Ellison Defends Oracle's Cloud Strategy

Oracle CEO Larry Ellison thinks his company holds a strong position in cloud computing, despite criticism that it's losing ground to rivals such as Salesforce.com and SAP.

Comments from Ellison, made during the Oracle's third-quarter earnings call Tuesday counter a recent report from the Piper Jaffray financial analyst firm showing partner dissatisfaction with Oracle's cloud strategy. The report said 47 percent of partners have not seen Oracle’s cloud approach gaining traction with customers, while 38 percent said they see limited progress.

’Most partners are confused by the strategy thus far, and see only slow progress while thinking it will be ’a hard sell,’’ the report said.

Ellison, speaking on the earnings call with financial analysts, touted the strength of the company's competitive position in the cloud-computing arena. He highlighted the company's recently launched Fusion applications, which can run in the cloud or on premise, and new database and Java cloud services now available to customers.

The Oracle CEO said the services, which he referred to as "Oracle Secure Cloud," are targeted toward larger companies "who want the simplicity and convenience of cloud computing, but are unwilling to accept the security risks inherent in [the] multi-tenant, public Internet cloud."

"Salesforce.com doesn't offer this kind of security in their cloud," he said of the CRM cloud application competitor. "This is a key advantage for us going forward."

Ellison also said SAP doesn't offer the same kind of cloud applications needed by large companies that Oracle now does with its Fusion software. "It will take years for SAP to catch up," he said. "The growing popularity of cloud computing gives us a great opportunity to replace SAP as the No. 1 application company in the world."

Ellison did not mention the Piper Jaffray report and it wasn't clear whether he was specifically responding to it.

The report's findings were drawn from 45 Oracle partners. It said, in part, "While it’s still early for this (cloud) strategy, issues include 'mixed messages,' Oracle being 'late' with the strategy, a perception that Oracle is 'trailing in Cloud,' and this being a 'tough row to hoe' because there are 'so many competitors.'’

Negative comments from partner about Oracle included:

-- "It will be several cycles before Oracle users are ready to move to cloud computing due to the large amount of legacy hardware/software investments most firms have made."

-- "I believe most customers still do not understand Oracle's Cloud Computing strategy. Most customers associate Cloud Computing with a SaaS model. From an applications perspective, Oracle makes it clear that Siebel is available as SaaS. However most are not aware that other applications can be available in a SaaS solutions as well, albeit sometimes through business partners."

Other partners made positive comments, including:

-- "We are receiving enquiries from the customers from all the regions covered by us, and they are very eager to go with cloud based computing."

-- "There's some confusion out there now with the Fusion applications actually being available. I think customers are taking a little more time to make decisions on their best options. Oracle is on the right track here when it comes to cloud computing and needs to stay on the right path."

Next: Oracle's Foray Into The Cloud

Oracle has moved rapidly in recent months to increase activity in the cloud.

The company announced its intent February 9 to buy Taleo, a developer of cloud-based human resource management applications, for $1.9 billion.

The company also plans to offer through Oracle Public Cloud the RightNow customer service applications it bought for $1.5 billion in January.

In a keynote speech at the Oracle OpenWorld conference in San Francisco, he said the company’s Oracle Fusion Applications were available through the cloud.

He said Oracle’s Public Cloud service is based on industry standards, such as XML, Java and BPEL, making it possible to move applications on and off the service and to other services.

"You can take any existing Oracle database and move it to the cloud," Ellison said in the keynote. "Oh, and by the way, you can move it back if you want to. Or you can move it to the Amazon cloud, if you want. Everything is portable. Your data is portable."

He used the event to jab at Salesforce.com’s President and CEO Marc Benioff, saying that company’s cloud strategy was ’the ultimate vendor lock-in.’

SAP, to help it expand its lineup of cloud-based applications and bring more "cloud DNA" to the giant software company, completed its $3.4 billion purchase of SuccessFactors, a developer of on-demand human capital management applications.