Oracle is about to launch its Cloud Computing strategy with a worldwide roadshow. What does this mean for Oracle customers and partners?

First of all, Oracle remains a technology platform provider and will not jump into the hosting business themselves for PaaS. Only for the space of hosted applications, will they remain in the OnDemand hosting business. Let’s have a look at the SaaS and PaaS segments separately:

Oracle has built into its Oracle Fusion Middleware 11g stack a couple of important capabilities that are needed in a PaaS deployment. The foremost important one is real multi-tenancy. This means you can achieve multiple independent platform tenants, not only by the virtualized deployment of multiple installations, but also within a single instance. This brings significant additional flexibility and reduces further operations efforts. Some of the tools required for a real PaaS functionality will be made available over the next months under the 11g main release.

In contrast to Microsoft, Oracle will not host this PaaS stack on their own (to Forrester’s current knowledge). Oracle’s focus is to enable partners for cloud business models with their technology stack. This can be Amazon’s EC2 images, or eventually soon a multi-tenant Oracle installation at a hosting provider like Rackspace.

The immediate reaction from most Oracle partners (hosting providers and system integrators) I talked to was very positive. In contrast to Microsoft, Oracle enables them for future cloud business models instead of competing with them. Many of them are really disappointed about the current partnership relationship with Microsoft in this respect.

In additional to the enablement of partners in the public cloud, Oracle brings the same technology stack into private data centers. This is even the focus of the initial message to end users in the current roadshow. Oracle talks about the “private PaaS” which means the further evolution of their grid computing story. Now, complemented with typical private cloud tools and capabilities, the private PaaS looks similar to IBM’s private cloud approach. But again the multi tenant capabilities are a major differentiator to IBM, as the Websphere stack can only achieve this with a virtualization approach.

OraCloud The end-customer reaction to this was twofold. Some customers embraced the potential immediately and were very pleased about the final commitment of Oracle to the cloud business. The other group of customers were struggling to understand the disruptive difference from already existing Oracle scale-out mechanisms like grid and RAC. Some characteristics of private clouds are actually not primarily technology issues but are describing a new interaction model between the IT side and the business side on one enterprise. Pay-per use, self-service, high level of standardization, charge-back and immediate availability of an elastic service delivery can turn a private grid into a private cloud. Oracle needs to release the already planned tools within the 11g stack supporting these kinds of PaaS functionality to also convince the skeptics.

Long term, customers fear lock-in situations the most. While, for example, the platform, locks the customer both into a technology and into a specific deployment model, the Oracle approach will allow customers to move applications between the cloud and their premises without many changes.

The SaaS application business with Siebel On Demand and E-Business Suite On Demand remains unchanged. However, Forrester expects that the upcoming next generation of Oracle’s ERP application (Fusion Applications) which are based on Fusion Middleware will support the multi tenancy of the platform. This will provide unknown efficiency to hosting models of the Fusion Application. As of today, we do not know if Oracle will mainly enable outsourcing companies or will compete with self-hosted Fusion Applications to their channel.