Oracle ultimately had to choose a cloud partner as customer demand for cloud consumption continues to rise. In fact, ESG captured a 10% year over year increase (29% to 39%) of companies that are taking a cloud first policy when it comes to new application deployments. These dynamics cranked up the pressure on the Oracle business as they seemed to try to hold on to legacy on-premises approaches with their customers. And why not….margins are excellent and it is a massive investment for Oracle to build out global data centers. Sure, Oracle has cloud offerings, but they appeared to be more like nice window dressing than what the likes of Microsoft Azure, AWS, and Google GCP are offering (and expanding) in the market.
Watching Oracle picking a strategic partner was turning out to be an obvious move that bent towards Microsoft Azure. AWS wants to annihilate anything red in the data center and Google GCP is hot to move its customers off of legacy footprint and onto cloud native services. This partnership was less about the technical nerdy aspects of deeply rooted Oracle propriety services and Microsoft’s twist towards Azure becoming the data center operating system. The partnership was likely lead by senior executive leadership teams that realized that both companies can create new growth trajectories in a market that is experiencing rapid change as it has been placing some of the IT vendor community back on its heels. Now was the time to strike.
Here is why. ESG research validates that:
- The two most mentioned difficult aspects of adopting public cloud are preparing for application migration and building the business use case (31%) and redesigning and moving applications to the cloud (29%).
- Hybrid cloud is off to the races as 76% of organizations ESG surveyed are evaluating, planning or have already begun initial implementations.
- The most important business objectives of hybrid cloud strategies come down to running application services on-premises while providing end-users with the same ability to provision resources from a public cloud provider.
- The most important hybrid cloud considerations are seamless compatibility with on-premises infrastructure (51%) and support for application development environments and tools (35%).
Microsoft and Oracle have the potential to combine efforts and meet customer requirements on all of the above ESG market research observations. Microsoft provides the cloud muscle while Oracle pulls in enterprise expertise. And perhaps most importantly, business can move forward without having to re-architect applications.
In the short term this relationship will be measured by customer reaction, which is important to observe given the pedigree of these two companies that IT pros love to hate. Long term, it will be important to watch for the pace of execution in the market to see how much faster Oracle can get the Azure gears turning and Oracle’s retention of data services that are being spammed by the likes of AWS and Google.