Oracle makes its pitch for the enterprise cloud. Should CIOs listen?

In a cloud market dominated by three vendors, once cloud-denier Oracle is making a push for enterprise share gains, announcing expanded offerings and customer wins across the globe, including Japan, Mexico, and the Middle East.  

But with Amazon Web Services (31%), Microsoft Azure (24%), and Google Cloud Platform (11%) accounting for two thirds of the worldwide market, according to Synergy Research Group, Oracle Cloud Infrastructure (OCI) remains distantly behind the behemoths, leaving many to question whether Oracle’s cloud gains are enough to make it a contender.

Some industry experts and IT leaders believe that, as Oracle’s cloud push continues to increase, the longtime also-ran may finally be worthy of wider enterprise IT attention.

“Oracle Cloud Infrastructure is now capable of hosting a full range of traditional and modern IT workloads, and for many enterprise customers, Oracle is a proven vendor,” says David Wright, vice president of research for cloud infrastructure strategies at research firm Gartner.

“Oracle has also done more than many other providers to offer cross-integrations with other cloud environments,” Wright says. “These qualities are making it easier for CIOs to adopt OCI as a second or third provider in their environment.”

In December 2023, Gartner named Oracle a leader in its Magic Quadrant for Strategic Cloud Platform Services, joining the “big three.” The research firm defines strategic cloud platform services as standardized, automated, public cloud offerings integrating infrastructure services, platform services and transformation services. Infrastructure and platform services might be hosted in providers’ infrastructures or customers’ data centers, but are owned by the service provider.

In the report, Gartner says Oracle differentiates itself from other providers through its enhanced support for Oracle Applications, aggressive IaaS pricing, multicloud services, and variety of distributed and sovereign cloud options.

“Traditionally, OCI has leveraged Oracle’s leadership in the database and ERP markets to grow its market share through existing Oracle customers,” the report notes. “However, in the last two years, OCI has begun to attract more new customers of its own.”

Even so, many clients tell Gartner they are not ready to trust Oracle as their primary provider, Wright says, due to past experiences with Oracle’s aggressive sales practices.

“It’s important to note that Oracle is already very successful versus the other hyperscalers in selling enterprise SaaS applications,” Wright says. “In the world of hyperscale cloud computing, data is king and the provider that lands and keeps a customers’ most critical business data has an advantage in selling its other services.”

What’s holding Oracle back from assuming a larger role in IaaS and PaaS “is really Oracle itself: It must demonstrate to a suspicious market that it can be trusted to act as a strategic partner, and not merely as another self-interested IT vendor,” Wright says.

Oracle’s cloud pitch

Kevin Thompson, CEO at Tricentis, a provider of testing and engineering products, sees Oracle as a solid contender in the enterprise cloud space, thanks to its key differentiation from more established rivals.

“What sets Oracle apart from any other vendor is its offerings across PaaS, IaaS, and SaaS,” Thompson says. “The platform provides support for custom development, cloud infrastructure for hosting, as well as unique cloud business applications.”

Most CIOs are likely using at least one offering from Oracle from a cloud perspective, “or at least evaluating them in their relevant procurement processes,” Thompson claims.

Sean Spittle, lead software developer and managing partner at InspectNTrack, a provider of scanning devices, says Oracle deserves to be considered alongside AWS, Microsoft Azure, and Google Cloud as a major enterprise cloud platform, “especially for companies already invested in Oracle technology.”

“Their depth of experience in [critical] database management, enterprise Java ecosystems, and running SaaS at vast scale enables compelling hybrid cloud solutions,” Spittle says.

Oracle is helped by the fact that it has two offerings for enterprise applications, says Thompson. “Oracle Fusion is suited for large enterprises, while NetSuite is more of a commercial product,” he says. “This doesn’t stop companies from evaluating both, but gives Oracle the ability to segment customer requirements and enhancements based on their outlined persona.”

Oracle is strong “in traditional IaaS, including bare metal, and it has differentiated in [the] market through some well-designed distributed cloud offerings such as Oracle Dedicated Regions,” Gartner’s Wright says.

The vendor’s database expertise is also a major plus for the cloud.

“Oracle’s crown jewel, its Autonomous Database technology, represents a pinnacle of innovation in the cloud space,” says Paul Lee, co-founder and CEO of patent software company Patlytics.ai. “This technology, leveraging artificial intelligence, offers a self-managing, self-securing, and self-repairing database system that significantly reduces the operational overhead for businesses.”

The allure of such a system for enterprises cannot be overstated, Lee says. “It’s a compelling proposition for any organization looking to optimize its database management in the cloud,” he says. “This specialization has positioned Oracle as a leader in database-as-a-service, attracting enterprises that have complex database needs and are looking for high levels of automation and efficiency.”

Seeking the AI edge

Leo Leung, vice president of OCI and Oracle Technology at Oracle, believes the vendor’s long history in enterprise software “gives us the ability to be nimble and innovative.”

“We have unique knowledge of what exactly is required to give customers what they want, how they want it,” he says.

These days that includes generative AI.

According to Leung, Oracle has been particularly focused on providing generative AI capabilities via the cloud. “We carefully considered how an enterprise’s business processes could be enhanced with generative AI,” he says.

One example is with its recently introduced OCI Generative AI Agents, a managed service that combines large language models with an intelligent retrieval system to create contextually relevant answers by searching a knowledge base.

Another will be the ability for Oracle customers to scale their search capabilities and gain faster results through retrieval-augmented generation with AI vector search in Oracle Database 23c.

“Both these examples highlight how Oracle plans to bring AI to enterprise data and databases,” Leung says. “We believe that every customer worldwide should have access to the cloud and cloud capabilities like AI the way they need it. That’s not the case today.”

What’s holding Oracle back

Still, on the downside, while OCI is now competitive in PaaS, and has the benefit of the Oracle Autonomous Database, “its portfolio of cloud-native services still lags the leaders in some key areas” such as AI and machine learning (ML), Gartner’s Wright says.

And, according to Tricentis’ Thompson, Oracle’s biggest challenge may be its release cadence.

“Oracle requires all Fusion customers to upgrade every quarter,” he says. “This helps Oracle reduce the number of versions it needs to support, but puts more responsibility on the customer to test and deploy upgrades frequently. Customers will need to be sure they are prepared with the tools necessary to manage quality in light of the regular deployment cycles.”

OCI’s roadmap is rapidly incorporating next-generation capabilities such as serverless computing, containers, and machine learning through solid engineering, says InspectNTrack’s Spittle, but the vendor still lags behind in breadth and maturity of services compared with the big three.

“Partner integrations are fewer currently, management [user interfaces] less refined, and some newer DevOps functionality has rough edges,” Spittle says. But Oracle is gaining quickly through big R&D investments, he says.

“I predict Oracle becoming a top choice for enterprise workloads in finance, healthcare, retail, and other highly regulated sectors where Oracle databases dominate,” Spittle says. “Companies wanting cloud-optimized versions of existing Oracle deployments will flock to OCI.”

The company’s relative lateness to the cloud market has been a double-edged sword, according to Lee of Patlytics.ai.

“On one hand, it has allowed Oracle to learn from the shortcomings of early movers and to innovate its cloud offerings with a focus on enterprise needs,” he says. “On the other hand, this timing has resulted in a game of catch-up in terms of infrastructure and ecosystem development.”

While Oracle has been expanding its cloud footprint with new data centers and forming strategic partnerships, such as a collaboration with Microsoft that allows interoperability between Oracle Cloud and Azure, “it is still in the process of building a global infrastructure that can compete on the same scale as AWS, Azure, and Google Cloud,” Lee says.

Long-term aspirations

What are Oracle’s long-term goals for the cloud? The answer could have an impact on IT leaders looking to make the company’s services a key part of their strategies in the future.

Thompson, for one, believes that Oracle should compete well with its focus on the needs of its customers and its variety of offerings to help support unique use cases.

“Oracle is also often a major component in one of the other cloud providers’ strategies,” he says. For example, SAP platforms are frequently hosted on OCI, he says.

“I think Oracle’s ambitions in the cloud are as broad as Amazon, Microsoft or Google,” says Gartner’s Wright. “But unlike the others, Oracle is comfortable coexisting with other providers in the same account. In some ways, OCI is a means for Oracle of staying relevant to large customers at the infrastructure layer, while it focuses on adding business value through its enterprise applications.”

Oracle seems poised for two things, according to Thompson, one of which is to continue its strategy around healthcare and personal medical records within the cloud.

“The goal is to enable better communication between healthcare providers while giving individuals more control over their historical records,” he says. “The inherent risk is trust. Any misstep or error could bring questions to the overall data quality and see companies withdraw from Oracle Health solutions and services.”

Secondly, the company will continue to invest in SaaS. “Its 2016 acquisition of NetSuite has been extremely beneficial, and the company also recently acquired Cerner, which supports both the healthcare and SaaS strategy,” Thompson says. “I think we’ll continue to see Oracle investing in SaaS applications and acquisitions as the margins are favorable, and this strategy fits the trend of companies looking to purchase applications as opposed to building in-house.”

The partnership with Microsoft is a testament to Oracle’s strategic approach to overcoming its challenges in the cloud market, according to Patlytics.ai’s Lee.

“By enabling interoperability between Oracle Cloud and Azure, Oracle has not only broadened its appeal to businesses that are entrenched in Microsoft’s ecosystem, but also underscored its commitment to flexibility and customer-centric solutions in the cloud,” Lee says. “This move, emblematic of Oracle’s broader strategy, showcases its willingness to forge partnerships that enhance its competitive stance and address areas where it seeks to strengthen its market position.”