Oracle Users Not Rushing To The Cloud

Hybrid Cloud: 7 Ways It's The Best Of Both Worlds

Oracle came out of the gate this week at its OpenWorld event with plenty of bold cloud moves amid increased scrutiny on its commitment and speed in that market. Indeed, Oracle has been competing with a new lineup of pure-play cloud companies, such as Salesforce.com and Workday on one side, even as it continues to compete with SAP and others on the on-premises side.

Meanwhile, many of Oracle's existing users are happy with the pace of change as the company evolves its offerings to a new era. They haven't been in any kind of hurry to move to the cloud.

"Initially when the cloud was talked about as a new endeavor from Oracle, our members were kind of shy with it," Melissa English told InformationWeek. She is the president of the Oracle Applications Users Group (OAUG) and serves as the global change management leader at Amway's parent company Alticor. "We are seeing now that members are having a better understanding of what cloud offers and how they can leverage it."

Even now, while some OAUG members are migrating some of their apps to the cloud, English said most users are going with a hybrid approach and keeping some functions on-premises.

Part of Oracle's appeal is its commitment to continuing on-premises applications for at least the next 10 years, English said.

The slow approach to the cloud may have been at least partially due to Oracle's own release schedule for making its full suite of applications available there, English said. Until now, on-premises has been the only option for some applications.

Another reason is that the investment organizations have already sunk into on-premises hardware and software. Hardware and software infrastructure is expensive, and organizations may be reluctant to abandon those capital expenditures just to move to the cloud.

"People put a large investment in on-premises applications," she said. "They need to build a business case for the cloud after they have put that investment in on-premises."

Why do OAUG members go to the cloud at all? English said that smaller organizations sometimes cannot justify the cost of on-premises applications, and the cloud is a great alternative. It's flexible and gives them a low cost-of-entry.

That's probably the factor that has driven some customers in search of enterprise apps in the cloud to companies such as Salesforce.com. But that's something Oracle has been working to improve.

"Oracle has made significant progress in customer adoption and customer success in the past couple of years, and appears to be gaining momentum," Paul Hamerman, Forrester Research vice president and principal analyst for business applications, told InformationWeek. "Oracle's focus has shifted away from traditional on-premises competitors like SAP and Infor, and now seems primarily intent on competing with pure-play cloud providers like Workday and Salesforce."

[Looking for more on Oracle OpenWorld? Read Larry Ellison: Oracle Sets Sights On Cloud Competitors.]

English said larger corporations that have been running their enterprise applications on-premises for a while tend to migrate to the cloud because of the flexibility that it offers. These big companies also recognize that the growing number of Millennials in the workforce prefer to work in a different way, and that is better served by cloud implementations.

OAUG's membership, made up of more than 300 companies and their employees internationally, has grown in recent years, but English is unsure how many new members are pure-play Oracle cloud application customers.

Gartner did not include Oracle in its most recent Magic Quadrant report for enterprise applications delivered in a platform-as-a-service (PaaS) model. The report was issued in March 2015, based on research performed in Sept. 2014. In the report, Gartner said Oracle had yet to enter the market with a full strategic investment. However, Oracle's cloud announcements and investments have grown considerably in the last year.

Still, English said the preferred current consumption model for OAUG member organizations may be hybrid -- running the same applications on-premises and in the cloud.

"You may see some companies who have project accounting on-premises, but also project accounting in the cloud," she said. They may be entering cost and budget in the on-premises implementation and doing more of the analytics in the cloud, she said.

And that's the message that Oracle co-CEO Mark Hurd delivered in his keynote address on Monday. Oracle is the only company that can provide a hybrid solution, he said.