Larry Ellison’s cloud computing conversion explained

Oracle OpenWorld this week featured what seemed like a flip-flop from one of the industry’s most outspoken leaders. What it means for IaaS and the choices facing IT departments in 2013

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It takes someone as arrogant — er, confident — as Oracle chairman Larry Ellison to answer his own question, which in this case was, “What the hell is cloud computing?”

Since its opening on Sunday, Oracle OpenWorld 2012 seems primarily organized as an about-face to Ellison’s previous disparaging statements about cloud computing. What he once derided as marketing hype and a passing fad has now morphed into what could be an important product and service offering that ties in key pieces of the company’s expansive mix of enterprise software and hardware acquired through acquisitions of PeopleSoft, Sun Microsystems and more. Instead of the Microsoft-bashing that used to be his trademark, Ellison described Amazon Web Services (AWS) as Oracle’s biggest competitor. What’s with all the flip-flopping?

It’s easier to understand Ellison’s new positioning on cloud computing if you look at the broader changes in the data center over the last five or six years. The first time I attended Oracle OpenWorld — which must have been about seven or eight years ago — the company was betting heavily on the idea of grid computing. Oracle had started in this space by offering what it called Real Application Clusters, where workloads could be split among a couple of servers. Oracle reworked its flagship database around the idea of creating ever more expansive clusters of database servers with Oracle 10g, and Ellison touted a new era that could create unprecedented levels of scaleability. And it probably would have, if virtualization hadn’t come along. Although load balancing remains an important approach to managing IT resources, virtualization and eventually cloud computing opened up a much larger market opportunity, where almost every major vendor can become a kind of service provider. A company of Oracle’s size and market penetration cannot afford to miss out on such opportunities. After buying up one company after another, Oracle is probably living off a lot of maintenance revenue, and the pay-as-you-go nature of cloud computing could offer a similarly steady flow of cash.

What Ellison’s keynote at OpenWorld this week really does, however, is validate the concept of infrastructure-as-a-service (IaaS), which may be the dominant cloud trend in the latter part of 2012 and 2013. In fact, the term IaaS is probably the best response to Ellison’s original question. He wasn’t necessarily wrong (or the first) to suggest “the cloud” is poorly defined. What really matters, in the end, is what companies are willing to move into a virtualized or off-premise environment. For many CIOs and IT departments, it started with software. Switching from Outlook/Exchange to Gmail or Google Apps is a lot less scary than touching the network or storage systems. Now it’s all about figuring out what server workloads make sense, especially since more local entrants have sprung up here in Canada.

The real contest is not going to be between Oracle and AWS, or any two particular providers. It’s going to be between workloads that run more or less smoothly and don’t need a lot of care and attention from IT departments, or the workloads that frequently struggle to meet business needs and offer opportunities for improved performance, cost savings, or preferably both. There will likely be less talk of “cloud” and more talk of IaaS, which is as it should be. If nothing else, it should become easier for IT managers to make the business case for such projects. If Larry Ellison can be convinced, any CEO can.

Learn more about the possibilities by downloading A Look Into The CLoud: Trends, Adoption and the Importance of the Network, a free white paper.


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