Oracle’s cloud business is growing quickly. The Silicon Valley firm’s cloud revenue is already above a $2.3 billion run rate and it sold $426 million worth of business in software as a service and platform as a service last quarter, a 200% increase over the same quarter last year. Oracle is having a dream run in its cloud business in India too where it has acquired several hundred cloud customers in recent months, all using the Oracle Cloud Platform, as its offerings are called. Last week, it announced new additions to its cloud portfolio, “a comprehensive, integrated suite of services that make it easier for developers, IT professionals, business users and analysts to build, extend and integrate cloud offerings,” as Mitesh Agarwal, CTO & vice-president, Sales Consulting, Oracle India, puts it. “This new Oracle Cloud Platform will help us become the preferred provider of cloud solutions for Indian businesses,” he tells Sudhir Chowdhary in a recent interaction. Excerpts
Platform as a service (PaaS) is still confusing to the average IT leader. Many enterprise IT leaders really have no clue where PaaS fits in…
What we are saying with platform as a service (PaaS) is that if a company today wants to develop an application and use the most modern of tools without worrying whether or not it would be compatible with a mobile device or some other technology, or whether it will have analytics compliance—can go ahead and use the Oracle platform as a service and consume it as though it’s just a web browser. In simple language, companies don’t have to start developing functionality. For example, if for device A you just developed it using a standard web browser because the cloud interface for you is a common web browser whether its Chrome or Fire Fox whatever—you only require an Internet connection and a web browser. The web browser could be on your mobile or on your desktop/computer screen. That is how easy this has become to develop, test and launch an application.
Now start thinking of the implication for this for some of the largest service providers in India. Today if you go and bid for a project you would have to take the cost of all of this, secondly you are telling the customer that it’s going to take 18 months to launch. Whatever service that they want to launch two things happen: straight away your cost goes down significantly and time to market went down significantly which meant that you were more competitive outside. You could provide more latest and innovative services and you never had to invest in what you call low value add items because none of these service companies invented any of the pieces of technology that they were developing or deploying on.
So at a very common level is the value proposition of PaaS and if you ask me whether there is opportunity for us. Yes there is. Not only us but for anyone who is in this space is the biggest—its bigger than software as a service and infrastructure as a service because you will start having cost savings.
Gartner predicts that PaaS market is expected to reach $1.8 billion in 2015 and $2.9 billion in revenue worldwide by 2016. What is driving this growth?
Two things are driving this growth. The first thing is suddenly companies are finding that competition is coming from completely unexpected angles. This local disruption is going to compel companies to innovate faster and make sure that they are not dependent on a particular vendor. A lot of times we have seen businesses come to us and tell us that look I am not able to do this because my vendor has not supported, I am not able to do this because this piece of software is outdated—a new version was just released.
The second is innovation. Something as fundamental as innovation is driving this growth. Every company has their innovation agenda now. Innovation has to be at a business level and has to be the way I treat my employees.
We hear about attrition in India right so why is this attrition happening because somebody got a hike, its happening because the need for the millennial today is very different, if you are not going to allow me to express myself on a social forum and you would have blocked my Internet access to one of the social forums then today’s millennials won’t take it lightly. If HR systems don’t understand this what is going to happen is companies will start seeing attrition.
Companies are using PaaS to start developing these interfaces that they have in their existing core HR system—nobody is asking them to change. All we are saying is keep it as it is and start developing extensions, start developing a social extension, Big Data extension, analytics extension that is fueling huge growth on PaaS.
How will the new products strengthen Oracle’s cloud play?
It has strengthened us in a few areas. I will mention top two or three areas. First thing it will do is it makes Oracle a complete cloud provider. It is important to explain why I keep emphasising on complete—today you can provide all services and therefore are simplifying customer’s lives even more. You can provide them with business service, you can provide them with PaaS, and you can provide them with IaaS. So they do not need to go to five different vendors to decide how to integrate all this. That is the biggest advantage with this launch.
The second, the fundamental question that customers have asked us for a number of years—OK, cloud is great, but if I want to come back to on premise for whatever reason (new company acquisition or business diversification or business integration etc), how do I do that? No cloud provider in the world can answer that question. They will simply tell you sir, why do you want to come back?
No, what if I want to come back? It could be regulation, it could be anything. Today we do allow them to come back and go back again. So you can keep doing this integration between on premise datacentre and the remote datacentre. The third thing that we have solved is zero proprietary solution. Everything is open standard based, so whatever you used to buy from us on premise by license, you can buy on cloud. So there is no differentiation between these two for us as far as we are concerned. That is the only part where we will say that there is no differentiation. Everywhere else we will say there is a lot of differentiation. Whatever we have developed is actually keeping the customer’s interest in mind as opposed to keeping Oracle’s interest in mind.
What is your go-to market strategy to increase Oracle’s cloud footprint in India?
We are going to go after all the major industries and the biggest place that opens up for us is the small and medium business. The biggest space that opens up is the consumers who in the past would not avail of Oracle technologies because either it was unaffordable or they had all of these complexities I spoke about. So that is a huge market space for us. Digital India, think about it, they can go ahead and start consuming it and launch these services much faster for the citizens.
How are you going to beat competition from players such as Microsoft, IBM, Amazon, Google who have also made significant progress in cloud infrastructure market?
I think you have asked the question very nicely because you ended with the statement on cloud infrastructure market. So yes they are playing in the cloud infrastructure market but we are already way ahead of them or any of these players in the rest of the market.
We categorise cloud under SaaS, PaaS and IaaS. In SaaS, we are the world’s number two; in PaaS I don’t think anyone can beat us considering our current install base; IaaS as I said, we won’t be differentiated in this market. You want to come and buy some CPU and memory from us, are you going to see value from us? Not really. We don’t want to be in that space in which we just go ahead and keep undercutting someone.
If you want to buy performance from us, if you want to get the fastest performance hardware to deploy a piece of software or application, that’s where we want to play. So really if you look at us our strategy is completely different from what others in the market have. They don’t have a complete cloud offering, they only play in some pockets so that itself is differentiated.
Now therefore yes they are strong there, they continue to be strong there but they have no way of playing in the rest of the market space and that’s why the number that IDC projects ($17 billion) is a huge market space in two years. And we believe that we are going to get a lion’s share in the market.
