Oracle’s “cloudy” future?

Ben Thompson wrote an interesting take on Oracle’s cloud strategy that was promoted heavily during Oracle OpenWorld 16 last week. While I generally agree with his thinking and thoughtful analysis, I think he’s missing a cycle that I’ve seen a few times since the 1980’s. It usually goes like this:

Step 1: New technology emerges that has disruptive qualities
Step 2: New tools and infrastructure
Step 3: Enterprise applications

I’ve seen it with client-server (networked PCs), browser-based applications (web) and we’re probably in the middle of it right now — or late stage — with cloud.

In the beginning of the cycle, everyone wants to build their own custom solutions because new technology delivers on value that the old way of doing things cannot achieve. IT departments staff up as they have to custom build or assemble a bunch of different technologies. Tool vendors emerge to make it easier to leverage the new technology.

Then everyone ends up with custom apps that require a legion of IT people to support. That’s when the enterprise applications providers emerge and take over.

Example of client-server:

Step 1: Networked Windows PCs
Step 2: SQL databases (Sybase, Oracle, Informix, etc.), Network vendors (Novell) and Windows-based application environments (PowerSoft PowerBuilder, Gupta SQL Windows, Microsoft Visual Basic)
Step 3: PeopleSoft, SAP, Oracle, JDE, Lawson, etc.

There’s a legion of consulting firms that appeared — and disappeared — in this cycle as well. I worked for one of them: BSG Alliance/IT in Houston.

The emergence of the browser caused the enterprise space to go through the same cycle, though the “winners” did not achieve scale to win (e.g., Ariba, which eventually was swallowed up by SAP). Or you could argue that the browser is the early part of the current cycle that we’re in today, and that there’s a straight line from the Netscape IPO to Workday.

Ben’s analysis focuses on the IT infrastructure side of Oracle and doesn’t spend enough time on the applications side. To me, it looks like Oracle is trying to surf the cloud wave to position itself as relevant in the SaaS applications world when they finally take over everything in the enteprise.

Now whether or not they will succeed is a different question. However, history tells me that non-tech companies will realize that being a software company is hard (and not core to their business) and will end up migrating towards packaged applications again.

That’s what Oracle and SAP appear to be counting on.