If you haven't noticed, I am positive on Oracle's Cloud Infrastructure (OCI) and have written several articles on the topic. That was not always the case. I was very critical of Oracle Cloud V1.0.
Oracle’s Generation 2 Cloud is an entirely new infrastructure developed from the ground up with no resemblance to its predecessor. The design goals were better performance, pricing, and—above all else—security. Oracle Cloud V2 is a significant improvement, more competitive, and the reason I have had a change of heart.
A year ago, in a January 2021 article, I wrote, "In my view, Oracle has come a long way since Cloud V1.0, and the product is better than the market perception right now. You heard it here first. Over the next 12 to 18 months, the story will keep getting told, and you will see more key customers choosing Oracle”.
A year on, it is high time to take stock of that prediction and see where OCI stands in the marketplace.
OCI by the numbers
Oracle reported stellar Q2 earnings due to continued and increased global demand for the cloud business.
The increase in OCI consumption revenue was 86% in constant currency, with total cloud customer revenue up 45%. Those are impressive numbers compared to the largest IaaS and PaaS companies. I can only imagine the disruptive transition to a consumption-based business. Customers only pay for cloud services when consumed. A simple pay-as-you-go concept, but it changes the entire sales cycle.
And, customer momentum appears to be broad-based. Enterprise and cloud native customers are running mission-critical workloads on OCI. Oracle's sample of those customers is Deutsche Bank, Pernod Ricard, Bayer, Aviva, Santander Bank, Telefonica Brasil, Quest Diagnostics, Bechtel, Carrefour, Liberty Global, Ingersoll Rand, and the National Stock Exchange of India.
Oracle is also making strides with cloud-native companies like SoundHound, and independent software vendors such as Telestream, Thomson Reuters, Kaltura, Crunch Mediaworks, Ericom Software, Fastly, and SCC Soft Computer.
Oracle also continues to expand its sports partnerships with teams like the Golden State Warriorsand Red Bull Racing to showcase how those organizations are using Oracle Cloud to gain a competitive advantage on and off the court and track. It’s why Oracle partners not only with individual teams but, in certain cases, entire leagues—such as Premier League and SailGP.
The industry is taking notice too. Oracle’s score in a recent Gartner Scorecard report jumped to 78% ahead of Google.
Why the continued momentum? Below I dig into the reasons why I think OCI is gaining momentum.
Equivalent performance and latency in the cloud
At the very least, you expect comparable I/O performance and latency. OCI features isolated network virtualization, essentially moving network and IO virtualization out of the server stack to network. The result is dedicated hosts with no hypervisor overhead, interference from other servers, or shared resources with a complete software-defined Layer 3 network topology. Off-box network virtualization enables bare-metal, VM's, containers, and databases to run on the same set of API’s with the cloud-native security and governance of a Layer 3 virtual network.
OCI addresses latency concerns with a flat non-blocking network based on Clos network topology(named after Charles Clos). Predictable data rates reduce the number of routers and switches that data has to pass through.
Easing migration of enterprise workloads
Migrating enterprise workloads to the cloud is non-trivial. Oracle has the Cloud Lift program that offers technical expertise and white-glove services to help customers move to the cloud at no additional cost. More than 1,000 global companies have already used the program.
Financial incentives are possible with Oracle Support Rewards, which enables new OCI customers to reduce software license costs, even down to zero.
Oracle Support Rewards is a program where you earn $0.25 to $0.33 in rewards for every $1 you spend on OCI. Rewards are applied to reduce your technical software license support bill. The $0.33 bonus is applicable if you are an Unlimited License Agreement (ULA) customer.
If you use Oracle's on-premises software, you become eligible for Oracle Support Rewards when you place a Universal Credit order and begin consuming OCI.
Redefines the Telco cloud market
Oracle continues to introduce new solutions and recently announced Oracle Cloud for Telcos, a comprehensive set of cloud solutions built on OCI, that provides telcos with an exceptional customer experience and helps drive new opportunities for growth. The solution takes advantage of Oracle’s decades of experience working with global telcos to support their critical data systems, applications, and network operations. Oracle has already started with key partners like TIM (Telecom Italia), Bharti Airtel, and Telefonica Espana.
Strong support for regions and hybrid clouds
I believe the customer experience is better when the cloud resources are closer. It is that simple. Additionally, business continuity and compliance requirements dictate that applications run across geographically separated locations—often without having sensitive data leave the country. Oracle has invested in significant Global cloud region expansion across 30 commercial and seven government cloud regions in 14 countries. Oracle opened seven new cloud regions alone in the last three months - Israel, Marseille, Abu Dhabi, Milan, Stockholm, Singapore and Johannesburg.
Customers can run the complete portfolio of public cloud services and Oracle Fusion SaaSapplications on-premises with Dedicated Region and Exadata Cloud@Customer. At the edge, Roving Edge Infrastructure with ruggedized devices enables cloud computing at the edge of networks and disconnected locations.
Notably, Oracle also sees strong hybrid adoption from customers like Deutsche Bank, Volkswagen, and Marsh McLennan.
The Oracle and Microsoft Azure interconnect delivers a mostly seamless and private interoperability for the many customers running multi-cloud environments. Oracle now has 10 interconnects around the world with the recent addition of South Korea and Phoenix.
Oracle joined forces with Cloudflare in the Bandwidth Alliance to eliminate unnecessary data transfer fees and ease the path to multi-cloud.
Continued innovation on the platform
OCI introduced hundreds of services and features over the past year. Here are just a few that caught my attention.
Oracle Cloud for Telcos is a comprehensive set of cloud solutions built on OCI. The OCI platform runs Oracle Fusion Cloud Applications Suite, Oracle Communications core network and B/OSS solutions, and more than 60 other industry application suites, as well as third-party and custom applications and workloads. It enables telcos to build new applications or modernize existing workloads with 80 plus cloud services, including data management, developer services, analytics, and artificial intelligence.
Oracle Cloud for Telcos enables any telecommunications provider to become more agile, reduce capital expenditures and operating costs, and establish a flexible foundation for innovation. Telcos can:
- Modernize their Enterprise IT and OSS/BSS in the cloud, improving performance by more than 50 percent and reducing costs by as much as 60 percent
- Gain insights across all Telco IT, network, and edge data for greater efficiency and new revenue
- Run their core and edge networks as cloud-native services, reducing CAPEX and increasing agility
- Run their IT, network, and new services on a distributed cloud architecture, combining OCI's innovative hybrid cloud technologies with the Telco's broad customer reach
- Generate net new revenue streams by creating and/or serving next generation applications
Applying artificial intelligence (AI) to applications without requiring data science expertise is the goal of introducing a new set of AI services for OCI. Prebuilt text recognition and anomaly detection models are now available to all OCI customers, once again at attractive prices. High query performance at scale—including provisioning, data loading, query execution, and failure handling is now possible with a new MySQL Database service with an in-memory query acceleration engine called Heatwave. For the first time, MySQL customers have a unified platform for Online Transaction Processing (OLTP) and Online Analytics Processing (OLAP) to run mixed workloads or real-time analytics.
Oracle introduced a new service called Oracle Autonomous JSON Database that automates database provisioning, securing, scaling, and tuning to reduce the risk and cost of human error. Oracle Autonomous Database scored the highest in all four use cases in the 2020 Gartner Critical Capabilities for Cloud Database Management Systems for Operational Use Cases.
I would be amiss not to mention security innovations in the public cloud. Oracle's philosophy has always been to build security into the core product. Security features such as encryption are default enabled. There is a list of security features to numerous to list here that come free with the product.
Oracle also provides additional capabilities like Security Zones so administrators can automatically set up and enforce security policies across cloud compartments within OCI.
Finally, in August 2021, Oracle also released the Oracle Cloud Infrastructure (OCI) Cloud Adoption Framework to better support customers in their cloud adoption journey. The framework was created as a resource rich center serving anyone who wants to further their cloud knowledge—from a tech operator to a CIO—and as an opportunity to learn more about OCI’s unique capabilities. Recently, Oracle enhanced delivering the framework by creating the OCI Cloud Adoption Framework technical site, which hosts relevant technical content, assets, and tools to better enable organizations shifting to the cloud. The site includes templates for cloud business strategy documents, reference architectures for specific scenarios, landing zone scripts to accelerate cloud deployments, and showcases the latest OCI Governance Model.
I should probably quit my predictions while I am ahead, but clearly, Oracle is making many of the right moves in the cloud space, and customers are voting with dollars.
One area I will be closely looking at OCI in 2022 is its integration of Arm-based instances to lower its customers cost of compute. Cloud companies like AWS have fully embraced the technology and Oracle has to watch this carefully. I will also be looking at composable memory architectures in a future version of OCI where customers can add more memory on-demand without having to add a compute instance.
It will be interesting to check back in at the end of 2022 to review the OCI scorecard.
Note: Moor Insights & Strategy writers and editors may have contributed to this article.