Is it enough to be a gorilla?

It may just be the law of large numbers, because Oracle accounts for a significant proportion of the entire industry, whose growth (with the exception of Asia) largely corresponds to gross domestic product (GDP).

However, it could also be interpreted as a sign of maturity. As the influential British Financial Times suggested in a provocative editorial, Oracle should regard itself as a "value stock" in line with its age and no longer as a "growth stock", and behave accordingly.

And indeed reported Oracle doubled its dividend, albeit still at a relatively low level compared to other mature industrial stocks. Oracles flat performance was surprising in view of several billion-dollar acquisitions in the past 18 months, such as Eloqua, Taleo and RightNow (not to forget Vitrue - for "only" 300 million dollars), whose aim had been to put the software giant at the top of the currently most important IT-trends:

Digital Customer Experience Management and the switch to cloud services. The new solutions appear to Oracles to replace, not expand, older business areas - the new normal in an age of largely flat IT-issues.

The IT-industry is still developing rapidly. By viewing itself as a value stock and relying on what it is good at, it would Oracle risk an inevitable but not necessarily slow decline.

Cloud solution providers are growing very quickly - from Box (storage) to Workday (Apps). Today they may still be small compared to Oracle but tomorrow? So simply carrying on as before is not enough.

Short-term sacrifice for long-term gain

As Oracle was unable to report an increase in revenue for the 2013 fiscal year, it received a lot of unwanted media commentary about its cloud strategy.

The company had prepared a series of important announcements to strengthen its cloud position. It must have been frustrating not to be able to publish these announcements at the same time as its annual press conference.

Since then, the news has followed one another in quick succession: agreements with MicrosoftSalesforce.com and Netsuite - along with the general availability of the cloud version of Oracle's database version 12c with a new multi-tenant architecture that Oracle first announced at Oracle OpenWorld in October 2012.

Of the three agreements, the one with Salesforce.com is the most interesting, not least because the two companies opted for a twelve-year contract - a lifetime in Internet terms.

And, of course, because they had been such fierce head-to-head rivals, and Salesforce.com had (often successfully) worked on it, Oracles large Siebel-customer base.

While this agreement (as with Netsuite) is primarily about the interoperability of Applications In our view, all three are primarily aimed at maintaining the market position of Oracles database platform when the entire IT-world is moving towards the cloud.

Oracle should rather generate some potential sales with Applications to Salesforce.com or Netsuite if it can increase the chances of improving its finance and HCMApps in addition to its database platform.

For Salesforce.com, it looks like an outright victory. Although it has squandered its own potential, Oracle as a core platform (which would have been tough anyway), it has undoubtedly achieved a better license agreement.

More importantly, Salesforce.com has significantly reduced its competitive challenges in the market. Because Oracle is now committed to using Salesforce.com in the front office in conjunction with Oracle (Fusion) Apps in the back office (HCM and financial management), even if this agreement does not go as far as selling the solutions.

The Netsuite agreement was also about linking Oracle HCM with the cloud-based ERP-system from Netsuite. This results in a further advantage for all parties involved: strengthening the defenses against Workday - a cloud reincarnation of PeopleSoftwhose explosive growth everyone was concerned about - and against SAP with its cloud solutions, in particular SuccessFactors.

Many SAP ERP customers have the Oracle-database platform and Salesforce.com and see them as a strategic choice. For customers who want to migrate to Cloud HCM, the arguments in favor of a pure SAP-solution (based on SuccessFactors) or a possible switch to Workday are less convincing.

So it seems that Oracle with the agreements with Netsuite, Salesforce.com and Microsoft gives up a little ground in today's market to strengthen its longer-term strategic play. The remaining question for us is how the merger CRM-Offer from Oracle which went noticeably unmentioned at the press conference.

We expect that Fusion CRM will still be offered as an alternative to Salesforce.com as part of a suite. But if the Salesforce.com/Oracle-promise of true interoperability between their offerings can be fulfilled, the market dynamics of Fusion CRMeven as an upgrade for existing Siebel-customers, be low.

Cloud no longer half-hearted

Anyone who believed, Oracle would still be timid about the cloud and its cloud strategy would be secondary to its desire to sell large data center systems based on its Exa boxes, will now have to adjust its views.

Oracle is striving to become the standard platform for cloud operations. However, more and more cloud companies are basing their solutions on big data platforms, especially those based on Open Source based. Such environments are becoming more and more mainstream.

Another critical factor for Oracles Future success is big data. Data storage, reporting and analysis are Oracles Core competence. Even if Oracle no longer reports these separately in its quarterly results, they still account for well over half of its business.

Oracle is to use a known IT-metaphor, the undisputed gorilla in this market. But gorillas have been overtaken by humans in evolutionary terms.

I recently attended a big data analytics conference in London. A striking number of speakers there said:

"Yes, we had Oracle (or mySQL), but ...".

Or as Bob Harris, CTO of TV station Channel 4, memorably put it:

"With ten times the amount of data as before Oracle simply not cost-effective."

Channel 4 is currently shifting its reporting and analysis of customer behavior to Hadoop-based solutions.

Others talked about how they switched to MongoDB, Riak or other market newcomers to process their big data workloads. Workloads for which the relational Database (now 30 years old) is not particularly suitable.

And a tenfold increase in data volumes is still modest - many companies are reporting far greater increases. We have long argued that big data should be seen in terms of four "Vs".

Not only the three well-known "Vs" (Volume, Variety, Velocity), but also the fourth "V" (Value) is crucial. Big data is about the cost-effective processing of large and diverse volumes of data.

Oracle must act quickly and convince existing customers of its strategy for big data solutions before they purchase the corresponding systems from elsewhere.

A test survey among the conference participants showed that only a small percentage had already procured big data solutions. But the seminar was full.

In line with our own seminars and experience, this is an important industry topic. The game is still wide open, and it is up to Oracleto win or lose it.

Given the pace of events in recent weeks, we probably won't have to wait long.

When Philip Carnelley joined the PAC team in December 2010, he had over 25 years of experience as an analyst, software developer and project manager. He has worked for companies such as TechMarketView, the Hacket Group and Ovum. As a respected consultant, he covered the areas of business applications, business intelligence and document management. Most recently he specialized in Cloud computing, SaaS and Applications Services.