenWorld conference this week in San Francisco by talking about the cloud, and throwing some shade on long-time competitors IBM and SAP.

The future is about cloud computing, Ellison proclaimed, a familiar sentiment at just about every tech software conference for the past three years, and Oracle’s customers are jumping on the bandwagon. When Oracle is looking to win those new cloud contracts though, its traditional competition isn’t at the table, he claims.

“Our two biggest competitors that we watched most closely over the last two decades, IBM and SAP, and we no longer pay attention to either one of them. It is a shock,” he told the audience.

Ellison went on to describe both IBM and SAP as “nowhere in the cloud” and now Oracle is competing with companies like Salesforce.com and Workday. His presentation included numbers comparing how many software as a service (SaaS) clients Oracle has for its ERP, HCM, and CRM products.

So how much of Ellison’s keynote opening speech was cold hard truth and how much of it was conjecture for the sake of jabbing his competitors? A look at both SAP’s and IBM’s shifting strategy in the past couple of years and growing cloud-based service offerings make it seem unlikely that Oracle never competes with these firms for a cloud contract. Or at the very least, Oracle may be used in enterprises alongside other cloud services from its apparently deflated competitors.

SAP started talking about its cloud strategy, providing SaaS, in earnest at its Sapphire Now conference in 2013. That was following some major acquisitions of public cloud companies including business-supplier software Ariba Inc. and HCM software SuccessFactors, worth $4.3 billion and $3.4 billion respectively.

Leagh Turner, chief operating officer, SAP Canada doesn’t hesitate in disagreeing with Ellison’s view of the market.

“Not only would I consider us a competitor, I’d consider us a formidable competitor with high growth,” she says. “Cloud growth for SAP has been growing in triple digits, that’s concept number one.”

SuccessFactors can be described as a market leader in terms of the HCM SaaS space, with both Gartner and Forrester naming it as such. Gartner places it in the same “leaders quadrant” as it does Oracle for talent management suite. Forrester’s Wave report on talent acquisition vendors for Q3 2015 also describes SuccessFactors and Oracle’s PeopleSoft offering as competitive products.

Providing some numbers on the matter, Turner says that SAP saw more than 100 per cent new cloud growth in its third quarter this year. Ariba’s business grew by 159 per cent and SuccessFactors is also growing in the triple digits.

IBM has been no cloud slouch either. It acquired IaaS vendor SoftLayer in 2013 and has been investing resources in it ever since to scale it up to the needs of its enterprise customers. In Canada, IBM has opened SoftLayer datacentres in Toronto and in Quebec within the past 12 months. It is touting a $1.2 billion expansion plan for SoftLayer worldwide, and has more than 1,200 customers here in Canada alone.

IBM declined an interview with IT World Canada for this piece, but did provide the following statement:

“For 3Q 2015, IBM’s cloud revenue was up over 65 per cent year to date. Total cloud revenue grew to $9.4b for the trailing twelve months putting IBM at the forefront of the cloud market. For cloud delivered as a service, annual run rate of $4.5 billion vs. $3.1 billion in third-quarter 2014.”

Gartner does name IBM/SoftLayer on its magic quadrant for IaaS vendors, in the “visionary” sector. It recommends it to businesses for e-business hosting, general business applications, batch computing, regulatory compliance, and circumstances requiring API control.

On the SaaS front, IBM has an active program to help its enterprise clients move from on-premises deployments to a SaaS model without any extra payments. Users of products ranging from Cognos BI, IBM’s WebSphere suite, DB2, SPSS, and Intelligent Operations are among those that can transition to the cloud today. Its talent acquisition software also appears on the same analyst reports as SAP and Oracle.

SAP's SuccessFactors is ranked similarly to Oracle's PeopleSoft in Gartner's Magic Quadrant.
SAP’s SuccessFactors is ranked similarly to Oracle’s PeopleSoft in Gartner’s Magic Quadrant.

IBM has also been making efforts to champion its Bluemix service, which resides in the platform-as-a-service (PaaS) category. IBM claims that it’s seeing growing popularity among developers and was reported by developers to be the most-used PaaS in April, in a a survey conducted by the Enterprise Strategy Group.

Overall, IBM said in May its total cloud revenue for the 12-month period was $7.7 billion and that it grew more than 60 per cent in Q1 of 2015.

So why would Ellison describe IBM and SAP as “nowhere in the cloud?”

Any vendor that delivers enterprise software is in the process of helping its customers undergo a big transition, Turner says. Ellison is likely looking to paint the landscape as one that includes winners and losers.

“It calls into question who will make the journey,” she says.

But SAP isn’t fixated on pushing customers to the cloud, no matter what, Turner adds. SAP’s mission is to help its customers run more simply, focusing on digitization and agility. Often that will include a recommendation to use cloud software, but that’s not where the conversation starts.

 



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