How to Understand SAP’s Cloud Upcharge on AWS Storage

Executive Summary

  • SAP is marking up AWS storage.
  • In this article, we provide a specific example of the upcharge and the percentage.

Introduction

SAP’s strategy of charging AWS, GCP, Azure and private cloud providers like HPE give customers an excellent reason to never use the SAP Cloud (which we refer to as SAP Cloud UaaS or Upcharge as a Service).

The Storage Example

AWS sells storage in Europe/Frankfurt for $2.3 per 100 GB/month. SAP resells the same storage block in the same region for $7.86. That’s a %342 premium. Storing 1 TB on AWS costs $276/year. The same 1 TB on SAP using AWS as a provider in the same region costs $943/year.

See the following screenshot.

Conclusion

This is consistent across all of AWS services when they are activated through SAP’s UaaS. This is why the SAP Cloud UaaS is so dangerous. SAP’s strategy is to markup the cloud infrastructure of other providers while doing very little work itself.

The Problem: A Lack of Fact-Checking of SAP

There are two fundamental problems around SAP. The first is the exaggeration of SAP, which means that companies that purchased SAP end up getting far less than they were promised. The second is that the SAP consulting companies simply repeat whatever SAP says. This means that on virtually all accounts there is no independent entity that can contradict statements by SAP.

Being Part of the Solution: What to Do About SAP

We can provide feedback from multiple SAP accounts that provide realistic information around SAP products — and this reduces the dependence on biased entities like SAP and all of the large SAP consulting firms that parrot what SAP says. We offer fact-checking services that are entirely research-based and that can stop inaccurate information dead in its tracks. SAP and the consulting firms rely on providing information without any fact-checking entity to contradict the information they provide. When SAP or their consulting firm are asked to explain these discrepancies, we have found that they further lie to the customer/client and often turn the issue around on the account, as we covered in the article How SAP Will Gaslight You When Their Software Does Not Work as Promised.

If you need independent advice and fact-checking that is outside of the SAP and SAP consulting system, reach out to us with the form below or with the messenger to the bottom right of the page.

Financial Disclosure

Financial Bias Disclosure

Neither this article nor any other article on the Brightwork website is paid for by a software vendor, including Oracle, SAP or their competitors. As part of our commitment to publishing independent, unbiased research; no paid media placements, commissions or incentives of any nature are allowed.

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References

How Vendors Get Customers To Buy Immature Applications

Executive Summary

  • Vendors consistently push their customers to purchase immature applications.
  • Considering the implications of implementing immature applications.

Introduction

IT buyers often fall into the lab rat trap. They adopt new technology too early and end up a test lab for vendors and a training course for consultants.

Innovative Versus Commercial Grade Products

There is a TITANIC difference between innovation and commercial grade products. New enterprise products need years of field testing to reach a stable release.

In the early stages of the technology adoption lifecycle, early adopters have to deal with an endless stream of:

  • Software bugs
  • Unstable code libraries
  • Poor system performance
  • Too many patches and updates
  • Too many functional changes
  • No roadmap

The Technology Adoption Curve

When “innovation” is deployed in an experimental area of the business, the risk of disruption is minimal. However, when applied to a business-critical function, the disruption to business continuity is often devastating.

The bigger problem is when the technology is offered as an implementation project. Projects are bound with time and cost constraints. When a new product is being functionally updated every other month, implementation rework never ends. After each vendor update, everything from requirement analysis to testing must be re-implemented.

Moreover, a project based on new products runs the risk of hiring consultants with no prior field experience. In effect, the consultants are learning how to implement the technology for the first time at the client’s expense. This often leads to cost overruns, poor quality, and higher failure rates. By their very nature, new product implementations offer no budget overrun protection.

Many “cloud vendors” for instance are themselves very late adopters of cloud technology. They are late adopters because as a business, they’re very risk-averse. They expect their customers to be early adopters. In fact, it is well known that Oracle is quite backwards technologically internally. Their approach is to push disruption onto customers, but not to do so themselves. Which is odd, considering Larry Ellison’s famous quote is that one needs to..

“Eat our own dog food.”

Championing disruption is an easy target to set, for outside entities that is, when the vendor doesn’t have to bear the cost of business disruption.

Customers Views on New Applications

Customers are often of two minds of applications. They are enticed by the new advertised capabilities, but in our experience, the vast majority of IT buyers are not internally configured to deal with immature applications. The mistake that vendors and consultants frequently make is that buyers of software are typically far less interested in software than they are in their own business problems and opportunities. They look at software as an enabler, not something they want to spend a lot of time tinkering with to get to work properly. In fact, the common complaint within IT departments is that they spend so much time managing existing investments, that they have little time to evaluate new investments. If one looks at the staffing of IT departments, one sees the limitations in terms of the willingness of companies to invest in problematic applications.

Understanding the Immaturity of Applications

A primary reason so many immature applications get into companies is that their immaturity and maintenance is understated to customers as a natural course of the sales process. Once the implementation begins, the consultants are told to not let the customer know the actual maturity level of the application, as it will undercut the confidence in the project.

Who Tends to Push Their Customers to the Most Immature Applications?

Application maturity is a lesser discussed topic but is probably the most important factor to implementation success. Implementing an immature product is like riding a partially built motorcycle. However, unlike the example of a partially built motorcycle, it is more difficult to determine when software is incomplete.

What is not to like about new? Except of course that the application will have untested shortcomings. Some vendors push out extremely immature products onto the market. 

The largest vendors tend to get away with introducing the least mature applications. SAP is known to commonly introduce immature applications with great fanfare, and they make no apologies when the application does not work properly. The largest software vendors can do this in part because they have an army of consulting firms that will support the vendor’s views on immature applications and will be the first to blame the client for failures, no matter how immature the application. That is part of their job, to pimp their application brand, regardless of what is true — and to do otherwise is considered disloyal.

The Immature of a Well Known SAP Application

For example, Brightwork Research and Analysis covered the numerous maturity issues with S/4HANA in the Study into S/4HANA Implementations, and this was while all the SAP consulting partners were telling their clients why they should migrate to S/4HANA. It also came out that not only was S/4HANA immature, so were other components that supported S/4HANA.

Immaturity of Oracle Applications

Another major vendor that has a habit of pushing customers to immature products is Oracle. Oracle has been pushing its customers to use its barely functional cloud products for over ten years. Oracle’s successful applications are their old and acquired applications, and Oracle has a very difficult time developing any new applications of any maturity or uptake on the part of customers. This is one reason we have been recommending migrating Oracle applications to the cloud and not using Oracle Cloud in any way. This was one of the themes of our book How to Leverage AWS and Google Cloud for SAP and Oracle Environments. One can migrate Oracle applications to cloud without Oracle’s involvement. No need to use Oracle Cloud and accept Oracle’s immature applications.

How Executive Compensation Helps Drive Immature Product Introduction

It should also be understood that a major motivator to get immature applications into customers is the stock market. The primary reason that Oracle wants its customers to use immature cloud offerings is that Wall Street wants to see cloud sales. SAP works the exact same way, the strategy is optimized around the stock options of the people at the very tippy top of these companies. These type of people don’t care if an application is immature or has implementation issues — those are issues for little people. The critical issue that consumes SAP is will Rob Enslin get to sell his options at the right price. When looked at through the eyes of a person with many millions of dollars in stock options, one can begin to see why the largest vendors introduce such immature products to their customers.

The Brightwork Approach

When we support IT procurements, we frequently have to move the discussion back to the topic of application and database maturity. SAP and Oracle will pivot the discussion to the roadmap and away from what the application’s maturity is now. Statements around..

“XYZ is the future,”

..and that

“our support for the current product will be dropped.”

These pivoting statements are designed to get the customer to only think of the future plans rather than what can be implemented. We already know the maturity of SAP and Oracle’s products as we do research full time. However, new items are being introduced all the time, and that causes us to go back and analyze a new product.

Maturity must be investigated before any negotiation on items to be purchased can begin.

Financial Disclosure

Financial Bias Disclosure

Neither this article nor any other article on the Brightwork website is paid for by a software vendor, including Oracle, SAP or their competitors. As part of our commitment to publishing independent, unbiased research; no paid media placements, commissions or incentives of any nature are allowed.

SAP Sales Content

References

AWS and Google Cloud Book

How to Leverage AWS and Google Cloud for SAP and Oracle Environments

Interested in how to use AWS and Google Cloud for on-premises environments, and why this is one of the primary ways to obtain more value from SAP and Oracle? See the link for an explanation of the book. This is a book that provides an overview that no one interested in the cloud for SAP and Oracle should go without reading.

How to Avoid these Nine IT Procurement Mistakes

Executive Summary

  • Procurement departments can fall into traps that are set by software vendors.
  • In this article, we cover some of the most common of these.

 

Introduction

Suboptimizing IT procurement is easy to do! Vendors often make it a complicated process to optimize. Procurement departments face time pressures, challenges in communicating across internal technical and business teams, sifting through a large amount of information that must be processed even to understand what is being purchased. All of these items and more factor in the overall complexity of the IT procurement process.

Of course, being forewarned is being forearmed, and that is what we will provide in this article.

The First Issue: The Overemphasis on the Legal Review

The first common issue is that they treat contracts as a legal matter and delegate contract review to corporate legal. Although a review by legal is essential. What is the problem? Lawyers don’t have the technical or operational background to evaluate IT contracts from a technical or business perspective. A lawyer cannot anticipate what could go wrong in a software implementation as they have never worked on an implementation. Nor might they think to recommend a clause specifying, for example, the buyer’s right to request a change in vendor’s personnel at no charge within an initial time period. Procurement contracts are too important to delegate to the legal department alone.

Before forwarding to the legal department, read through every contract from a technical and business perspective first, and then route the contract through the legal department for final review.

The Second Issue: Accepting the Vendor Language Without Changes

IT buyers are often too conservative in their approach to requesting changes to contract language. IT vendors generally present “standard contracts.” Many buyers assume that such contracts are not easily modified. This is not true. Contract language almost always favors the seller, and any contract is an agreement between two parties. The buyer has as much right to suggest language for the agreement as the seller does. Never assume that contract language is cast in stone. The seller has to know they may lose the contract if they keep 100% of the contract as they initially presented.

For example, we have seen SAP waive indirect access rights, a major liability for companies because SAP was told there would be no sale if the clause remained in the contract.

Often the initial negotiation or sale is the only opportunity to remove some of the more onerous clauses.

The Third Issue: Keep From Being Put Behind the 8 Ball and Review Vendor Contracts Early

One error is waiting until the business or IT is 100% in favor of one vendor before reviewing their contract. There is no reason contracts can’t be sent earlier in the selection process. Pricing or terms may invalidate the vendor from consideration (under rational circumstances). The vendors all have standard contracts and they should be able to share them at will.

That way the terms and (a rough approximation of pricing) can be reviewed before anyone falls in love with the software. Negative responses from vendors to requests to provide such details normally means that either they are attempting to overtly control the process or the would prefer the prospect not know the details until they are under time pressure. Either way, it is a red flag and a harbinger of bad things to come. Furthermore, such information hoarding should be communicated back to the business and to IT.

The Fourth Issue: Understanding The Importance of Benchmarking

Benchmarking allows an organization to understand the competitiveness of its purchases via a process of periodic comparison.

A benchmarking provision in a procurement contract ensures that an organization is not without recourse where the prices are contractually set and not reflective of current market prices or the services do not deliver as anticipated.

The Importance of Using Benchmarking Provisions

Price is a major consideration when procuring IT services. With the passage of time, IT prices sometimes decrease and products become more advanced. Products that are up to date on day one of the contract will likely not be current one or two years into the contract. This can result in ongoing shipments of overpriced or outdated products and services. Benchmarking is one of the various strategies for dealing with this challenge. Let’s look at some scenarios where benchmarking provisions can empower your organization.

The Fifth Issue: Price Adjustments

Today, IT vendors vary significantly in terms of operating scale. Mega-vendors operate at global scale offering services to millions of customers and billions of users. At this massive scale, vendors command significant volume discounts from their suppliers and manufacturers. These discounts are often passed on to their customers as price reductions.

For instance, AWS has reduced prices on cloud computing services over 60 times since 2006. In some years, the vendor introduced several price reductions across multiple products and services. However, AWS is the rarity, for most on premises vendors the prices go up every year. 

A 3-5 year IT contract should include a benchmarking provision to ensure that your organization is not paying more than you should by comparing competitive offerings and adjusting pricing for the same product or service.

The Sixth Issue: Double Charging for Software

Contract provisions are applicable to more than benchmarking and price adjustment. You can also use provisions as an insurance policy against vendor double-charging.

Vendors often change their licensing policies unilaterally. For instance, SAP recently introduced a document-based ERP licensing model charging customers by the number of documents created in the system. For customers who have previously licensed the software on a user basis, this means they get double-charged: once for user access and again for document creation. Consulting companies and media that covers SAP are very careful to never point this out. 

Make sure you include a provision in your contract that protects you against being double-charged.

The Seventh Issue: Vendor Forced Upgrades

SAP recently announced the end of support for their current ERP system (ECC6) by 2025. Customers who do not wish to upgrade to the new S/4HANA system will be charged additional support fees. Moreover, customers will be charged additional fees to support a product that no longer receives any further development or enhancement. New features and enhancements are only available in the new version. This is an example of a forced upgrade.

Make sure your contracts include provisions that protect you against forced upgrades.

The Eighth Issue: Mitigating Vendor Lock-In

In January 2017, Oracle quietly changed their database licensing policy and removed the core licensing factor (CLF). This change effectively doubled the database license for customers who choose to run Oracle database on AWS, Azure, and Google clouds. This is an example of vendor lock-in. Vendors suddenly apply exorbitant licensing fees to limit customer choice and keep them locked into their platforms. Make sure your contracts include provisions that protect you against vendor lock-in.

The Ninth Issue: Bait and Switch on Bidding and Resource Quality

 To secure contracts, vendors frequently present an intentionally very low financial proposal. Once awarded, they may subcontract parts of the project to a cheaper supplier and turn the difference into their margin.

In other cases, vendors may replace experienced (expensive) resources with less experienced (cheap) resources. This is one of the oldest tricks used by consulting firms. Each consulting company has its top resources. However, in most cases they are already staffed. Once the contract is signed, a number of new names and new resumes actually end up working the project. Or the more experienced resources show up, but then promptly leave. Over time the consultants tend to become less senior and less capable as the consulting company has pulled more of the money out of the account. 

Make sure your contract includes a provision to give you the right to request a change in the vendor’s personnel at no charge within an initial time period.

Conclusion

These nine issues come up on most software selections. But really, there are straightforward answers for each. One of the common problems that face procurement departments is that often go a significant amount of time between major software purchases. In that time memories can fade, staff can turnover and other factors can reduce the institutional knowledge of the issues they encountered the last time around. This, of course, gives the advantage to the vendor.

Financial Disclosure

Financial Bias Disclosure

Neither this article nor any other article on the Brightwork website is paid for by a software vendor, including Oracle, SAP or their competitors. As part of our commitment to publishing independent, unbiased research; no paid media placements, commissions or incentives of any nature are allowed.

Search Our Other Purchasing and Source of Supply Content

References

AWS and Google Cloud Book

How to Leverage AWS and Google Cloud for SAP and Oracle Environments

Interested in how to use AWS and Google Cloud for on-premises environments, and why this is one of the primary ways to obtain more value from SAP and Oracle? See the link for an explanation of the book. This is a book that provides an overview that no one interested in the cloud for SAP and Oracle should go without reading.

What Oracle’s Cloud Strategy Means for Customers

Executive Summary

  • Oracle has a strategy for the cloud that will lead to long-term issues for Oracle customers.
  • We cover the problems and how customers should interpret what Oracle is doing.

Introduction

Listen to Oracle’s cloud pitch in the OpenWorld 2018 sessions. The narratives invariably lead to one destination: Database. When Oracle talks about infrastructure technology, they really mean database. That’s Oracle’s cloud strategy. That’s Oracle’s compelling reason for Oracle cloud.

If you want the Oracle database, you must use Oracle cloud. When Oracle uses the term cloud, there are issues with the accuracy of this usage as Oracle’s cloud is about lock-in, which is of course not cloud. 

Why Oracle Follows this Strategy

Cloud customers have options. Why Oracle and not AWS, Azure, or GCP?

Oracle needs a compelling reason for customers to choose their cloud. However, the following reasons forced Oracle into a corner:

Oracle’s Tiny CAPEX Spend on their Cloud Infrastructure

Building cloud infrastructure is expensive. If Oracle matches the CAPEX spend of AWS, Microsoft, or Google their operating margins and EPS would plummet. Oracle’s executive compensation is built around high operating margins NOT growth.

The Inability of Oracle to Compete Monopolistically by Acquiring Competitors

Oracle competitive playbook’s simple: acquire competitors you can’t beat. Today, Oracle can’t acquire any of its cloud competitors. Amazon, Microsoft, and Google are too big for Oracle to swallow. As of January 04, 2019 Oracle’s market cap is $193B. Amazon hit the Trillion dollar valuation in September 2018.

Oracle’s Hard Core On-Premises DNA

To be commercially competitive in public cloud, companies need massive scale. Operating at scale means that cloud vendors get massive discounts from hardware manufacturers. At these discount rates, vendors can offer hardware at low price points and still make significant margins.

However, operating at scale requires very advanced operational competencies because vendors must host customer software and data for billions of users worldwide. Moreover, vendors need to develop advanced automation capabilities to manage millions of server farms and globally distributed data centers and ensure high levels of service availability. In other words, the game isn’t so much about software features and functions. The bigger challenge is site reliability and operational efficiency.

Oracle’s DNA for the past two decades has been to acquire, rebrand, and sell on-premises software. It was always the customer, not Oracle, who had to install, operate, tune, upgrade, and integrate the software. Thomas Kurian realized that Oracle didn’t have the DevOps DNA and tried to push using third-party cloud infrastructure to host software. That strategy was shut down by Oracle executives and investors and Thomas left Oracle to lead Google cloud operations.

How Does Oracle Enforce their Strategy?

Licencing

Oracle uses database licensing to drive customers toward Oracle cloud. In January 2017, Oracle removed their core licensing factor (CLF) effectively doubling their DB license cost on AWS, Azure, and GCP.

Certification

Oracle does NOT certify new product releases on competing clouds. Database 18c autonomous is only available on Oracle cloud.

Cloud Only

Oracle does NOT offer new database releases for on-premises deployment. Oracle 18c autonomous database analytics DW and transaction processing are only available as cloud services.

Conclusion

Most of Oracle’s cloud strategy is itself a bit misleading, as the Oracle Cloud is not cloud. However, whatever it is called, there are many factors to “it” that are a long-term problem for customers. After years of cloud talk, Oracle still behaves as a dyed in the wool on-premises vendor. Oracle consulting partners will never explain these issues to their clients, as ultimately their control by Oracle through the partnership agreement means that there are few sources that will provide the real story on this topic.

The Necessity of Fact Checking

We ask a question that anyone working in enterprise software should ask.

Should decisions be made based on sales information from 100% financially biased parties like consulting firms, IT analysts, and vendors to companies that do not specialize in fact-checking?

If the answer is “No,” then perhaps there should be a change to the present approach to IT decision making.

In a market where inaccurate information is commonplace, our conclusion from our research is that software project problems and failures correlate to a lack of fact checking of the claims made by vendors and consulting firms. If you are worried that you don’t have the real story from your current sources, we offer the solution.

Financial Disclosure

Financial Bias Disclosure

Neither this article nor any other article on the Brightwork website is paid for by a software vendor, including Oracle, SAP or their competitors. As part of our commitment to publishing independent, unbiased research; no paid media placements, commissions or incentives of any nature are allowed.

Search Our Cloud Services Content

References

AWS and Google Cloud Book

How to Leverage AWS and Google Cloud for SAP and Oracle Environments

Interested in how to use AWS and Google Cloud for on-premises environments, and why this is one of the primary ways to obtain more value from SAP and Oracle? See the link for an explanation of the book. This is a book that provides an overview that no one interested in the cloud for SAP and Oracle should go without reading.

Our IoT Platform Review of SAP, IBM and AWS

Executive Summary

  • This is a study that compares SAP IoT, IBM IoT, and AWS IoT.
  • This will compare how these offering function and result in a rating.

Introduction

This study was commissioned by a prospect during their vendor selection journey. The customer is a regional luxury hotel chain based in Dubai, UAE. The requirements were pretty straightforward.

The Requirements

A cloud-based IoT platform to manage a hotel facility and guest devices. Device types include security cameras, motion sensors, smoke detectors, refrigerators, temperature sensors, and golf carts.

With thousands of devices, the platform must push software and firmware to devices in the field, execute bulk updates, and define jobs to update device software automatically so they are always running the latest version. Furthermore, the platform has to send device reboots and factory resets remotely to fix software issues or restore the device to its original settings.

A must-have requirement is to monitor devices for abnormal behavior and send alerts to the facilities manager if something doesn’t look right. Typical alert conditions include device out-of-bound telemetry, traffic from device to an unauthorized IP address, or spikes in outbound traffic.

SAP IoT

SAP was evaluated first and quickly disqualified. The platform didn’t meet any of the must-have requirements for functionality, performance, or security.

SAP IoT runs on HTTP 1.1. HTTP 2.0 (released 2015) encrypts HTTP connections. This is a must-have security requirement for internet applications. Moreover, HTTP 2.0 supports multiplexed requests for a single connection. Instead of buffering requests and responses, it handles them in streaming fashion. This reduces latency and significantly boosts application response time.

SAP was evaluated first and quickly disqualified. The platform didn’t meet any of the must-have requirements for functionality, performance, or security.

SAP IoT runs on HTTP 1.1. HTTP 2.0 (released 2015) encrypts HTTP connections. This is a must-have security requirement for internet applications. Moreover, HTTP 2.0 supports multiplexed requests for a single connection. Instead of buffering requests and responses, it handles them in streaming fashion. This reduces latency and significantly boosts application response time.

SCP still runs on HTTP 1.1. HTTP 1.1 may pass for internal applications running behind your corporate firewall but never for internet facing applications. This was immediately disqualified by the customer security team as it poses an eminent security threat. Moreover, with thousands of active devices in the field sending telemetry readings 24X7, the performance bottleneck will render the system unusable.

SCP has no native MQTT support. MQTT is the most common device-level communication protocol. It’s a light-weight protocol and helps devices consume less power. SAP Cloud Platform is not equipped with an MQTT broker. You have to use a third-party MQTT broker. This will severely degrade performance and add an additional level of landscape complexity.

SAP IoT device management is extremely limited. Aside from device configuration, an administrator can’t perform firmware upgrades, device reboots, or schedule bulk maintenance jobs. With thousands of field devices deployed, this will be a maintenance nightmare. Moreover, there’s no support for fault detection or built-in alerting.

IBM IoT

Next, we tested Watson IoT on IBM Bluemix. Watson IoT is a minimally viable product. It has the bare bones must-have functionality. An administrator can configure and monitor sensor status.

You can also perform firmware upgrades and reboot the sensors if required.

During the evaluation, however, we experienced constant connection timeouts. In some cases, actions take over 2 minutes and timeout before completing. We decided to move on.

AWS IoT

AWS IoT core offers a mature solution. Once you onboard your devices, IoT device management offers very fine-grained access to your fleet.

AWS Device management lets you collect device logs. In the event of a problem, you can query the log data to figure out what went wrong. You can also configure the logs to include only the metrics that are critical to device performance.

With AWS IoT, you can push software and firmware to devices in the field to patch security vulnerabilities and improve functionality. You can execute bulk updates, control deployment velocity, and define continuous jobs to update device software automatically so they are always running the latest version. You can send device reboots or factory resets remotely to fix software issues or restore the device to its original settings.

AWS IoT fully supports MQTT

But we also found 2 great advantages for AWS IoT:

  1. AWS IoT Device Defender: continuously audits device policies and monitors the fleet for abnormal behavior that might indicate a potential security issue. When a telemetry value goes out-of-bounds, it can send an alert. You can easily respond to events like traffic from device to an unauthorized IP Address, or spikes in outbound traffic that might indicate that the device is participating in a DDoS attack.
  2. AWS IoT Analytics: is a fully managed analytics service to easily analyze IoT data. It can run analytics on massive volumes of IoT data without having to worry about all the cost and complexity typically required to build your own IoT Analytics platform. It filters, transforms and enriches IoT data before storing it in an IoT optimized data store. That way you can easily query your data using the built-in SQL query engine and visualize your outcome using Amazon QuickSight. AWS IoT Analytics also supports more sophisticated analytics by preparing your data from Machine Learning using pre-build Jupyter notebook templates of machine learning models that can be trained and run using Amazon SageMaker.

Conclusion

Our conclusion is the following.

  • SAP IoT Disqualified.
  • IBM Watson IoT ★ Minimum viable product supports MQTT.
  • AWS IoT ★★★ Full support for IoT device management, security, and analytics.

Financial Disclosure

Financial Bias Disclosure

Neither this article nor any other article on the Brightwork website is paid for by a software vendor, including Oracle, SAP or their competitors. As part of our commitment to publishing independent, unbiased research; no paid media placements, commissions or incentives of any nature are allowed.

Search Our Other AWS and Google Cloud Content

References

AWS and Google Cloud Book

How to Leverage AWS and Google Cloud for SAP and Oracle Environments

Interested in how to use AWS and Google Cloud for on-premises environments, and why this is one of the primary ways to obtain more value from SAP and Oracle? See the link for an explanation of the book. This is a book that provides an overview that no one interested in the cloud for SAP and Oracle should go without reading.

Categories IoT

Why is AWS a Bigger Threat to Oracle than SAP and Microsoft?

Executive Summary

  • Oracle has long-term competition from SAP and Microsoft.
  • Find out why AWS is the biggest threat of all to Oracle.

Introduction

Oracle is obsessed with AWS. Over the past couple of years, Oracle’s marketing machine has been completely fixated on Amazon’s cloud business. I knew something was up when Larry used most of his hour-long keynote at Open World ’16 in San Francisco to trash AWS’ slow first-generation cloud infrastructure.

I really didn’t get it. Why’s Oracle suddenly locking horns exclusively with AWS? Knowing what I know about enterprise IT, that doesn’t quite compute.

Does Dr. Spock Have Any Insights?

Eventually, I decided to ask the smartest person I know: Mr. Spock. Care to guess what he had to say?

Exactly my thoughts! Just consider the facts:

  1. AWS is 100% cloud only. Oracle’s entire cloud business is 16% of total revenue. 84% of Oracle’s business is far more important to protect against competitors like SAP, Microsoft, and open source.
  2. Oracle’s cloud business is nearly all SaaS. AWS isn’t even a SaaS player (yet).
  3. Oracle core business, the database, is in clear and present danger from Microsoft. For the past three years, Microsoft SQL Server has displaced Oracle database as the leader in operational databases by worldwide commercial sales.

Logically, AWS isn’t even a major competitor, let alone a significant threat. Spock, however, is dead wrong because he’s operating under incomplete information.

Again, let’s look at the facts.

AWS has been poaching Oracle’s database customers at an alarming rate.

The Migration of Oracle Databases

By October 2017, AWS migrated over 40,000 databases to their cloud. The majority of which are Oracle instances. Why’s this a threat? Because these are AWS fully managed instances. This means AWS takes care of the full range of database administration work including upgrading, patching, and security.

This is irresistible to many customers because they no longer need to keep as many DBA’s on their payroll. The savings are really quite significant. The operational agility is even better. This model is a no-brainer not only for small businesses but also for large companies trying to do more with less.

But that’s just an appetizer. Here’s the main course: A fully managed database is a trouble-free database. In other words, customers can easily drop the annual 22% maintenance and support fee they pay Oracle and save really BIG. That’s the existential threat because nearly 50% of Oracle’s annual revenue is generated from install base M&S. The cash cow is moving to greener pastures.

How Serious is the AWS Threat to Oracle?

The AWS threat is so serious, Oracle resorted to the most desperate anti-competitive measure the industry has seen in decades. In January 2017, Oracle quietly doubled its database license for instances hosted on AWS cloud!

Spock’s reaction to the news was sober!

Spock’s skepticism is rational. Once he verified the facts for himself, he got onboard: AWS is indeed a serious existential threat to Oracle.

The Upside?

The upside of the story?

Competition is fantastic. The monopoly era is long gone. Today, AWS offers fully-managed Oracle database instances for as low as $0.07 per hour. Even better, AWS promised to significantly lower the prices even more as they roll out the next wave of automation capabilities to their infrastructure. Oracle, on the other hand, is no longer sitting still. On October 2017, Oracle announced a new line of autonomous products including a fully autonomous database. The new cloud service promised to cost 50% less than AWS and offer 99.995% availability!

That’s 2m:11.5s downtime per month. How great is that? Better product at lower prices.

Let the games begin!

References

Financial Disclosure

Financial Bias Disclosure

Neither this article nor any other article on the Brightwork website is paid for by a software vendor, including Oracle, SAP or their competitors. As part of our commitment to publishing independent, unbiased research; no paid media placements, commissions or incentives of any nature are allowed.

Search Our Other AWS and Google Cloud Content

References

AWS and Google Cloud Book

How to Leverage AWS and Google Cloud for SAP and Oracle Environments

Interested in how to use AWS and Google Cloud for on-premises environments, and why this is one of the primary ways to obtain more value from SAP and Oracle? See the link for an explanation of the book. This is a book that provides an overview that no one interested in the cloud for SAP and Oracle should go without reading.

How to Win the Cloud Jackpot

Executive Summary

  • The database is being commoditized and this has a significant effect on Oracle.
  • This article covers the implications of this commoditization.

Introduction

The first wave of cloud computing commoditized hardware. The second is moving quickly up the stack to software. Prime target: database.

Five years ago, worldwide database spend looked like this: Oracle leads, no AWS.

And today..

Microsoft beats Oracle 3 years in a row mostly with SQL Azure. AWS ahead of SAP and IBM edging on Oracle.

What’s different about a database as a fully-managed service?

Just like cloud storage and compute, the manufacturer doesn’t matter. SLA does. We don’t care HOW service providers achieve 99% availability. That’s their job, not ours. A database service is no different than any other microservice. If a provider switches overnight from an Oracle microservice to any SLA-compliant microservice running Redshift or MariaDB, nobody notices and nobody cares.

What’s the upside for customers?

You no longer need as many in-house DBAs. The fully loaded cost of an Oracle DBA is $120,000 per year. Labor is typically 60% of overall IT spend. The savings are substantial.

When the database is fully managed by the provider, you no longer need vendor tech support. Drop the 22% M&S annual fees and save BIG. You also save the annual 20% M&S on hardware and storage. That’s another 42% savings off your overall IT spend every single year!

Financial Disclosure

Financial Bias Disclosure

Neither this article nor any other article on the Brightwork website is paid for by a software vendor, including Oracle, SAP or their competitors. As part of our commitment to publishing independent, unbiased research; no paid media placements, commissions or incentives of any nature are allowed.

Search Our Other Cloud and Multicloud Content

References

AWS and Google Cloud Book

How to Leverage AWS and Google Cloud for SAP and Oracle Environments

Interested in how to use AWS and Google Cloud for on-premises environments, and why this is one of the primary ways to obtain more value from SAP and Oracle? See the link for an explanation of the book. This is a book that provides an overview that no one interested in the cloud for SAP and Oracle should go without reading.

How Gartner Rates Oracle and IBM as Tier 2 Clouds

Executive Summary

  • Gartner rates Oracle and IBM as tier 2 clouds.
  • We explain what does this mean for these companies and their cloud future.

Introduction

  • Audience: IT and business executives – IT procurement & operations professionals – Developers.
  • Summary: As of April 2018, Gartner classifies AWS, Microsoft, and Google as Tier 1 clouds. IBM and Oracle as Tier 2.
  • Recommendations: Organizations are advised to consider Gartner’s evaluation before making strategic cloud computing purchase decisions to reduce the risks of their business critical projects.

Why Oracle is Tier 2 Cloud?

According to Gartner:

“Oracle cloud offering remains a bare-bones “minimum viable product,” and it is arguably too minimal to be viable for a broad range of common cloud IaaS use cases. It has limited enterprise customer traction. Oracle has just begun to build a partner ecosystem, and Gartner clients report that MSPs are sometimes reluctant to support OCI. Customers need to have a high tolerance for risk.”

Why IBM is Tier 2 Cloud?

According to Gartner:

“IBM has repeatedly encountered engineering challenges that have negatively impacted its time to market. Customers must thus absorb the risk of an uncertain roadmap. This uncertainty also impacts partners, and therefore the potential ecosystem.

The IBM Cloud experience remains disjointed. SoftLayer infrastructure is available in 16 countries, and the container service in 12 countries, but the rest of IBM Cloud (Bluemix) is available in only four countries and in just two U.S. cities. Consequently, customer infrastructure placement options are very limited”.

Tier 1 vs. Tier 2 vendors by CAPEX spend

Tier 1 vendors vastly outspend Tier 2 counterparts in cloud infrastructure. This is reflected in CAPEX spend.

The trend is also clear when we consider CAPEX spend as a percent of revenue.

What are Your Tier 1 Cloud Options?

Gartner classifies AWS, Microsoft, and Google as Tier 1 clouds. The best choice depends on your own specific use case. For example, Gartner recommends Google for

“Big data and other analytics applications, machine learning projects, cloud-native applications, or other applications optimized for cloud-native operations.”

The Tier 1 cloud leader.

According to Gartner..

“AWS is the provider most commonly chosen for strategic adoption; many enterprise customers now spend over $5 million annually, and some spend over $100 million. While not the ideal fit for every need, it has become the “safe choice” in this market, appealing to customers that desire the broadest range of capabilities and long-term market leadership”.

Gartner also says that “AWS is the most mature, enterprise-ready provider, with the strongest track record of customer success and the most useful partner ecosystem”.

Reference

Gartner April 2018 IaaS MQ report. Download full report here.

The Problem: A Lack of Fact-Checking of Oracle

There are two fundamental problems around Oracle. The first is the exaggeration of Oracle, which means that companies that purchased from Oracle end up getting far less than they were promised. The second is that the Oracle consulting companies simply repeat whatever Oracle says. This means that on virtually all accounts there is no independent entity that can contradict statements by Oracle.

Being Part of the Solution: What to Do About Oracle

We can provide feedback from multiple Oracle accounts that provide realistic information around a variety of Oracle products — and this reduces the dependence on biased entities like Oracle and all of the large Oracle consulting firms that parrot what Oracle says. We offer fact-checking services that are entirely research-based and that can stop inaccurate information dead in its tracks. Oracle and the consulting firms rely on providing information without any fact-checking entity to contradict the information they provide. This is how companies end up paying for items which are exorbitantly priced, exorbitantly expensive to implement and exorbitantly expensive to maintain.

If you need independent advice and fact-checking that is outside of the Oracle and Oracle consulting system, reach out to us with the form below or with the messenger to the bottom right of the page.

Financial Disclosure

Financial Bias Disclosure

Neither this article nor any other article on the Brightwork website is paid for by a software vendor, including Oracle, SAP or their competitors. As part of our commitment to publishing independent, unbiased research; no paid media placements, commissions or incentives of any nature are allowed.

Search Our Oracle Cloud Content

References

AWS and Google Cloud Book

How to Leverage AWS and Google Cloud for SAP and Oracle Environments

Interested in how to use AWS and Google Cloud for on-premises environments, and why this is one of the primary ways to obtain more value from SAP and Oracle? See the link for an explanation of the book. This is a book that provides an overview that no one interested in the cloud for SAP and Oracle should go without reading.

How to Interpret The Clear Signs of Oracle’s Decline

Executive Summary

  • Oracle recently changed how it reported its cloud revenues.
  • We cover what this revenue reporting change means.

Introduction

In January 2017, Oracle quietly changed database licensing policy, effectively doubling their licenses on AWS and Azure. This was a clear signal that Oracle cloud is struggling. I explain this in more detail here.

This year, Oracle changed its revenue reporting policy and stopped reporting cloud revenues separately. This was a second signal to analysts and investors that Oracle’s cloud business is in trouble.

Last month, the City of Sunrise Firefighters filed a lawsuit in a US district court in Silicon Valley against Safra Catz, Mark Hurd, Larry Ellison, Thomas Kurian, Ken Bond, and Steve Miranda citing allegations of fraud. The Florida-based investment group claimed Oracle’s leadership misrepresented cloud segment revenue growth, falsely attributing it to Oracle’s “unprecedented level of automation and cost savings”. The complaint alleged Oracle has been “forcing customers to adopt its cloud services, to inflate revenue and hide market disinterest”.

Earlier this month, Oracle president and head of Oracle cloud Thomas Kurian, announced he’s leaving. Insiders said that his departure is a result of a clash with the boss, founder, CTO and executive chairman Larry Ellison.

“Kurian wants Oracle to make more of its software available to run on public clouds from chief rivals Amazon.com and Microsoft as a way to diversify from its own struggling infrastructure, a view opposed by Ellison,”

..one of the people said.

Who is Holding Oracle back?

For decades, Oracle (Hardware.Software.Complete) followed the one-stop-shop strategy pioneered by IBM. In the past 8 years, however, mainstream IT standardized on the Intel platform. IBM accepted that. They no longer compete in the Intel space. The Intel cloud is owned by Amazon, Intel software is owned by Microsoft, and Intel AI is owned by Google.

Today, IBM is pursuing a fortune 250 strategy. Their go to market “niche” is built around Z and Power performance hardware. SAP never entertained the idea of going into mainstream IaaS or PaaS. Instead, they also adopted a niche, high-end, proprietary appliance strategy within their own ERP install base. Both vendors learned the lesson from Verizon, HP, Cisco, VMware, and Rackspace.

Oracle’s biggest vulnerability is that its investors have become used to the company having the fattest profit margins in the industry. Oracle’s executives built their executive compensation model around those numbers. Basically, investors and executives are jointly unwilling to trade off profit margins for revenue growth. Despite consistently declining revenues, Oracle has 4 of the top 25 paid executives in the world, even though Oracle doesn’t even make it into the Fortune 100 list!

Losing the CAPEX Battle

In 2017, Amazon, Google, and Microsoft each spent more on CAPEX than Oracle has in its entire history. CAPEX spending on cloud infrastructure is both a leading indicator of the ability to compete at scale and a confirmation of success with customers. In cloud computing, CAPEX is the ultimate form of putting your money where your mouth is because no amount of jawboning alone will conjure up data centers or pack them with millions of servers.

To compete in cloud infrastructure, Oracle must at least match the CAPEX spending of its rivals. This would decimate its profit margins and send its stock price into a tailspin. Moreover, Oracle’s on-premises margins depend on owning the entire stack. Hardware, middleware, and software.

Just like IBM, Oracle can’t commercially compete in mainstream Intel-based IaaS. That leaves Oracle struggling with steeply declining hardware sales for SPARC, Engineered Systems, and Storage.

More Signals of Oracle’s Decline

  • In 2008, Larry ridiculed cloud computing and set Oracle back a decade.
  • In 2010, Larry shut down Sun Cloud. Again, a historic lost opportunity.
  • Java, the internet programming language, the one technology with the greatest potential to evolve into a true internet platform as a service, was wasted. “Write-once, Run anywhere” sounds like today’s Docker and Serverless.
  • Oracle’s cloud at customer was an attempt to get customers to finance Oracle cloud by paying for their own hardware and data centers.

Conclusion

Oracle’s investors and executives are holding Oracle back. Investors are unwilling to trade profit margins to finance growth catalysts like cloud infrastructure. Instead of spending on R&D and cloud infrastructure, Oracle executives spent $12 billion this year to buy back shares to boost the stock price and their own compensation packages.

The Problem: A Lack of Fact-Checking of Oracle

There are two fundamental problems around Oracle. The first is the exaggeration of Oracle, which means that companies that purchased from Oracle end up getting far less than they were promised. The second is that the Oracle consulting companies simply repeat whatever Oracle says. This means that on virtually all accounts there is no independent entity that can contradict statements by Oracle.

The Necessity of Fact Checking

We ask a question that anyone working in enterprise software should ask.

Should decisions be made based on sales information from 100% financially biased parties like consulting firms, IT analysts, and vendors to companies that do not specialize in fact-checking?

If the answer is “No,” then perhaps there should be a change to the present approach to IT decision making.

In a market where inaccurate information is commonplace, our conclusion from our research is that software project problems and failures correlate to a lack of fact checking of the claims made by vendors and consulting firms. If you are worried that you don’t have the real story from your current sources, we offer the solution.

Financial Disclosure

Financial Bias Disclosure

Neither this article nor any other article on the Brightwork website is paid for by a software vendor, including Oracle, SAP or their competitors. As part of our commitment to publishing independent, unbiased research; no paid media placements, commissions or incentives of any nature are allowed.

Search Our Oracle General Content

References

AWS and Google Cloud Book

How to Leverage AWS and Google Cloud for SAP and Oracle Environments

Interested in how to use AWS and Google Cloud for on-premises environments, and why this is one of the primary ways to obtain more value from SAP and Oracle? See the link for an explanation of the book. This is a book that provides an overview that no one interested in the cloud for SAP and Oracle should go without reading.

How to Understand Oracle Cloud Infrastructure’s SLA

Executive Summary

  • How Oracle Cloud Infrastructure works regarding its target service availability level.
  • Considering the big picture regarding OCI and service level.

Introduction

Oracle Cloud Infrastructure (OCI) provides a range of IaaS and PaaS offerings. The graphic below is an overview.

Global Footprint

Currently, OCI has 4 regions in Phoenix, Ashburn, London, and Frankfurt. The graphic below is an overview of OCI current and planned commercial and government regions.

Service Availability

OCI has a target service availability level, or target service uptime, of 99.5%. Important to understand that target service uptime does NOT guarantee 99.5% availability. Depending on the specific service you use, Oracle simply offers service credits if your SLA is breached as shown in the table below:

How Availability is Measured

Following the end of each calendar month of the applicable services period, Oracle measures the service uptime over the immediately preceding month by dividing the difference between the total number of minutes in the monthly measurement period and any unplanned downtime by the total number of minutes in the measurement period, and multiplying the result by 100 to reach a percent figure.

Outages

Outages are defined as any time during which the Oracle cloud services are not available. Note the following exceptions:

  1. Outages caused by scheduled and announced maintenance (planned downtime).
  2. Unavailability of third-party services including hosting or connectivity providers.
  3. Hacker, malware, and denial of service attacks.
  4. Outages caused by failures or fluctuations in electrical, connectivity, network or telecommunications equipment or line. (Caution) The above outages are NOT considered unplanned and therefore do not count toward any service credits.

Restrictions

There are many restrictions on specific OCI services. In this review, we will discuss restrictions related to one service in detail: The autonomous database service.

Available only on Exadata: Oracle autonomous database service is comprised of Oracle database 18c Enterprise Edition with all database options and management packs included from a software packaging perspective, Oracle Exadata X7-2 as the deployment platform, and the Oracle cloud automated database and database operations components (scripts, best practices, procedures, etc.).

Multi-Tenant only: Oracle Autonomous Database only dedicates OCPUs (equivalent to an Intel Xeon physical core) and a single PDB (Pluggable Database) to each Oracle Cloud client. The memory, flash cache, and other resources on an Oracle Exadata system are not dedicated. Oracle will decide who and how many other clients share the PDB resources available within a single Exadata machine.


With a multi-tenant configuration, you will not even know how many additional clients are sharing your Exadata machine. Although Oracle can control data access and PDB separation from a security perspective, there is no advertised purchasing option which allows you to dedicate memory and flash cache to specific PDBs (only OCPUs are dedicated).

Hidden costs

There are many hidden costs associated with OCI. In this review, we will cover a couple only.

FastConnect: Per hour charges

FastConnect is a private connectivity service offered by Oracle OCI between customer DC and Oracle public cloud using the Equinix Cloud Exchange inside an Equinix IBX data center. This connection provides a private data connection that bypasses the public Internet. FastConnect is often used when Internet latency is too high between the customer and the nearest Oracle region. There are many costs involved in this service. For instance, Oracle FastConnect is charged by the port hour regardless of data transfer volume.

Autonomous DB SLA

Oracle offers two configuration choices for Autonomous Database: Enterprise and Mission Critical. The 99.995% availability SLA is ONLY true for the Mission Critical configurations which could cost clients up to 2X the monthly subscription costs. This increased cost estimate is based on the requirement of a standby database which will double the infrastructure and storage and therefore could double the cost if there are no additional discounts.

Conclusion

It is difficult to get the real story on Oracle OCI SLA information as almost all the sources on this topic are connected to Oracle. Brightwork Research & Analysis provides completely independent information on this subject and many other Oracle topics.

The Problem: A Lack of Fact-Checking of Oracle

There are two fundamental problems around Oracle. The first is the exaggeration of Oracle, which means that companies that purchased from Oracle end up getting far less than they were promised. The second is that the Oracle consulting companies simply repeat whatever Oracle says. This means that on virtually all accounts there is no independent entity that can contradict statements by Oracle.

The Necessity of Fact Checking

We ask a question that anyone working in enterprise software should ask.

Should decisions be made based on sales information from 100% financially biased parties like consulting firms, IT analysts, and vendors to companies that do not specialize in fact-checking?

If the answer is “No,” then perhaps there should be a change to the present approach to IT decision making.

In a market where inaccurate information is commonplace, our conclusion from our research is that software project problems and failures correlate to a lack of fact checking of the claims made by vendors and consulting firms. If you are worried that you don’t have the real story from your current sources, we offer the solution.

Financial Disclosure

Financial Bias Disclosure

Neither this article nor any other article on the Brightwork website is paid for by a software vendor, including Oracle, SAP or their competitors. As part of our commitment to publishing independent, unbiased research; no paid media placements, commissions or incentives of any nature are allowed.

Search Our Oracle General Content

References

AWS and Google Cloud Book

How to Leverage AWS and Google Cloud for SAP and Oracle Environments

Interested in how to use AWS and Google Cloud for on-premises environments, and why this is one of the primary ways to obtain more value from SAP and Oracle? See the link for an explanation of the book. This is a book that provides an overview that no one interested in the cloud for SAP and Oracle should go without reading.