In 2016, Larry Ellison called the race. "Amazon’s lead is over," Oracle’s CTO said, while unveiling the company’s plans to challenge AWS in the Infrastructure as a Service space.
But for Oracle, IaaS is not its strong suit. Late to the market, Oracle faced an uphill battle, competing with dominant vendors with immense data center capacity already established.
While the company can be considered one of the major cloud providers, "it remains a long way behind the leaders," said John Dinsdale, chief analyst and managing director at Synergy Research Group, in an email to CIO Dive.
Though it has worked to rapidly grow its IaaS offerings, Oracle's primary strength lies in its Software as a Service products. The IaaS market, however, is practically impenetrable for a latecomer like Oracle.
In the IaaS and PaaS space, which focuses on replacing hardware and IT assets with remote infrastructure on a usage-based model, Oracle would have to "dramatically increase its capex as it is a long way behind the leaders," said Dinsdale. "And this market is all about scale."
While the IaaS competition is practically closed, the cloud is still wide open when it's broken into its "constituent parts," said Andrew White, VP and distinguished analyst of data and analytics at Gartner, in an interview with CIO Dive. "Infrastructure is not so exciting; it's pretty boring. Oracle is doing the necessary work to keep sufficient capability there for its own use, and customers will pay them for it."
Oracle is still vying to become a cloud leader in its own right, reshaping customer perceptions along the way.
While its technology stack matures, the company has to convince its customer base and CIOs across sectors to adopt its cloud products. For now, Oracle is looking toward the marketability of autonomous features as the answer.
Keeping it SaaS-y
While many are quick to think the cloud market equates to infrastructure, the reality is far more nuanced. Certainly, IaaS is a major part of the cloud, dominated by Amazon and Microsoft.
"But that particular part of the conversation is really only relevant to the CIO and only is focused on cost savings and cost optimization," said White. "It saves pennies."
The cloud, however, will eventually represent discussions CEOs and other business leaders, whether in marketing or sales, have about how to implement and build applications for the business, according to White.
Oracle is already well positioned in the space, offering a broad set of multi-tenant applications designed for the cloud.
The company is the fourth largest enterprise SaaS vendor, a particularly "sweet spot" for Oracle, according to Dinsdale. Though Microsoft remains dominant in the space, Oracle has an opportunity to increase its market share.
Investors, too, are responsive to Oracle's ERP success. "Oracle's success in the cloud application market seems more tangible to investors," according to Barclays analyst Raimo Lenschow, in a note to investors last week. "Besides Workday there is no other competitive cloud ERP offering, and customer adoption of Oracle solutions seems healthy."
To continue to thrive, Oracle has to maintain its standing in both the ERP segment and in the database, at the bottom of the stack where customers build applications, analysis and reports, among other things.
One of the reasons Oracle is pushing its autonomous capabilities is to help convince customers of the benefits of the cloud. With more robust offerings, customers can realize the same Oracle capabilities they're used to on-prem but in a cloud-based environment, which can help cut down on service costs and allow for easier tuning, patching and database maintenance.
Most Oracle ERP customers are "new logos," according to Lenschow, and the company's leadership said more than 20,000 Oracle ERP customers are still on-prem and could eventually convert to cloud-based capabilities.
By using autonomy to help reduce human labor and allow Oracle software to take over rote database tasks, the company may convince more customers of the benefits of cloud-based offerings.
Oracle is "extending the idea of automating as much of the services as they possibly can under the cute umbrella of autonomy, which is a nice word," said White. But Oracle's capabilities aren't just boastful, and it needs to maintain its market share in both the ERP and the database segment to survive.
"It cannot afford to lose because it would be impossible to recover," White said.