Preparing Your Mind to Deal with Oracle and Indian Recruiters

Executive Summary

  • Dealing with terrible entities requires preparation of the mind.
  • We cover how to deal with two of the worst entities in software.

Introduction

This article is a response to a question received regarding dealing with swarms of Indian recruiters. 

I am an SAP SD Consultant in California. I have been contacted by five different recruiting agencies for a local contract. After reviewing each one online, I’ve found they all have terrible reviews. They don’t pay on time or at all, con artist, don’t reimburse for travel, etc. They have some good reviews too, but not sure how authentic they are. Could you please give me some advice? Other than throwing darts to pick one… I don’t know what to do here.

Thanks very much for your time. .

The first thing to notice is that the types of things declared as problems, such as not paying on time, not reimbursing for travel, etc… were not issues in the US IT contract market before Indians arrived and took over most of the IT contract recruiting market. This is more evidence that Indians are dropping the labor standards in IT. And with hundreds of thousands of foreign workers coming into the country every year, as we cover in the article How the H1-B Program Understates The True Number of Yearly H1-B Visas, this is only going to continue to erode US working standards.

This topic is barely mentioned in the standard IT media. The standard IT media, which primarily takes the sides of corporations, which means taking the side of foreign workers that erode the rights, pay, and standards applied to US domestic workers, all of the negative aspects of this Indian invasion of the US IT market are swept under the rug.

Both major corporations and, therefore, IT media are in favor of degraded labor standards in the US because it means more money and more control for them!

What Corporations Are Telling Us

Corporations have made their desire for a complete takeover of IT by foreign workers plain by how they lobby US politicians, as we cover in the article Why Are 47 Entities Lobbying in Favor of the H.R.1044 IT Immigration Bill.

The behavior of corporations with H1-B and in opposing unions and even increases in the minimum wage illustrates that they want to push the US back to the standards prior to the labor movement. This includes no 40 hour work week, no safety standards, no paid time off even for illness (already not offered to low wage workers).

And while this is more apparent than the sun in the sky, IT media entities spend most of their time covering how foreign workers visa programs need to be expanded.

This movie was ahead of its time. This movie perfectly describes how US IT workers feel dealing with Indian recruiters. 

How Bad at Recruiting are Indians?

What is curious is how bad Indian recruiters are at their job.

Not only do Indian recruiters have close to universally terrible ethics, but they normally have enormous English communication problems, they lack conscientiousness, they normally know less about the technology and even what terms stand for than US domestic recruiters. The proposal by the H1-B lobby is that bringing in Indians was all about “skills,” something negated in the article How the Pay Level of H1-B Visa Workers Contradicts Industry’s High Skills Argument, and the article How The H1-Bs Are Pushing Out Domestic US Workers of IT and STEM, is again contradicted by the existence of Indian recruiters in the US. This is yet another arrow in the target of the false construct that all of the Indians that are brought into the US are highly skilled.

Still, with their awful performance as recruiters, they now dominate the US contract recruiting market. This illustrates that whatever they did to accomplish this feat, it was not based upon quality. A major factor that pushed Indian recruiters forward was that such a high percentage of IT workers are now Indian. There is now an enormous number of Indians who believe that US IT jobs belong to them and not to the citizens of the US.

What this shows is that Indians use a specific strategy, which is “flooding the market,” which we cover in the article How Indians Flood the US Market with Indian Resources.

Our Recommendation and Response

Our first recommendation for this questioner and to all domestic US IT workers is to read our article, The Worst SAP Recruiters List. The majority of recruiters on this list are Indian firms, although plenty of UK based firms are also on the list.

The next step we recommend is to get oneself in the right frame of mind.

Time to Sit Down For a Good Prison Movie

I recommend good prison movies. Like this one — called Runaway Train. Its a classic from the 1980s.

This scene is called “I am right here; shoot me.” The protagonist Manny, played by John Voight, is reacting a murder attempt a fellow inmate by set up by the Associate Warden Ranken, who just had to let him out of solitary confinement. 

There are many excellent prison movies that show live at absolute the lowest level. This is a window into the soul of who one will be dealing with.

This type of movie prepares the minds of a civilized person to deal with the uncivilized, which is Indian recruiters and for dealing with Oracle employees. Before the rise of brutal monopolies like Oracle, for which our anti-trust legislation was explicitly designed to bring to heel (and which due to elite influence we have stopped enforcing), and the mass infusion of Indian workers to the US, the treatment of workers was far better. I now have US domestic IT workers reaching out to me frequently.

They are often in a state of shock and unable to process the degradation of the work environment. They can’t say anything or will branded racists and singled out by HR departments for “disrupting harmony.”

The walls are closing in on US domestic IT workers, were in the past, IT workers could find alternative companies to work for say once Cisco or eBay became overrun by Indians who discriminated against them and “Indianized the culture,” there are increasingly fewer places to run. Fewer places to work where Indians have not taken over. US domestic IT contractors now find it increasingly difficult to find US recruiters to work with. They are being forced into working in the degraded environment of Indian IT recruiters.

Domestic IT workers feel constant time pressure. They must deal with Indianization of their field. They must continually obtain new certifications, certifications that Indians cheat or pay other Indians to pass for them — the exact same way that Indian education corruption works. Each US domestic worker sees themselves as “individuals.” Particularly technical individuals in the US have been trained to think of competing on the basis of their skills. 

However, that is not how Indians see it.

Indians function not as individuals but as a hive. Most Indians have much more extensive networks within a few years of working in the US, as US domestic workers have who have spent their entire lives in the US. 

Tick, Tick Tick…

Every year that passes, more older US domestic IT workers retire or leave the profession, and more young Indians come in on foreign worker visas. And this is not merely individuals or H1-B mills like Cognizant, Tata, Wipro, and the rest — as China has had an industrial policy to steal IP and manufacturing capacity from the US, India’s industrial policy is to capture the IT services industry in all of the developed countries. 

This is accomplished by a combination of unbridled immigration fraud and outsourcing to India. Two critical industries for the developed world, are in the process of being rapidly captured by hostile foreign powers.

Both India and China have accomplished a significant part of their objective in just a few decades. We are currently only in the transitory stage. The eventual goal of India and China is to have captured virtually all of these industries — and once they get each area — they intend to keep it. US domestic workers cannot expect their pleas to be “let back into the industry” to be taken seriously. “Opening up” is a one-way street.

Of course, all of this is a small price to pay so that Cisco and Infosys can push down their labor costs and push the saved money to the company’s executives.

Right?

The type of graphic you will never see in an IT media entity. The US now has a higher income inequality than the great depression and is on par with the middle ages — that is when Europe lived under a monarchial system. 

The Reality of Dealing with Indian Recruiters

While prison movies are good to view before interacting with Indian recruiters, however, I see how a non-Indian can deal with an Indian recruiter, in terms of working under contract to them. The information they provide is useless because a very significant percentage of the time, they are merely lying to you. Indian recruiters repeatedly cover up for their own desires by stating..

“The client wants this, the client needs, it is the client.”

By pushing every single unreasonable expectation onto the client, they never have to make the case or justify their requests. Indian society is quite hierarchical, and there is little thinking, beyond the acquisition of narrow technical skills.

Indians Exploit Indians

India is a  country of massive labor exploitation, so most exploitation of Indians happens at the hands of other Indians.

Here bonded labor is shown in India. The managers of this kiln had to be confronted by authorities to actually pay their workers. 

These children are working in a mine in India, which, while technically illegal, is not enforced. 

There is an excellent argument that most of the Indian population is in some shape or form enslaved. Indians only very rarely agitate for changes in India to stop these things. What Indians will put a great deal of effort into is complaining about how US visa restrictions need to be expanded. 

Western elites often question whether they should critique these practices. After all, they aren’t perpetrated by whites — and therefore there is an open question as to whether it is newsworthy or even problematic. And if the offenders are not European, there is very little interest from say The New York Times. The New York Times wants offenders who are white. 

We have been trying to get whites to purchase some of these mines in India where there is child labor. Not because we support child labor — but because without white ownership, there is no racism to how the children are treated in Indian mines, and without the racism angle, there will be no coverage of the child miners. Notice also that Indian media entities do not cover these topics. Media is highly censored in India. Indians have debated me that there is absolutely no bonded labor in India.

Discrimination is Only Illegal if You are White

This also extends to protection for discrimination in the US. Discrimination can only be taken seriously if the victimizers are white. Indians are very happy to use their brown card to engage in extensive discrimination against US domestic workers, as we cover in the article The Amazing Fact That 99.7% of Tata Consulting is Indian. Tata can be certain that they can bring over mass quantities of Indian workers, and never ever have to worry about the US government investigating their many US offices for discrimination.

Indians reach out to me and tell me how they get screwed over by Indian recruiters. So US domestic IT workers should not consider it anything personal, US domestic IT workers are just soft targets.

I cover this in the following article Why Dealing with Indian Recruiters is Futile for Domestic Workers.

Secondly, in most cases, Indian recruiters are not even interested in placing US domestic workers. They need a “proxy” domestic individual so they can appear to be what they aren’t, which is a bottom of the barrel recruiting company that only places Indians. US domestic IT candidates are suitable for this. And US domestic resumes are good to copy from, and then to paste the experience onto an Indian resume. 

Oracle and Indian Recruiters

There are two entities that I try to put myself into a different frame of mind when dealing with. One is anyone who works for Oracle. Oracle is basically a full-time graduate school for chiselers.

This is a rather routine discussion at any office of an Indian recruiter or at the Oracle corporation. 

Indian culture has no real limits in terms of labor exploitation. Labor is exploited in India. India never went through any type of labor movement occured in the developed world, and it is acceptable in India both pay people terribly and to treat them terribly. Abusive treatment is now commonplace in the US IT market, and it is clearly headed further downhill.

In India, the Hindu religion for thousands of years has legitimized the mistreatment of the Dalits or “untouchables.” These people are considered garbage in India and can be treated any higher caste member desires anyway.

How Indians Are Changing IT Labor Standards in the Developed World

The more Indians immigrate to the US and other developed countries like Canada and Australia, the more the labor standards begin to migrate to the Indian level. Indians generally seek to instantiate Indian methods and standards on to the US, rather than adopting the US standards. This is why I cover in the article Contract Clauses to Watch Out for In Indian Professional Service Agreements, how Indian subcontract agreements are appalling.

Conclusion

One has to prepare the mind for dealing with Oracle and Indian recruiters. The mental framework is the same. It is the prison mindset. Dog eat dog, kill, or be killed, and ethics mean nothing. Civilized people must brutalize their minds in preparation for interactions. Cisco, Infosys, IBM, and the many other firms that lobby for more and more foreign workers have decided this is the path forward.

And after all, we have to compete with China.

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

https://en.wikipedia.org/wiki/Runaway_Train_(film)

Who Makes the Firewall Software Proposed to be Used by Third Party Support Providers?

Executive Summary

  • A firewall is an alternate approach to database security patching.
  • This is recommended by third party support providers for Oracle, but where does this firewall software originate?

Introduction

The Oracle database requires a constant application of security patches or patching. These are a significant overhead for customers, and in reality, most customers do not apply Oracle patches when the vulnerability is first announced.

How to Protect a Database

There are two ways to protect a database — one way is through patching. The second way is by using a database firewall.

Third party support companies for Oracle normally recommend database firewalling as opposed to database patching, which a customer can no longer do, as they lose access to patches from Oracle when they go off of support. Therefore, third party support companies recommend using a firewall rather than applying security patches from Oracle.

A database firewall is explained by ExcitingIP in the following quotation.

The Database Firewalls include a set of pre-defined, customizable security audit policies and they can identify database attacks based on past incidents / threat patterns called ‘signatures’. So, the SQL input statements/ queries are compared to these signatures, which are updated frequently by the vendors to identify known attacks on the database (Many tasks inside a database are implemented as a series of executable SQL statements).

Who Develops Database Firewall Software?

What tends to go unmentioned is that these firewalls are not the IP of the third party Oracle support provider. Instead, they simply leverage firewalls from vendors and wrap up the firewall with their overall support service. For example, Imperva is a well-known firewall vendor and Exitas is another. However, when reading the third party support marketing documentation, and talking to sales reps, it can be difficult to ascertain what we are explaining directly in this article — which is that the firewall software is unrelated to the third-party support provider.

Imperva SecureSphere can be brought up within AWS.

Conclusion

Third party support providers like Rimini Street do a good job of explaining how vendors like Oracle and SAP greatly overcharge for their support. But the intent is to get the customer to not only drop Oracle or SAP support but to hire the third-party support provider. Firewalling software is available on the market both to Oracle customers that either want to change their strategy from Oracle security patching, or for customers that simply want to bring their support internal — which is where the customer itself “self supports.”

There are several areas that the third party support provider covers. However, the area of database firewalling is not part of what the support provider is offering — that is it can be purchased directly from the vendor.

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 that are exorbitantly priced, exorbitantly expensive to implement and exorbitantly expensive to maintain.

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

https://www.imperva.com/resources/resource-library/datasheets/securesphere-database-activity-monitoring-and-database-firewall/

*https://www.excitingip.com/1933/what-are-database-firewalls-why-are-they-required-how-do-they-protect-databases/

https://www.oracle.com/security-alerts/

https://www.mysql.com/products/enterprise/firewall.html

https://aws.amazon.com/marketplace/pp/Imperva-Inc-SecureSphere-Database-Firewall-for-AWS/B0153ZQOL0

Is Vishal Sikka Helping Oracle Prepare a Lawsuit Against SAP?

Executive Summary

  • When Vishal Sikka joined the Oracle board of directors, Oracle claimed it was because of his AI knowledge.
  • Our research points to a different reason Oracle has hired Vishal Sikka.

Introduction

This article is essentially part two of the article Is Oracle Board Member Vishal Sikka a World Expert on AI?

The end of that article concludes..

Vishal Sikka is not a world expert on AI, in fact, he is not even prominent in the space.

Vishal Sikka has a Ph.D. in AI but has not done even close to enough work to be considered anywhere close to being what Larry Ellison claimed. This claim by Larry Ellison is yet another attempt to associate Oracle with AI. Who knows if Larry Ellison even believes it. But what Larry Ellison got many media entities to publish is that Oracle has nabbed one of the world’s experts in AI.

Since Vishal got his PhD in AI, Google has since developed products such as TensorFlow which ordinary computer scientist graduates are capable of developing code with. – Markian Jaworsky

We give Larry a 1 out 10 for accuracy in this claim and award him our prestigious Golden Pinocchio Award.

What is the Actual Reason for Oracle Reaching Out to Vishal Sikka?

The previous article established that official story offered by Oracle for their interest in Vishal Sikka does not add up. There is something else odd about the relationship between Oracle and Vishal Sikka, which is that before he joined the board he had a highly lucrative consulting contract with Oracle, which is described below.

However, in the paperwork announcing Sikka’s appointment to its board, Oracle did disclose that it signed a three-month contract with Sikka’s consulting company, Hang Ten, that pays $2,000/hour. Oracle says the contract will involve between 20 – 50 hours of consulting services and sales support per month, which works out to $40,000 – $100,000 a month. That’s on top of the pay and stock Sikka will receive as an Oracle board member. – TechR

This does not sound right. Why would Oracle pay $2,000 per hour simply for Vishal Sikka’s very ordinary AI knowledge? What does Vishal Sikka have that would interest Oracle to offer him a $40,000 to $100,000 per month consulting contract and a board seat?

A Very Deep Rabbit Hole…on the HANA Project

Well for starters, Vishal has in depth knowledge of SAP’s inner workings, but Oracle can and does hire senior executives from SAP on a regular basis.

But Vishal does possess knowledge that is somewhat unique. And that knowledge is Vishal’s understanding of the HANA program. In fact, Vishal is named in the Teradata lawsuit against SAP, as is covered in the following quotation.

While it was actively partnering with Teradata on the Bridge Project, SAP also was developing its own competing database solution—SAP HANA. In the summer of 2009, just months after the Bridge Project formally began, SAP co-founder Hasso Plattner and then-CTO Dr. Vishal Sikka announced their goal of revitalizing SAP’s lackluster and outdated product offerings by developing a new, faster database architecture. Dr. Sikka quickly restructured SAP’s engineering teams to develop and deploy SAP HANA in less than a year, an extremely short time frame for a project of such magnitude.

In November 2010, Dr. Sikka announced at SAP’s annual user conference, SAPPHIRE, that SAP had begun shipping its HANA product. In May 2011, again at SAP’s SAPPHIRE conference, an SAP customer demonstrated HANA for SAP BW to create what purported to be an EDAW-type environment. SAP’s CTO described this version of SAP HANA as incorporating a “massively parallel” database “with various data processing engines”—a similar type of database architecture as that pioneered by Teradata and used in Teradata Database. SAP announced general availability of SAP HANA in June 2011.

Two months later, on August 19, 2011, after the parties had been working on the Bridge Project for nearly three years, SAP unilaterally terminated the project and stopped supporting, selling, or marketing Teradata Foundation. Just days later in September 2011, SAP announced HANA for SAP BW, which combined front-end software with the back-end database engine (HANA) for the purpose of creating an EDAW solution—the same thing Teradata Foundation was intended to achieve.

Unbeknownst to Teradata at the time, SAP stole Teradata’s trade secrets related to optimizing data storage and retrieval (including query execution) in an MPP environment, without authority incorporated them into HANA, and otherwise used them to aid development of HANA, which has become SAP’s flagship database product. Unlike Teradata, which has spent four decades developing its EDAW technologies, SAP managed an initial release of its competing HANA product after spending mere months in development. It has become clear to Teradata that SAP was able to go to market so quickly only because SAP entered into an agreement with Teradata under the false pretense of integrating the two companies’ technologies, stole key Teradata trade secrets, and then incorporated them into and used them to develop HANA. – https://assets.teradata.com/News/2018/2018-06-19-Complaint.pdf

Whatever IP theft did occur, Vishal Sikka would know exactly what it was, as he was leading the team. In fact, Teradata specifically names Vishal Sikka as one of the primary parties that helped SAP steal IP from Teradata.

On information and belief, to overcome this challenge during HANA development, the HANA developers, at the direction of Dr. Sikka, utilized the same solution developed by Teradata’s engineers and developers during the Bridge Project — using Teradata’s trade-secret techniques for optimizing the execution of analytical queries and the speed of data storage and retrieval on large-scale databases.

It said that key SAP employees including Sikka were aware of and supported SAP’s misappropriation of Teradata’s trade secrets during the development of HANA. – The Economic Times of India

Brightwork’s Prediction on the Teradata Lawsuit

Our prediction is that Teradata will either win its lawsuit against SAP, or something will interfere with that outcome before it happens. This would include

  1. Teradata being acquired (we proposed this could happen by SAP in the article Will SAP Acquire Teradata to Extinguish the Lawsuit?)
  2. A normal settlement.

The star witness for Teradata, former SAP employee Thomas Waldbaum has requested US Federal Witness Protection as we covered in the article SAP is Accused of Witness Tampering in Teradata Lawsuit. This is the most shocking legal filing we have ever read and indicated to us that either Thomas Waldbaum is completely insane, or SAP did what Thomas Waldbaum said they did. We find it unlikely that it is the former.

Generalized IP Theft?

However, what has been little discussed is that other database vendors have similar claims against SAP. 1/2 of the Teradata lawsuit deals with anticompetitive behavior, which SAP treated all database partners too while it was pushing their partners out of accounts using false claims around HANA. SAP has a multi decade partnership with Oracle and IBM and Microsoft and other database vendors and they certify their databases for use with SAP applications. The relationships were very open and amiable, as all parties were making money from the arrangement. However, these partnerships allowed SAP to learn a great deal about these databases. These vendors naturally exposed their IP to SAP as part of the certification process.

We covered in the articles Did SAP Just Reinvent the Wheel with HANA?, and How to Understand Fake Innovation in SAP HANA, that SAP had taken IP from multiple database vendors.

Note that we wrote these articles before the Teradata lawsuit, and we had no idea Teradata would file their lawsuit.

Oracle and TomorrowNow

Oracle has already sued SAP. This was the TomorrowNow case where SAP had to admit to IP theft.

States District Court for the Northern District of California case in which Oracle sued SAP, alleging that SAP had engaged in copyright infringement by downloading thousands of copyrighted documents and programs from Oracle’s Customer Connection website. SAP admitted that its subsidiary TomorrowNow had infringed Oracle’s copyrights and a jury awarded Oracle record-high damages in the amount of $1.3 billion. Judge Phyllis Hamilton later vacated the jury’s verdict, which was based on the calculation of a hypothetical license, and granted SAP’s motion for a new trial dependent on Oracle rejecting a remittitur of $272 million. In November 2014, an appeals court ruled for $356.7 million in damages, a decision which was accepted by both parties. – Wikipedia

Therefore, Oracle, although they are a partner with SAP have already sued SAP and won, and they already beat them specifically in a case of IP infringement.

The Story of HANA’s Development: The Impossible Dream

HANA was developed in a very haphazard manner. It began with Hasso Plattner setting up unrealistic design parameters, and then after Hasso Plattner could not get the development team to get HANA to work properly (Hasso is just an “ideas person” and quickly loses focus on things, and likes to hand projects off when real work begins), so Hasso flipped HANA to Vishal Sikka as a special project.

However, HANA’s claims always would be impossible to meet as we cover in the article Articles that Exaggerated HANA’s Benefits. SAP was constantly redesigning HANA, including a large chnage to where many row based tables were added to the database as we cover in the article How Accurate Was John Appleby on HANA SPS08?, even though HANA originally promised to be 100% columnar and as when they introduced HANA 2 which was a major re-architecting of HANA years after it had been released as we cover in the article How the SAP HANA 2 Story Was a Cover for the Real Story.

This meant that the HANA team was desperate to add capabilities that would help it meet Hasso’s unrealistic goals and promises that he and SAP had made to the market. According to our research and according to Teradata, they took shortcuts that resulted in violation of Teradata’s IP.

Vishal Sikka and SAP

Vishal Sikka left SAP very quickly back in 2014. It was noted at the time how abrupt the departure and the fact it was immediate. Vishal is thought to have had a good relationship with Hasso Plattner, but opinions differ as to his general predisposition towards his previous employer. But of course, Oracle is paying him what appears to be a legal advisement consulting contract and also naming him to the board.

These types of enticements are hard to pass up. Secondly, Vishal’s AI startup has received the coverage of his appointment to the board of Oracle as well as Larry Ellison claiming he is a “world expert” on AI, although he clearly is not.

Legal Support for an IP Theft Lawsuit

Much of the work for an Oracle lawsuit has already been done, and is contained in Teradata’s legal filings with the Northern District of California.

Oracle’s IP attorneys have certainly extensively reviewed these documents, conferred with Oracle’s database team, specifically the team that works with SAP to certify SAP databases and to see if any of Oracle’s IP was breached by SAP. Oracle has sued for far less as is evidenced by its lawsuit against Google for violation of its Java IP, which of course it did not own at the time.

Conclusion

Vishal Sikka has one thing that would make Oracle hire him as such a precious consultant rate, and that is his knowledge of the HANA project, which he lead. Vishal Sikka can tell Oracle essentially what SAP took, and Oracle can agree to hold SAP accountable, but not Vishal. Oracle after all would want to collect damages against SAP, not Vishal Sikka. It is in their interest to now protect Vishal and to only expose or bring legal claims in areas that inoculate Vishal from accusations. If Teradata had Vishal Sikka as a consultant or on their board of directors at the time they filed their lawsuit against SAP, Teradata would have conveniently left out the claims they made against him.

The story presented by Oracle that Vishal Sikka was added to the board is a cover story designed to deflect rom the fact that Vishal Sikka is helping Oracle plan its lawsuit against SAP. Oracle can of course choose to file the lawsuit whenever is sees fit, and can continue to review the ongoing information that is flowing from the legal filings with the Northern California District. For instance, from recent filings, Oracle would have determined that SAP is extremely concerned about the testimony from Thomas Waldbaum. There is no reason Oracle cannot hire Thomas Waldbaum as an expert witness after the Teradata lawsuit is complete.

Oracle can then request the same documents (and more) that SAP has provided to the court and to Teradata, and that it is yet to provide (and for which Teradata has complained to the court that SAP has taken far to long to provide). With Vishal Sikka in their pocket, and with access to the Teradata lawsuit, Oracle is an excellent position to file a lawsuit against SAP.

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 that are exorbitantly priced, exorbitantly expensive to implement and exorbitantly expensive to maintain.

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

*https://www.techrseries.com/employee-engagement/oracle-names-vishal-sikka-to-the-board-of-directors/

https://economictimes.indiatimes.com/tech/ites/teradata-claims-former-cto-vishal-sikka-was-aware-of-ip-theft-in-lawsuit-against-sap/articleshow/64679793.cms?from=mdr

https://en.wikipedia.org/wiki/Oracle_Corp._v._SAP_AG

https://www.businessinsider.com/sources-why-vishal-sikka-left-sap-2014-5

https://assets.teradata.com/News/2018/2018-06-19-Complaint.pdf

Is Oracle Board Member Vishal Sikka a World Expert on AI?

Executive Summary

  • When Vishal Sikka joined the Oracle board of directors, Oracle claimed he was one of the world’s leading experts in AI.
  • We analyze whether this claim by Oracle is true.

Introduction

When Vishal Sikka joined Oracle’s board of directors some amazing things were claimed, and then repeated throughout the media.

Notice this web page from the Economic Times of India. He is called one of the world’s leading experts in artificial intelligence.

However, who actually made this claim? Well, it turned out to be Larry Ellison.

“Vishal is one the world’s leading experts in Artificial Intelligence and Machine Learning,” said Oracle Chairman and CTO Larry Ellison. “These AI technologies are key foundational elements of the Oracle Cloud’s Autonomous Infrastructure and Intelligent Applications. Vishal’s expertise and experience makes him ideally suited to provide strategic vision and expert advice to our company and to our customers. He is a most welcome addition to the Oracle Board.” – TechR

First things first.

  1. Oracle has no known AI capabilities and is not known for AI. Oracle, just like other vendors simply uses AI as a marketing construct.
  2. As we covered in the article How Real is Oracle’s Autonomous Database?, the autonomous database is not real and is simply a way of trying to keep pace with AWS’s RDS database service.
  3. Oracle has very little cloud business and is also not considered competent in the cloud, with engineers working in the background to provide faux cloud.
  4. Oracle also does not have “intelligent applications.” Oracle has a number of applications that they acquired because Oracle is not capable of developing effective applications internally.

These are very important points because Larry Ellison tells multiple lies in just one paragraph. So before we get to Larry Ellison’s claim around Vishal Sikka we should first appreciate that everything that Larry Ellison has said in this paragraph is false. Obviously, this does not bode well for anything else we will fact check. But who knows, maybe Larry inserted one true thing in the paragraph.

Larry’s Unending Verbal Diarrhea Of Lies

Now let us get to why Larry Ellison has told so many lies in this paragraph.

Well, Oracle is using trying to get maximum PR benefit from the announcement, and they know this announcement will be carried and repeated uncritically in many outlets. Therefore, the strategy is to incorporate other as many marketing elements into the PR release as possible. Most media outlets employ journalists who have never worked in IT, and they are will repeat whatever is in the press release.

Hence we get to the claim about Vishal Sikka supposedly being a world expert in AI. Notice that The Economic Times of India did not say who said this, it simply included the statement so that it seems as if it is a claim made by The Economic Times of India.

Oracle marketing must have been over the moon when they saw how uncritically this claim was accepted!

When you get inept and deadline constrained media entities who think their job is done when they obtain a quote to repeat your marketing messaging for free, that is referred to as a Crystal Moment

Furthermore, virtually the same story with the exact same quotes was carried in multiple media outlets, with no analysis provided by the media entity. Because so much of the article was simply quotes from Oracle, these articles can be considered as simply having been written by Oracle. This issue of mindless media entities repeating the same press releases was something we specifically noted in the article How Awful Was the Coverage of the McDonald’s AI Acquisition?

No Effort, No Thinking

These “no effort and no thinking” articles help media entities get clicks with minimal investment, but it also makes it look like there is consensus on a topic, when in fact, a large number of media entities have copied and pasted the same press release onto their website. IT media entities know that entities like Oracle have a sophisticated marketing department that is adept at manipulating them. It is not responsible to serve as their passive repeaters, as it takes advantage of the naivete of the reader, and distributes false information.

Evidence of Vishal Sikka’s Expertise in AI

Vishal Sikka began making claims around being an expert in AI when he was raising money for his new AI venture, Vianai, where he raised $50 million. However, I have been following Vishal Sikka for a number of years as I analyze and fact check SAP, and Vishal Sikka was previously the CTO of SAP.

What struck me as odd, is that until very recently, I do not ever recall once hearing about Vishal Sikka within the context of AI. Vishal Sikka’s dissertation is in AI. However, Vishal Sikka is 52 years old. And his work experience shows virtually no AI since that time.

This is not unusual.

Before AI became hot again in the past 4 to 5 years, it was very common for there to be few jobs in AI when Vishal graduated back in 1996, and so people that had degrees in AI moved over into other areas of computing. There are also a bunch of people with degrees in robotics, who switched into general systems implementation or development.

It just so happens that AI is now hot.

Where Did All This AI Work Experience Come From?

Normally to be considered a world expert in something, one needs to actually work in the field, normally for a few decades. However, Vishal Sikka never did this. Vishal Sikka’s work experience shows a person who is both a technology generalist and who has been in very senior roles for over 10 years, including leading a 225,000 person company in Infosys — which is also not known for its AI work. A second point. I spoke to several people I consider AI experts, but who are not in the SAP space. None of them had heard of Vishal Sikka.

I performed a search in an academic search engine, and Vishal has no published articles on AI (since his 1996 dissertation). All of Vishal publications are associated with SAP Labs, which does not publish research as much as marketing material in a research format — but they have multiple authors and its unlikely much of it was Vishal’s work. 

An Amazon book search show no books of on AI and no books of any kind. Nothing.

Vishal Sikka is a world expert in a topic without a single publication in the topic after his dissertation? This has to be the strangest world expert I have ever heard of. Perhaps he is a secret world expert?

In reviewing his Wikipedia entry, Vishal did not work on AI from the time he began at SAP in 2002, and nor would have have had much to do with AI when he was the head of Infosys for 3.5 years.

Vishal Sikka was who Hasso Plattner tapped to complete what was a flawed database design, based upon Hasso Plattner’s massive overestimation of his own capabilities to design a database. For a number of years, Vishal Sikka was presented to audiences as a deep expert in databases. But it is also not clear where Vishal Sikka acquired this expertise, as he had not worked in databases prior to being tasked with recovering the HANA project. This video shows a person who is using the term “fundamentally” frequently but does not appear to have a very good grasp of what he is talking about. SAP has added precisely zero to the intellectual property of databases since HANA was introduced, and SAP has been reverse engineering other far more advanced databases as we cover in the article Did SAP Just Reinvent the Wheel with HANA?

At SAP “enormous innovation” amounts to backward engineering other company’s products. This is something I noted back in 2010 in the article Its Time for the xApp Program to End, and long before Teradata filed its lawsuit against SAP for both anticompetitive behavior and theft of its data warehouse IP (where Vishal Sikka is named as a complicit party).

Specific Topics from the Video

  • Aggregates are a Problem?: Vishal Sikka’s statements about not requiring pre-aggregates (what is a pre-aggregate Vishal?) and closed systems are really just babbling and is designed to sound good, but contains little actual content. Pre-aggregates, or just aggregates are a good part of database design and many aggregates don’t change and don’t need to be recalculated.
  • HANA is Moving Away from Closed Systems?: SAP makes the most closed systems in enterprise software, even having the most punitive controls over accessing their systems, called indirect access. So there is no more closed set of systems than those offered by SAP. HANA itself has its own indirect access liabilities and often requires a second HANA instance as HANA cannot be connected to other systems without incurring indirect access liabilities as we cover in the article The HANA Police.
  • Simplification?: HANA is not a simplification of anything. HANA does not have a more simple data model as we cover in the article Does S/4HANA Have a Simplified Data Model? HANA is the highest maintenance overhead database that we track (which can be seen at The Brightwork Comparison and Scoring of Databases) and has been marred by continual maturity.
  • HANA Replacing Data Marts and Data Warehouses?: SAP customers did not replace data warehouses and data marts with HANA. HANA is a database, not a data warehouse or a data mart. SAP’s goto data warehouse/data mart solution is the BW, and companies simply ported their BW instances to HANA. Nothing of what Vishal is discussing in this area of the video is accurate.
  • Moving to a Single HANA Instance?: One of Vishal’s more hallucinatory proposals was that all applications and analytics would run from a single HANA instance. We covered this fallacy in the article SAP’s Big Idea: ERP Data and Big Data on the Same Database?
  • Massive Performance Improvement?: Vishal makes the claim that a process that previously took 3 days in ERP on Oracle was reduced to 2 seconds on HANA. Let us do the math on this. 3 days × 24 hours per day× 60 minutes per hour × 60 seconds per minute = 259,200 seconds. 259,200 / 2 = 129,600 times faster. This calculation was for an incentive program for loyal customers, which is not even in HANA’s wheelhouse of read performance. It is simply impossible for this claim to be true unless there was something else changed, some type of misconfiguration that Vishal is not including.

This quote encapsulates his view and is a prediction.

I believe in a completely different reality which is significantly more simplifying than what we have used to is in front of us. That is the opportunity that we are after with HANA. I think that reassembly of existing components and layers towards that misses the point. – Vishal Sikka

Well, eight years after this video was made, there is very little different on SAP projects with HANA than from when this video was filmed and these grand projections were made. Analytics run faster, but not any faster than any of the competing databases. SAP’s claims about everything “in memory” never came true because HANA is just another memory-optimized database, although with an overly expensive hardware specification.

Hasso Made Him Do It?

The only “out” that Vishal has here is that he has to repeat whatever Hasso Plattner says, and Hasso Plattner defined the language around HANA before Vishal inherited HANA. With Hasso Plattner, you either do exactly as he says and pretend he is a genius, or you find yourself another job.

Furthermore, none of the things proposed by SAP about HANA’s superiority regarding competing databases turned out to be true. We analyzed claims made by SAP and John Appleby of Bluefin Solutions in the article The Appleby Accuracy Checker: A Study into John Appleby’s Accuracy on HANA.

Therefore, previously, Vishal Sikka was presented to the general public as a database expert, when he was not one. And he did nothing to make HANA a more effective database, yet he constantly receives credit for HANA by journalists, who don’t have the background or interest in fact-checking what happened with HANA. Brightwork Research & Analysis has performed the most independent research on HANA, unlike virtually all media entities in IT, we take no income from SAP or any other vendor and we have concluded that the claims around HANA by Vishal Sikka and SAP are false. And that they must have known they were false at the time they made them.

A Lack of Fact-Checking by Media Entities

In fact, notice this statement from Quartz India.

He is known as the “father of HANA,” SAP’s fastest-growing product ever—in 2014, this platform was generating over $1 billion in revenue.

Being the father of HANA does not even fit with SAP’s official story of HANA, which we cover in the article, Did Hasso Plattner and His Ph.D. Students Invent HANA?

Secondly, this writer is simply repeating false statements made by SAP about HANA, which we fact-checked in the article How Accurate Was SAP on HANA Being the Fastest Growing Product In SAP’s History?

The question on a lot of people’s minds these days is whether SAP HANA will be as big as R/3? Plattner has said several times he believes it will be—while SAP will continue to support its current database partners, it will optimize all of its applications to run on the HANA database. And at TechEd this year, Sikka and SAP offered more details. – ASUG

This is why it is a good idea not to read ASUG (unless you perform media criticism as I do). You end up getting highly slanted information. ASUG is a captive entity to SAP and presents itself as a user group, while it primarily serves as a marketing and customer control arm of SAP, as we cover in the article How ASUG Lost its Way and Sold Out to SAP.

HANA was released in 2011. That has given it over 9 years to grow. If HANA has been the fastest-growing product in SAP’s history, then why is it ranked next to FileMaker according to DB-Engines? 

Even a person who simply works in SAP and has no special research capability knows quite well that the fastest growing product in SAP’s history was R/3.

Vishal’s Legacy of Inaccuracy

I have spent a great deal of time reading quotes from Vishal Sikka, and he tends to speak at a very high level when discussing technology topics. I don’t think of technology insights when I think of Vishal Sikka. When I analyze statements by Vishal Sikka, the most prominent thing that comes to mind is that the things Vishal Sikka says don’t come true.

Here is Vishal Sikka proposing to Denis Howlett (of Diginomica and at the time a recipient of SAP funding) that SAP was putting a lot of emphasis on addressing cancer by running genetic algorithms in HANA.

What is curious is that nothing stated here came true. SAP’s supposed health care solution never became anything used by SAP customers. We covered Vishal Sikka’s inaccuracy in the article How Accurate Was Vishal Sikka on the Future of HANA?

So far, we are the only entity to go back and fact checks whether anything stated here came true. There is also little validity to Vishal Sikka’s statements about running genetic algorithms in the database, as there is plenty of time for processing in medical research. These computers are dedicated to these tasks. The issue is the time required by humans to analyze the outcome.

Vishal Sikka is not occasionally wrong, every time we have checked what happened versus what Vishal Sikka said would happen, Vishal turned out to be wrong. We covered his prediction about Sybase in the article How Accurate Was SAP on the Sybase Acquisition?

Review the accuracy of Vishal Sikka on the Sybase acquisition for yourself.

Safra Catz Adds On to Larry Ellison’s False Claims

As I brought up previously, Oracle wants to wring the most PR value out of its announcement of Vishal being appointed the board.

“The digital transformation of an enterprise is enabled by the rapid adoption of modern cloud applications and technologies,” said Oracle CEO Safra Catz. “Vishal clearly understands how Oracle’s Gen2 Cloud Infrastructure, Autonomous Database and Applications come together in the Oracle Cloud to help our customers drive business value and adapt to change.  I am very happy that he will be joining the Oracle Board.” – TechR

Here we have the same strategy, say that the person you are appointing knows basically “how great you are.”

Vishal Adds On His False Claims

“For years, the Oracle Database has been the heartbeat and life-blood of every large and significant organization in the world,” said Dr. Vishal Sikka. “Today, Oracle is the only one of the big four cloud companies that offers both Enterprise Application Suites and Secure Infrastructure technologies in a single unified cloud.  It’s unique position in both applications and infrastructure paves the way for enormous innovation and growth in the times ahead. I am excited to have the opportunity to join the Board, and be part of this journey.” – TechR

Here Vishal Sikka does some marketing for Oracle and like the other people in this press release he is providing false information. First, as brought up by Markian Jaworksy..

“The big four cloud companies”  🙂 Everyone knows there are only 2 that are big.

And this is quite true. As Oracle has a negligible cloud business, how are they one of the four big cloud companies? So the statement by Vishal is false. As Oracle is not one of the four big cloud companies, it is not..

only one of the big four cloud companies that offers both Enterprise Application Suites and Secure Infrastructure technologies in a single unified cloud

Vishal has only just begun making public statements as a member of Oracle, and he is already providing not slightly, but highly false information.

Vishal also thinks that Oracle is in a unique position in both applications in infrastructure.

Did Vishal Sikka think this back when he worked as the CTO for SAP?

I ask because I can’t find any instances of Vishal Sikka praising Oracle back when he worked for SAP.

Has Vishal told Larry what he thinks about Exalytics?

Because in the video included above, Vishal stated in the video the following.

Based upon what I read at least, I don’t think that Exalytics is worth criticizing. It misses the whole point of the new real time that we believe new enterprises are looking for.

Apparently, Vishal does not think companies should be buying either Exalytics or Exadata.

Vishal’s View on HANA Versus Oracle?

Vishal also did not think much of Oracle 12’s in-memory capability, stating in September 2013 that..

“Well, they are right that it is not comparable to HANA,” Sikka said in an emailed statement.

“The in-memory option they announced completely misses the point because the column store is read-only, and therefore it is a redundant replica of data in the row store, which means redundant storage and at least 5x larger size.”

“Plus, it hasn’t actually been released yet, so please come back and talk to us when it is available,” Sikka added. – ComputerWorld

Furthermore, Vishal stated about Exadata..

 SAP HANA offers more simplification, while Exadata offers more layers. “As businesses attack more-complex problems, they need to rethink all the layers involved in their technology stacks,” said SAP’s Amit Sinha, vice president of Solution Marketing for SAP In-Memory Computing, in a recent conversation. “From the beginning with HANA, Vishal [Sikka] has talked about the need for dramatic simplification. But with Exadata, you still get more layers—it may be faster than your old database structure, but you’ve also got more backup layers, more replication layers, and more of the old stuff that just adds cost and complexity. And cost-shifting is definitely not the same as cost-optimization.” – Forbes

Does Vishal still have such a diminished view of Oracle’s database and data appliance offerings? Becuase it was extremely negative on them.

How about HANA, does Vishal still think that most HANA is so advantageous that SAP accounts should migrate away from Oracle and to HANA. Or has this view changed along with his income and position with Oracle?

If it has changed and he thinks SAP customers should stay with Oracle and not move to “his baby” HANA, then was he lying back when he told everyone that it was critical that the Oracle database was replaced?

SAP Admitting They Took IP from MySQL and Not Teradata

In the court case of Teradata v. SAP, SAP stated in court documents that they took IP from MySQL, and not Teradata, as claimed by Teradata. We cover this in the article How SAP Admitted in Court Documents to Copying from Open Source. This filing would seem to greatly interest Oracle, as they now own MySQL and are fresh off of suing Google over Java.

Conclusion

Vishal Sikka is not a world expert on AI, in fact, he is not even prominent in the space.

Vishal Sikka has a Ph.D. in AI but has not done even close to enough work to be considered anywhere close to being what Larry Ellison claimed. This claim by Larry Ellison is yet another attempt to associate Oracle with AI. Who knows if Larry Ellison even believes it. But what Larry Ellison got many media entities to publish is that Oracle has nabbed one of the world’s experts in AI.

We give Larry a 1 out 10 for accuracy in this claim and award him our prestigious Golden Pinocchio Award.

Curiously, we read every article that provided coverage of the addition of Vishal Sikka to the Oracle board, and we did not find a single article that questioned whether Vishal Sikka was a world expert on AI. Does this mean that the IT media system is credulous and unreliable? Yes, yes it does mean that. Because it is not just this one case, but it is now very standard for IT media to republish press releases without analyzing what they are publishing.

The Real Reason Vishal Sikka is Back Talking About AI

The only reason that Vishal Sikka has suddenly positioned himself as an AI expert is that AI is known as the easiest area to raise venture capital. We consider Vishal Sikka to be a highly unreliable source of information. Larry Ellison has been known to throw enormous sums of money at people who he thinks have AI experience, as we mistakenly believes AI is critical to Oracle’s future. At one point Oracle was paying Vishal Sikka $2000 per hour for his “AI expertise.”

However, in the paperwork announcing Sikka’s appointment to its board, Oracle did disclose that it signed a three-month contract with Sikka’s consulting company, Hang Ten, that pays $2,000/hour. Oracle says the contract will involve between 20 – 50 hours of consulting services and sales support per month, which works out to $40,000 – $100,000 a month. That’s on top of the pay and stock Sikka will receive as an Oracle board member. – TechR

This is surreal, and it illustrates that people with very marginal expertise can raise $50 million in venture capital or $2,000 per hour if they have the right branding, and furthermore that accuracy of previous statements is for all intents and purposes meaningless.

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 that are exorbitantly priced, exorbitantly expensive to implement and exorbitantly expensive to maintain.

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.

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References

*https://www.techrseries.com/employee-engagement/oracle-names-vishal-sikka-to-the-board-of-directors/

https://hai.stanford.edu/people/vishal-sikka

https://www.asug.com/news/vishal-sikka-gets-real-on-sap-hana-benefits-and-barriers

https://www.computerworld.com/article/2484973/sap-hana-isn-t–even-comparable–to-oracle-s-in-memory-technology–hurd-says.html

https://www.forbes.com/sites/sap/2011/06/23/the-top-10-reasons-sap-hana-is-disrupting-larry-ellisons-grand-plans/#3f2eaaf83e92

https://www.businessinsider.com/oracle-vishal-sikka-joined-oracle-board-2019-12

https://qz.com/india/1057676/vishal-sikka-is-the-tech-oracle-indian-it-desperately-needed-but-shunned/

https://en.wikipedia.org/wiki/Vishal_Sikka

https://qz.com/india/1057676/vishal-sikka-is-the-tech-oracle-indian-it-desperately-needed-but-shunned/

https://economictimes.indiatimes.com/tech/software/artificial-intelligence-expert-vishal-sikka-joins-oracles-board-of-directors/articleshow/72457388.cms

Is Oracle in Trouble (Longer Term) for Oracle Cloud vs AWS?

Executive Summary

  • Oracle is a dominant database vendor, but Oracle is set to lose out in database growth as well as IaaS growth in the future.
  • How AWS threatens Oracle’s account control and how AWS dramatically differs from Oracle in using products themselves
  • Our prediction of what will happen versus AWS (Oracle Cloud vs AWS)

Introduction

This blog focuses on SAP HANA and related topics, and of course, Oracle database is a related topic. SAP HANA was designed not to benefit customers, not to bring anything particularly advantageous to the market, but to grab the high margin database business from Oracle. Oracle is the dominant database that SAP customers use. SAP thought that if they used enough false claims about HANA they could claim a large share of the database market. Bill McDermott predicted that by this time, 7 years after HANA was introduced, SAP would be the number two database vendor in the world.

SAP made all manner of exaggerations in order to promote its customers to drop Oracle in favor of HANA. All of these claims have been researched by Brightwork Research & Analysis and have been proven to be untrue. Oracle’s future database dominance will be challenged, but not by SAP. 

In this article, we will observe something quite interesting about their popularity in databases and what it might mean for the company’s future.

Understanding the DB-Engines Ranking  for Oracle Cloud vs AWS

DB-Engines ranking is a site that uses a method that combines a series of factors to result in a rank of how widely a particular database is used. So what factors do they use? Well, I have listed their description of their method below:

“Number of mentions of the system on websites, measured as number of results in search engines queries. At the moment, we use Google, Bing and Yandex for this measurement. In order to count only relevant results, we are searching for <system name> together with the term database, e.g. “Oracle” and “database”.

General interest in the system. For this measurement, we use the frequency of searches in Google Trends.

Frequency of technical discussions about the system. We use the number of related questions and the number of interested users on the well-known IT-related Q&A sites Stack Overflow and DBA Stack Exchange.

Number of job offers, in which the system is mentioned. We use the number of offers on the leading job search engines Indeed and Simply Hired.

Number of profiles in professional networks, in which the system is mentioned. We use the internationally most popular professional networks LinkedIn and Upwork.

Relevance in social networks. We count the number of Twitter tweets, in which the system is mentioned.” – DB-Engines

This seems like a reasonable way to perform a ranking.

Oracle’s Growth Rate

To begin, let us review the usage/popularity list from DB-Engines.

DB-Engine rankings can go up and down over time, so when we refreshed this article we took a second data point.

Oracle’s decline has continued, but interestingly, MySQL and SQL Server have turned significantly negative. This does not track what we will discuss, which is Oracle databases which are switched from being on premises to being hosted with AWS or Azure or other — reducing Oracle’s support revenue. 

Oracle’s DB-Engines Ranking for Oracle Cloud vs AWS

Oracle has two of the fastest declining databases in terms of popularity on the entire list of databases. MySQL is less of a concern as Oracle makes little money on MySQL as it is open source. However, Oracle’s proprietary databases are steeply declining in popularity. Now the overall database market is not growing very fast. In fact, the top 2 databases have an average growth rate of 4.2%. Although it should be mentioned DB-Engines is not measuring revenues, but rather popularity.

  • Clearly, databases that are growing very rapidly such as PostgreSQL and MariaDB are simply taking market share that Oracle is losing. Of all the open source databases, PostgreSQL has probably the best overlap with Oracle in terms of higher-level functions. However, it is also true that many companies that use Oracle don’t take advantage of Oracle higher level functions. That is they purchased Oracle on the basis of brand recognition and defensibility if something were to go wrong (i.e. the IBM argument “no one ever got fired for buying IBM”)
  • This means lower cost databases are eroding the market share of a high-cost database, with high maintenance costs (but with more ability to be tuned).

Oracle’s Long-Term Growth

DB Engines also shows the long-term trend of Oracle.

This is a rather shocking and severe decline. What is curious is how little this is commented upon. Oracle’s databases have not declined, but open source alternatives are eating away at Oracle’s market share, as well as lower priced databases like Microsoft’s SQL Server. Let us look at SQL Server’s growth. 

This graphic is misleading, however. It makes Oracle’s decline look more much severe than it actually is. This is because the base is set to 1.3, instead of zero. If we look at the actual percentage decline from Jan 2013 to July 2017 it is 1.5k – 1.35k or .15. .15/1.5 = 10%.

However, if we look at the graph, it looks like a decline of over 50%. This is the problem with graphs that do not have the x axis set to zero.

Also, this does not seem to match the 97% decline year over year presented in the table. July 2016 shows Oracle with a popularity of roughly 14.2. A decline from 14.2 to 13.7 is .5/14.2 = 3.5%. So how does that comport with DB-Engine’s estimate of 97% decline year over year?

After a significant period of decline in 2014, 2015, SQL Server is regaining its popularity. But is not indicative of long-term growth. 

PostgreSQL is a highly technically competent open source database. After 2014, PostgreSQL has grown consistently. This is exactly the type of database that it taking market share from Oracle, and looks ready to do so in the future. 

Oracle and the Cloud (Oracle Cloud vs AWS)

Oracle is like SAP, a vendor that flourish and is completely designed for the on-premises model. Oracle has two major problems with the cloud.

  1. SaaS vendors tend to not choose Oracle. And prominent SaaS vendors like Salesforce that do use Oracle are trying to move away from them.
  2. Oracle’s applications are not substantially used in the cloud. Oracle sells cloud licenses (because this is how Oracle compensates salespeople) but Oracle sells both the on-premises license and the cloud license bundled. However the cloud license is far less frequently used, and it becomes shelfware — all of this is an attempt to cloud wash Oracle’s earnings for Wall Street.

This following point is brought up by Ahmed Azmi.

“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.

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.”

How AWS Explains This Topic

This is explained in the AWS page on the benefits of managed databases like AWS RDS.

“Many customers prefer to use Amazon RDS for Oracle because it frees them to focus on application development. Amazon RDS automates time-consuming database
administration tasks, including provisioning, backups, software patching, monitoring, and hardware scaling. Amazon RDS simplifies the task of running a database by eliminating the need to plan and provision the infrastructure as well as install, configure, and maintain the database software.”Strategies for Migrating Oracle Databases to AWS

As we are currently doing application development ourselves for our application the Brightwork Explorer, this resonates with us. We want the database to just work, and don’t want to worry about all the database maintenance, which is why we are going with AWS ourselves.

Ahmed continues….

“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!”

How AWS is Changing How Customers Staff Database Management

This next quote from Ahmed gets into how AWS is changing how customers staff database management, essentially outsourcing it to AWS.

“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.”

But familiarity becomes less of a concern if someone else is managing it — providing the DBA, etc… And to Ahmed’s point, AWS has a history of proving managed DBs; Oracle never had this background. (They are an on-premises vendor in their heritage — and as Ahmed points out in their actual revenues).

The customer buys the database and hires their own DBA. That has been their model.

How AWS Threatens Oracle Account Control

Oracle (overall) is vulnerable to database maintenance loss because everything Oracle does is based upon its account control which is based upon its monopolistic control over the database.

If AWS threatens that, it threatens everything else that Oracle does — including their account control.

Ahmed’s quote regarding commoditization of the database layer is as follows.

“Cloud computing commoditized hardware. Now, it’s commoditizing software starting with database. The database, a back-end process by definition, is the perfect candidate for automation.

What happens when a database is commoditized? Just like compute and storage, customers only care about the SLA not the manufacturer. They no longer care HOW you deliver 99% availability because that’s no longer their concern. In this case, why keep paying millions for M&S? You no longer maintain the database and you loathe tech support.”

How Oracle Cloud vs AWS Differs in How the Companies Go To Market

And this shows a difference in how Oracle and AWS go to market.

“AWS and Google are developer-focused. They sell to developers. When your buyer is a developer, you really need credentials. You get credentials from building not buying and reselling.

You may be surprised to learn that AWS hired so many seasoned Oracle salespeople. They hire them because they own the account relationships at many organizations and know how to open doors. Long years of experience also gives you a deep understanding of the local market.

AWS goes to market primarily by gaining grass root mindshare for their developer centric tools. You can call it B2D2B where developers use the services to build solutions then they (the developers) do the selling internally on behalf of AWS. They showcase their work to management as social proof. Much of the process, as you said, is self-service. You don’t need nearly as many sales people. The products do much of the “talking”.”

This gets into the topic of the prominence of the database as it becomes a service.

“The database trajectory is a micro-service. Apps and developers only need to know the API/SQL. If the service provider switched overnight to another SLA-compatible micro-service that happens to run say RedShift, who cares?”

Migrating Oracle to AWS (Lo0king Easier and Easier)

As pointed out by Ahmed, AWS has hired ex-Oracle sales to get Oracle accounts transfer to AWS hosting. A major part of Oracle keeping its customers is inertia. AWS’s hiring to sales reps (many who were let go by Oracle in an effort to go younger and cut its sales costs, explained by Ahmed in the following quotation).

“The idea is to replace as many highly experienced (expensive) account reps with much cheaper fresh grads to lower operating cost enough to report a net profit for product lines where sales growth has stalled.

The justification is that in such accounts, experienced reps add no value since the customer is already locked into long-term contracts and account control is already established via lock-in and the prohibitively high switching cost.

The problem, as Mark Dalton noted, is that those high-profile reps joined competitors like AWS, Google, Salesforce, and Workday. They took with them the account relationships, deep industry insights customers want more than anything else, and some pretty persuasive, time-tested, competitive tactics.

It’s dangerous to think that the credentials of an enterprise sales rep is a replaceable commodity.”

This is clear evidence that AWS is becoming more aggressive in going after Oracle’s maintenance business. AWS did not have to do this. They could have sat back and continued to receive inbound business and continued to grow very well. However, out guess is that AWS saw the opportunity to seriously cut into Oracle’s maintenance business, and by selectively hiring ex-Oracle sales reps decided to alter their normal sales strategy. How can we put this, AWS essentially said to Oracle “For you, we will make an exception.”

But AWS also has online educational material that explains how to migrate Oracle DBs to AWS as well as Oracle DB to AWS’s DBs like Aurora.

They also offer a migration service. 

We have always found that AWS has some of the best technical documentation, and all of it available on the web. 

The Multiple of the Initial License Paid Per Database Version Since Purchased

 
Database Version
Overpayment Multiples of Initial Net License Charge
% of Oracle DB Customers
2Oracle 12c
N/A
3Oracle 11g
2.75
31%
4Oracle 10g
3.75
29%
5Oracle9i
4.25
21%
6Oracle 8i
4.75
13%

In AWS’s documentation, it shows different approaches for exporting databases from Oracle.

 This is the SQL Database Copy, (for smaller databases).

...which changes depending upon the size of the database. SQL Loader for databases smaller than 10 GB. 

The more customers have customized the Oracle database, the more they have followed Oracle’s advice and placed stored procedures in the database, the more difficult it will be for them to migrate their data to AWS, and also to other non-Oracle databases.

A big part of AWS’s strategy for grabbing Oracle support business is by having customers help themselves as much as possible.

How Oracle Really Sees the Cloud (Oracle Cloud vs AWS)

Oracle appears to have a weak commitment to the cloud as anything more than a mechanism to extract more income from companies and to get a higher multiple from Wall Street. This following quotation is the problem that companies run into when they both try to message to customers and to Wall Street, you end up with inconsistencies.

“And healthy margins are what Oracle’s cloud strategy is all about. “When a customer who is on-prem paying us support moved to the cloud, they pay us more money,” Hurd explained on the most recent earnings call. “They don’t pay us one to one, they don’t pay us two to one, they pay us more like three to one. In some cases more than three to one.”Forbes

How is a customer supposed to interpret this statement from Mark Hurd?

More reality regarding Oracle’s true commitment to the cloud is offered by Mark Dalton, CEO of AutoDeploy.

“Oracle has cloud marketing, AWS has the real deal. The capabilities that AWS has so far outpaces anything Oracle talks about, it is astonishing. I would urge everyone to watch Werner Vogels and Andy Jassey’s talks at Reinvent, last year. Vogels is particularly good.

On Oracle sales front, I used to think the biggest threat to Oracle was not having a fully baked cloud roadmap. I’ve come around to think that it’s the massive sales force that Oracle has alienated, and now have huge upside to go work with Google, Amazon, SFDC etc….Oracle is losing the institutional knowledge of their sales teams. They just push cloud cloud cloud regardless of customer needs. It’s a problem.”

What is the Value of Oracle Support?

Oracle support is as little in value-add as SAP’s, and Rimini Street was essentially originated as an idea to go after this 90%+ margin business that Oracle has in its support. As with SAP support, it is one of the great areas of waste in IT budgets for companies that use SAP or Oracle.

“As a recent Rimini Street survey showed, as much as 74 percent of Oracle customers are running unsupported, with half of Oracle’s customers not sure what they’re paying for. These customers are likely paying full-fat maintenance fees for no-fat support (meaning they get no updates, fixes, or security alerts for that money).” NZ Reseller

This article brings up the question of whether you should be hosting with Oracle. That is, is IaaS and managed DBs a core thing for Oracle? Oracle has immense resources and can cut the price on its IaaS BDs, but the price is not the only factor, but other probably more important features are selected and options for one. So what if a customer want to migrate some of my current Oracle DBs to Redshift or try out other DBs, is Oracle a good choice for my IaaS provider? No. Oracle will, of course, lock them into Oracle.

How about proven managed DB capability. Is this an Oracle core “thing?” No. Oracle is doing this defensively.

Again Oracle seems to be transitioning to managed DBs rather than it being something they have normally done.

How AWS Differs Dramatically from Oracle in Using Products Themselves

Have you noticed how little AWS talks or makes announcements or talks about how much they are investing in A or B? Amazon is huge but very quiet. They don’t have to make big pronouncements; they don’t need expensive sales reps — they just quietly grow market share by being more efficient and offering more choice.

If you don’t actually use your own stuff, you are much more likely just to create trendy stuff that sounds cool. SAP does this. They sell software on the basis of things that sound cool, and they don’t care if any of the cool things end up being true.

Oracle has made announcements that they are investing mightily in data centers as the following quotation attests.

“The future of IT is autonomous. With our expanded, modern data centers, Oracle is uniquely suited to deliver the most autonomous technologies in the world,” said Oracle CEO Mark Hurd. “As we invest, our margins will continue to expand. And with our global datacenter expansion, we are able to help customers lower IT costs, mitigate risks and compete like they never have before.”

First, Oracle has actually very little to show for the “autonomous database” which is a response to AWS’s managed service. The vast majority of Oracle instances globally are managed the old fashioned way, inefficiently, on-premises and with little in the way of automation.

Second Oracle seems to think the only thing that separates them from AWS that will make the difference between Oracle Cloud vs AWS is more servers and more sysadmins. But if customers are looking to have someone manage their databases why would they want to be locked into one database vendor?

  • If possible, (which it is) it is preferable to choose an entity that is database agnostic.
  • An entity that can offer scale economies in Oracle’s database that even Oracle can’t seem to offer?
  • And if the database becomes managed, then the preference for Oracle DB will decline, as much of Oracle’s market share in DBs currently is due to familiarity with IT departments.

A Prediction of What Will Happen Versus AWS  (Oracle Cloud vs AWS)

Sounds like Oracle is going to lose a lot of maintenance to AWS in the coming years.

This whole thing with Oracle being able to charge so much for their database for such long periods of time so long is odd.

Normally customers say Oracle is their least liked vendor, and yet they have this leverage over their customers for so long while there are so many good options available. The old argument was MySQL was not heavy duty enough, but now PostgresSQL brings scale and performance. MariaDB has built-in cloud features that 12c does not have.

AWS sees a big fat margin in Oracle maintenance and they are going after it.

Oracle’s Attempt to Respond to AWS with Pricing

Oracle has claimed that customers that switch from AWS to Oracle for managed DBs will see their costs decrease.

Ahmed Azmi has the following observation on this.

“Larry doubles Oracle DB license on AWS then claims he can halve the cost on Oracle cloud. When Larry’s gone, I’m going to miss his funny antics. Ethics aside.

Nobody can compete with Amazon or AWS on price leadership. Google’s the only exception because of their monstrous scale and pervasive automation. Everyone else, in comparison, has enormous cost inefficiencies. If you have any lingering doubts, ask Verizon, HP, Cisco, Rackspace, and VMware.”

Oracle as a Highly Expensive Offering with High TCO

Oracle has always been a very expensive offering — literally, customers constantly complain about Oracle’s pricing. I have heard these stories for decades now. But all of a sudden Oracle is going to cut the cost in half. Its difficult to believe because its antithetical to what Oracle has been about. That history does not get wiped away because Hurd or Ellison make some statement about pricing at a presentation.

The standard argument offered by Oracle has been their database is better than all other databases. That is a different topic. But it has not been the price argument.

Here is another story that makes the Oracle price declaration seem unrealistic.

“According to that story, Oracle, which would not comment, is calling lawyers in faster to invoke “breach notices.” These contractual notices mandate that non-compliant customers stop using the relevant software within 30 days. If the software in question happens to be the company’s lifeblood database, that is a potentially lethal threat. But guess how the customer can avoid all that unpleasantness? By buying cloud! Cha-ching for Oracle.” – Fortune

And in this quote.

“The secret: tricking customers into using features they haven’t licensed. “Oracle’s licensing policies are notoriously vague and confusing,” said Robert Sheldon, technical consultant writing for TechTarget’s SearchOracle. “One misstep and you can end up owing thousands of dollars in audit fees. Yet Oracle software, with its dazzling array of management packs and pre-installed options, is easy to misuse.”

This is the same technique used by SAP, but for indirect access. Both SAP and Oracle use confusion in order to charge more from customers than would ordinarily be possible. This can be viewed as the attorney approach to extraction.

“The challenge with Oracle software, in particular, is that product options and management packs are installed with the main products and enabled by default.” Once a customer has fallen into this trap, Oracle sends it a breach notice, and then sends in a team to conduct a software license audit. Bringing a customer into compliance, however, isn’t Oracle’s primary goal – selling them services they may not want or need is. “These days, to make the breach notice go away — or to reduce an outrageously high out-of-compliance fine — an Oracle sales rep often wants the customer to add cloud ‘credits’ to the contract,” Bort said.

Once again, it almost seems as if this is undifferentiated from SAP’s use of indirect access. Under indirect access, SAP brings what are phony claims in order to push companies into buying more SAP.

“Customers are buying cloud services to make the Oracle issue go away, not because they have any intention of using cloud services,” according to Craig Guarente, CEO of Palisade Compliance.

Why Is Oracle Used?

Oracle has several different businesses. They have hardware, applications and databases. But their core advantage lies in their database. However, the options for both the database itself as well as the hosting now put Oracle’s database in a weak value proposition. A case can be made for Oracle 11 and 12’s differentiation in the market, but the differentiation is for a narrow number of applications. If a reset button were hit, and companies were able to select any database they wanted, Oracle’s database dominance would change very quickly. This brings up the following quotation.

“For many of its existing customers, however, sticking with Oracle in spite of its anti-customer policies is preferable to switching to another vendor – not because Oracle’s products are necessarily any better, but because Oracle has done such a good job putting up roadblocks for any company considering such a move.” – Forbes

The Problem for Oracle for Oracle Cloud vs AWS

The problem with this for Oracle is that databases are really Oracle’s core strength.

Oracle used its database revenue to make an enormous number of acquisitions in applications.

However, none of those acquisitions were as differentiated as their database. As Oracle’s database decline continues, it reduces their power over their customers. And that leads to Oracle’s application sales also declining. Not immediately of course. Applications in the enterprise space have a stickiness. For example, DB-Engines shows Oracle declining in popularity over the long term, but a rapid decline.

The original purpose of making such acquisitions in the first place was, at least in part, to concentrate the account management and sales effort. Therefore, an Oracle rep would not only offer databases but applications as well. Enterprise accounts tend to like to concentrate their purchases from as few vendors as possible. That is rather than evaluate each offering on its own merits, IT pushes the business to make their lives as easy as possible and to manage fewer vendors.

Therefore, the thought goes that the more that any one rep can offer, the higher the ability to crossover sales for various products.

Historically, vendors that have made the most money, have used a strong capability in one area to sell more product in another area. This is how vendors grow from stronger offerings to progressively weaker offerings.

Conclusion

The trend in databases is clear — most of the growth is coming from open source databases versus proprietary databases. This will have a major impact on Oracle Cloud vs AWS. What this shows us is that the original promoters of open source are being proven correct.

  • The Relational Market: This is still dominated by Oracle in both its proprietary databases and in MySQL, is giving way to open source databases.
  • The Rise of AWS: The usage of AWS’s open source databases continues to grow rapidly. This is bad for Oracle Cloud vs AWS because AWS primarily offers open source databases on its PaaS. It exposes more customers to non-Oracle databases. And the more they do, the more customers will realize they often have Oracle databases that could be migrated to open source options.

These activities in the popularity of databases bode poorly for Oracle at least in the long term and is something that they will need to address with some strategy.

As a side note. It is important to look over long periods of time for database increases or decreases in popularity. If we look at the example of SQL Server, it has grown quite a bit over the past few quarters. However, has yet to recapture the popularity that it maintained back in 2013. This may indicate some change in policy, price change etc..

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 that are exorbitantly priced, exorbitantly expensive to implement and exorbitantly expensive to maintain.

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.

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References

Ahmed Azmi is a Developer Advocate and Community Builder at the Dubai Technology Entrepreneur Center

https://d0.awsstatic.com/whitepapers/strategies-for-migrating-oracle-database-to-aws.pdf

https://www.reseller.co.nz/article/633023/why-oracle-cloud-bravado-masks-deep-database-despair/

https://www.linkedin.com/pulse/why-aws-bigger-threat-oracle-than-sap-microsoft-ahmed-azmi

– https://fortune.com/2015/07/10/oracle-sales-cloud-hard/

https://db-engines.com/en/ranking_definition

https://www.forbes.com/sites/jasonbloomberg/2017/07/11/oracles-cloud-strategy-ruthless-or-byzantine/#5fae6e1662d9

https://www.techrepublic.com/article/oracle-prepares-for-war-with-amazon-adds-12-new-data-centers-for-cloud-business/

*https://www.dbms2.com/2015/12/31/oracle-as-the-new-ibm-has-a-long-decline-started/

What Percentage of Revenues do SAP and Oracle Get from Audits?

Executive Summary

  • Audits are big business for both SAP and Oracle, however the hide the percentage from customers and Wall Street.
  • In this article, we discuss the percentage of revenues obtained from these audits.

Introduction

Neither SAP nor Oracle can achieve their revenue objectives using reasonable means — and this is where the software audit comes in. Oracle is taking the form of a highly extractive software audit. SAP has created a false licensing principle called indirect access, a concept that should be tried in a US court, but so far has not. Both of these mechanisms are used to extract significantly more from customers than customers expected to pay.

The Percentage of Revenues for Each Vendor Audits

The percentage of revenues that each vendor extracts from customers is a closely guarded secret, and both Oracle and SAP seek to minimize the figure in the popular imagination. One reason is that they want to surprise customers with audits and want the incidence of audits unreported. For example, if we look at the SAP user group ASUG (which is controlled by SAP) and Diginomica (which is paid by SAP) we can identify the media outlets through which SAP gets its word out:

The Drastic Difference from How SAP and Oracle Present Themselves to Wall Street Versus Reality

When it comes to Wall Street, both SAP and Oracle sell themselves as dynamic companies that have customers that are very interested in their new products, and in the fact that they are becoming increasingly cloud (which they are not). Therefore, the fact that a significant percentage of their revenues are coerced out of customers is not something SAP or Oracle wants Wall Street to know.

This leads to the question of what it is. Here is the following quote that generally matches what we have heard about the percentage.

An interesting statistic that Oracle gets 94% margins on support. I read an article some time back that the big ones, i.e. including SAP, get ~20% of their revenue from audits and going after their customers.. wonder how much they really make selling their products. Ask anyone who has been around the IT space for a long period of time and I believe you would have a hard time finding many say something positive about the big ERP vendors.., only that they are stuck with them. – Danny Borndal

Where is the Margin for Oracle and SAP?

There is not that much margin in the sale of the items, which is mind-boggling because Oracle and SAP software is exceptionally overpriced. Oracle’s database, its best product, is so overpriced compared to every other competing database (except HANA). It is a marvel how they don’t make that much money on the actual license. 

“It’s Time for Your Audit Sir”

Oracle is the best-known user of audits in enterprise software. And while Oracle proposes legitimate reasons for audits, in reality, Oracle uses audits in the most dishonest way imaginable. Oracle uses audits to control customers and drive them to things that Oracle would like them to purchase. Oracle’s attempts to legitimize their audits are undermined by the fact that no other software vendor uses audits in such an extreme fashion as Oracle. No other vendor places triggers in their software that are deliberately designed to be exploited during an audit. Oracle resources endorsing Oracle’s audits illustrate the fundamental corruption of the person attempting to defend such manipulative and abusive practices. An obvious question becomes apparent. If virtually all other vendors that charge far more reasonable prices for their software do not need to perform such audits, why does Oracle claim the right to do so?

So how to Oracle audits work in reality?

Boobie Trapping the Installation

One strategy they use is to boobie trap the installation. A typical audit scenario we have seen is that Oracle delivers software with essentially all functionality, default, enabled. The actual bill of material is not relevant. They put the onus on the customer to deactivate the functionality to tie out to the bill. However, few customers do this. Also, few Oracle consulting firms advise their customers to do this. As with the SAP consulting partners market, this is one of the many things that leads us to question who much Oracle consulting partner market looks out for their customers versus looking out for themselves (and for Oracle).

This is covered in the lawsuit against Oracle by Union Asset Management Holdings AG.

Oracle would audit on-premises customers and upon finding violations, would threaten large penalties…unless the customer purchased cloud. Typically, the violation would be organisations caught out by Oracle’s tactic of enabling add-ons by default, and thus being found “using” software they hadn’t purchased.

It is alleged that LMS and the sales teams worked in tandem to identify large accounts and that, in some cases, the sales teams would write letters that the LMS team then sent to customers. Once customers had bought the cloud, LMS would close the file – without even a follow up to review the licensing position. – ITAM

Oracle knows when to audit the customer, as they placed the trap in the installation in the first place. When the audit hits the customer, Oracle will tell the customer something along the lines of the following.

“Look here this is what you procured yet you have transportation turned on, have you used this module?”

The customer often has no idea. Then the audit starts!

Oracle’s audits attack the entire stack. That is from apps, middleware, to the database. Oracle then comes up with a number that conveniently matches/exceeds a sales rep cloud quota. Then the horse-trading starts, and they state something along with the following.

“Your cost is 500k for all this illegal use of software. We’re also going to have to charge you interest based on time of use and this is going to get ugly.”

So a deal is cut.

“Buy 500k Oracle Cloud ANYTHING, and we’ll make this problem go away.”

And then…

“Sign this non-disclosure, and everything is fine.”

The Sequence of Events of an Audit

Let us review the sequence of events.

  1. Set the Audit Land Mine: The problem, in this case, is a landmine that is preset by Oracle to go off when the audit is conducted.
  2. Complicit Oracle Consulting Partners: Oracle consulting partners are complicit by not informing the customer as to the preset landmine. Any Oracle consulting partner that would advise their customer about the landmines in the implementation would put their partnership with Oracle on tenuous ground. This is why companies that have a history of helping customers with these types of issues, like House of Brick, are not Oracle partners.
  3. The Audit: Oracle then audits the account, knowing precisely what they will find as they set the landmine.
  4. The Determination of the Audit Bill: The Oracle sales rep works backward from their quota to determine the audit charge.

The solution is then for the customer to buy more software. The customer ends up paying exorbitant compensation to Oracle. The IT department is then motivated to use somehow the software they “purchased” to cover up for what happened.

However, when the sale of the item is reported to Wall Street, it is reported as if it is voluntary. Oracle does not set aside a part of its quarterly analyst calls to state that “40% of our cloud sales were coerced through audits of other products.” There is a lawsuit filed against Oracle for misrepresenting audit lead cloud purchases as a consequence of authentic demand at customers, which will be covered in more detail later in the book.

How Big of a Deal are Oracle Audits?

One should consider the seriousness of an Oracle audit concerning what it means for the work effort on the part of the customer. Oracle’s strategy is to drown the customer in paperwork to overwhelm their ability to respond to the audit. When Mars sued Oracle over their audit, Mars claimed that they were required to provide over 233,089 documents over a year period to Oracle.

Mars asserted Oracle lied the reasons it requested information.

“Oracle demanded information to which it is not contractually entitled regarding servers that do not run Oracle software and Mars personnel who do not use Oracle software,” Mars’ complaint read. “Oracle made these demands under false pretenses under false premises that non-use of software nonetheless somehow constitutes licensable use of software for which Mars owes Oracle.”

As is usually the case, this information is only available because it came out in a lawsuit. Non litigated audits (which is nearly all of them) stay private. However, why would so many documents be requested by Oracle?

Oracle and VMware

According to Dave Welsh of House of Brick Technologies, this case in 2015 was the first litigation of Oracle on VMware. Oracle did not like this case to be discussed because it shed light on something they would prefer to do in the shadows, which is Oracle’s pricing with respect to virtual machines. Dave Welsh proposes that Oracle settled out of court so quickly with Mars because Oracle did not want its claims around Oracle on VMware tested in court. This is because they want to continue to bring these same audits with the same set of assertions against other customers, as his following quote attests.

“I’m sorry that it appears Oracle opted not to appear in court. I’m also not the least bit surprised. In my opinion, Oracle appears interested in trying to see if it can get any more money out of any of its Oracle on VMware customers. It also appears to want to do that without a court’s evaluation.”

And Arthur Beeman, who was the lead counsel for Mars, made the following statement regarding the outcome of the case.

“That filing…represented such a threat to Oracle’s practices as it related to the licensing that there was an agreement to immediately stay the matter… and then eventually there was a settlement and it was dismissed with prejudice less than two months after the filing.”

These are not uncommon experiences. AutoDeploy has experienced the audit scenario above with every one of their customers. It’s a feature of their sales process, not a bug.

The Lawsuit by the City of Sunrise Firefighter Fund

This is corroborated by the lawsuit brought by the City of Sunrise Florida Firefighter Fund that was brought up earlier in the book. The Firefighter Fund is suing Oracle for not disclosing that a portion of its cloud revenue reported as voluntary was anything but. This was, as asserted by the Firefighter Fund, because Oracle has been using audits to coerce customers into buying cloud products and not telling investors. All while Oracle has made it appear as if the cloud business has been customers coming to Oracle asking to purchase cloud offerings.

Oracle also misleads customers in its documentation as to what the rules are about auditing, which is covered in the following quotation.

“Another area that causes confusion with many Oracle customers is the policy documents that Oracle publishes. Most of these documents (Partitioning Policy, Licensing Oracle Software in the Cloud Computing Environment, Licensing Data Recovery Guide, etc.) are not referenced by the agreement and are thus not binding in your contract with Oracle. The Partitioning Policy document is frequently cited by Oracle to customers running on VMware. Just remember that this document does not contain binding policy. There are some non-contractual documents, however, such as the Licensing Oracle Software in the Cloud Computing Environment (Cloud Environment) policy from Oracle, that are fundamentally different. In this particular document, Oracle is granting additional privileges beyond the contract, rather than restricting them.(emphasis added)”

SAP and Oracle must have been separated at birth!

This is because we found this exact issue with SAP when they released what was supposedly an announcement to ameliorate the concerns of their customers regarding something called indirect access. In a nearly identical pattern to that displayed by Oracle regarding audits, SAP pretended in their announcement to soften their position on indirect access, but instead, which served to claim more restrictive indirect access rules on customers. Brightwork Research & Analysis covered this topic in detail in the article SAP’s Recycled Indirect Access Damage Control for 2018.

How SAP Uses Indirect Access for Coerce Purchases

As a brief interlude, SAP has perhaps unsurprisingly been using indirect access to force cloud purchases, as is covered in the following quotation from the book SAP Nation 2.0.

“Other customers report “gun to the head” behavior. In a spin-off situation, SAP demanded a hefty assignment fee, but offered an alternate multiyear contract on its cloud products, which the customer did not need. In another such situation, SAP threatened to invoke its “indirect access” clause (a tactic many customers report)-again, the customer was offered a cloud subscription as an alternative.”

Oracle also declares that they may change their license agreements at any time.

“Reliance on such documents may be risky, however, as Oracle expressly points out in the Licensing Oracle Software in the Cloud Computing Environment policy that it is non-binding and subject to change at any time. However, to the extent that Oracle is knowingly publishing extra-contractual documents on which its customers rely by making large investments, an argument can be made that Oracle should be estopped or prevented from changing course down the road, especially if such a change would cause injury to Oracle customers. Whether a court would accept this argument, or find that the customer proceeded at their own risk, is an open question.”- Pamela Fulmer

Audit Software Vendors that are Also SAP Partners?

Unfortunately, for a software company to build audit software for SAP, it must be an SAP partner. This means that it has restrictions by SAP on what it can say and what it can publish. I am in constant contact with many software vendors, and the complaints about SAP interference in what they can say and what they can do are unremitting. I am surprised that SAP would allow software vendors to offer an audit product as it states clearly, for instance, in the promotional video from one of the software vendors that their product.

It ensures that you know more about your SAP system than anyone else, giving you the upper hand in any negotiation or audit.

Why would SAP want that? SAP wants the upper hand. Snow software states that they can

..save 20 to 30% savings on their SAP costs typically within weeks alone.

But again, this is money coming out of SAP’s pockets, and they have the right to decertify Snow or any other software vendor at any time. So if the audit vendors statements are true, how are they still certified partners of SAP. What this means is that SAP has a say as to how the software vendor’s software works. SAP can and will threaten the software vendor with the removal of their SAP Certification, which would impact that software vendor’s ability to exist.

If I compare how the SAP partnership agreement is used with other vendors, SAP will use it to neuter the marketing of the vendor so that everything the third-party vendor releases is consistent with the needs of SAP.

How the Total Costs are Hidden from SAP & Oracle Customers

A big part of the on-premises software model is that costs are hidden. It is a curiosity to participate in sales support and to see executives spend so much time focusing on the initial purchase cost when the initial purchase cost is such a small percentage of the overall TCO of an on-premises application or database.

With SAP and Oracle, costs are always hidden to the degree possible.

As with other on-premises purchases, the costs are absorbed as part of the overall IT budget. Costs don’t ever seem to decrease with SAP or Oracle. SAP and Oracle customers typically have their IT budgets overconsumed by SAP and Oracle, and this leaves areas unaddressed because SAP and Oracle don’t offer everything necessary to run a company, or at the very least, to run it well.

Conclusion

Both SAP and Oracle have a strategy set up around auditing or applying indirect access to their customers. Furthermore, both vendors have what amounts to fake purchases, because the way that auditing fees and indirect access fees are paid is through purchasing software — often software that is unwanted and ends up unused. That is neither SAP nor Oracle has a line item on their income statements that say “audit income” or “indirect access income.”

Both companies are very happy to have Wall Street think that every single dollar that is paid to these companies is voluntary on the part of their customers.

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.

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 Accurate Was Bob Evans on Oracle’s 2018 Q4 Being Due to the Autonomous Database?

Executive Summary

  • Bob Evans runs a PR firm that promoted the idea of Oracle gaining traction with the autonomous database.
  • We review the accuracy of this article.

Introduction

This article we will review was a paid placement by Oracle on a website called Cloud Wars. It was paid for by Oracle. Let us see how much of it is true or likely to be true.

Booming Demand for the Self Driving Database?

“After a year of relentless hype about its Autonomous Database, Oracle yesterday said booming demand for the self-driving database was a huge factor behind the company’s blowout numbers for the final quarter of its fiscal year.

In just the 3 months ending May 31, Oracle customers and prospects ran 5,000 trials of the Autonomous Database, founder and chairman Larry Ellison said. And those types of trials are beginning to generate significant revenue.

“In Q4, we saw a surge in database license sales,” Ellison said to open his prepared remarks on the earnings call.”

Right. But this does not mean it is true. Larry Ellison lies quite frequently, therefore using a quotation from Larry Ellison does not make it true, especially without corroboration.

We provide evidence further on in this article why we have concluded that what Larry Ellison stated is not true.

Also, this is a good time to point out that nowhere on the Cloud Wars website does it explain that the website is an outlet for Evans Strategic Communications.

Is Oracle Gaining Market Share?

“We also saw very rapid growth in sales of those database options required to run our Autonomous Database. We continue to gain overall database market share as we migrate our database users to the cloud.”

The Oracle database is not gaining market share. It has been slowly losing market share for more than five years.

The following is from DB Engines, which tracks database usage. This graph makes Oracle’s decline look larger than it is, as the base is not set to zero. However, if we look at the high point of October 2013 (which is roughly 1.625k) and use the most recent value (of 1.3k), the Oracle database has lost approximately 17% of its popularity. 

Bob Evans did not fact check a statement by Larry Ellison that is widely known in the industry not to be accurate.

Safra Catz is a Reliable Source on the Autonomous Database?

“Oracle CEO Safra Catz put some specific numbers around the impact Autonomous Database and its related options are having on the overall database business for the company. The bullish comments from the typically reserved Catz underscore the enthusiasm customers are feeling for the new self-patching and self-updating database.

“Technology license growth was up 19%, making it abundantly clear that customers are investing in the Oracle platform,” Catz said in her discussion of the company’s Q4 and full-year results. And the key database options necessary to run the Oracle Autonomous Database service grew 21%.”

Safra Catz would say anything to make a good impression on Wall Street. It is unclear what Oracle defines as technology license growth, but is this the Autonomous Database?

Is Oracle Cloud Growing?

“Catz then brought up the company’s recent cloud partnership with Microsoft—a blockbuster agreement that I analyzed recently in Microsoft-Oracle Shocker: Customers Win as #1 and #6 Vendors Pair Up—and predicted it would become another growth engine for not only the new self-driving database but also the Oracle Cloud overall.

“In addition, the recent interconnect agreement with Microsoft will only help accelerate the transition from on premise database to the Autonomous Database service,” Catz said.”

The Oracle Cloud is not growing in usage. Its usage is so low that it usually is not measured by those entities that measure usage. This is because it is below 1% of the overall market for cloud services.

Oracle has been making claims around the growth of Oracle Cloud for years now. If the growth story is occurring, why has the Oracle Cloud not passed 1% of the total cloud services market? Continual rapid growth, without being, is not a logical possibility. Over the past ten years, if you had cancer in your body that was growing at the rate of the Oracle Cloud, you would be fine. 

Secondly, if Oracle Cloud is growing, why is Oracle partnering with Microsoft and its Azure cloud service offering? The reason is that, as we covered in the article The Problem with the Oracle Cloud and Colocation, Oracle is not investing much in its cloud data centers. As we will cover further on in the article, Oracle prefers to redirect funds that could go to data center investment to stock buybacks.

We think that Oracle is jealous of SAP’s UaaS business. 

We predicted that Oracle would see how SAP is marking up the cloud services of other cloud service providers (creating the Upcharge as a Service {UaaS} model in the article How to Understand SAP’s Upcharge as a Service Cloud. And that they would follow suit. The money is too easy, and Oracle cannot resist the lure of easy money.

Is Larry Ellison Bullish on the Autonomous Database?

“We’re really optimistic about this business,” Ellison said. “And the optimism is not just due to Safra’s guidance, which is based on sales forecasts. The thing that I find fascinating are the consumption-data curves, which shows our consumption rate [by customers] is growing much faster than the sales team’s currently anticipating.

“To me, that’s just wonderfully encouraging. And hopefully this is the beginning of the trend.”

Among those Autonomous Database customers, two intriguing patterns emerged:

  • 20% of Autonomous Database customers have never used Oracle Database before; and
  • 40% of Autonomous Database customers are running workloads that had not previously been run on an Oracle database.

All of these numbers and commentary from Oracle reinforce in my mind a very big question about the Oracle Autonomous Database: if it’s so wonderful—and the results above indicate that lots of customers believe it is—then why haven’t other major database vendors begun offering competitive products?”

Oracle is desperate to stop the migration of customers to AWS, and specifically to the AWS managed database service called RDS. AWS’s RDS dramatically reduces the maintenance cost of the Oracle database and far better support than anything provided by Oracle. While the Oracle AD is fake, the RDS (although it is not suitable for every situation) is a real innovation. The AWS RDS is also something that the Oracle database usually is not, which is run as a multitenant service by AWS. This allows AWS to obtain significant scale economies and to keep many customers in a single Oracle (or MySQL or MariaDB, etc.) database. This is something Oracle does not offer in the Oracle Cloud does not provide.

Everything started by Larry Ellison in the above quote is what Oracle wants customers to believe in fighting back against AWS.

Why Aren’t Microsoft and IBM Offering an Autonomous Database?

Bob Evans arrives at an interesting question — one that he probably does not want readers to think about too deeply.

“Why aren’t we seeing Microsoft and IBM disclose roadmaps for their own self-repairing and self-securing databases? Do they not feel customers will be interested in such a product? Or is it that—as Ellison has claimed in the past—no other company can match what Oracle’s delivering?”

We have an entirely different explanation.

We covered in the article How Real is Oracle’s Autonomous Database?, that the Autonomous Database is fake. It is a marketing construct. There are a number of reasons we think that are explained in detail in the article — but overall, Oracle’s story on the AD does not make sense. One of the vast areas of evidence is that the AD only works when running from the cloud and not on-premises. This gives no way to know if it runs without assistance from Oracle engineers working in the background.

Pay no attention to the Oracle DBAs working at the Oracle Cloud — and behind the curtain. It takes a lot of Oracle resources to make Oracle’s AD so autonomous!

No Loss of DBAs with the AD?

“Either way, for Oracle customers, the big value is that their entire organizations will benefit from the security features of the Autonomous Database, and will be able to redeploy DBAs to work on more-valuable projects because the new database handles the chores those DBAs formerly had to oversee.”

Oracle is in a pickle — it wants to and has claimed, the AD can be run entirely without DBAs. But, Oracle also wants not to alienate DBAs — so it walks lightly (and inconsistently) when describing the relationship between the AD and the DBA.

The AD Must Use the Oracle Cloud?

“One other critical point on this big win for Oracle: it means the company’s “Gen2” IaaS business is also picking up. Because the only way customers can get the Autonomous Database is by agreeing to have it run on Oracle’s Gen2 IaaS.”

As we stated, the AD does not work on-premises.

However why?

We have an answer as to why. The Autonomous Database is not autonomous.

Let Oracle Take Control of Your Database?

“Ellison’s betting that customers will accept that bundle because of the unique features of the Autonomous Database, which as he put it in a press release announcing the Q4 results, “encrypts all your data, backs itself up, tunes itself, upgrades itself, and patches itself when a security threat is detected.”

“It does all of this autonomously—while running—without the need for any human intervention, and without the need for any downtime. No other cloud infrastructure provides anything close to these autonomous features.””

Oracle is one of the least trustworthy software vendors in the world. Even if the AD worked, it would be extremely odd to hand over control of the Oracle database, its upgrade, patches, etc. to Oracle. Oracle would instantly upgrade your databases, and wipe out your IT budget. This would be like handing over the authority to create invoices to Oracle.

As we covered in the article What Percentage of Oracle Customers are on What Oracle Database Version?, the vast majority of Oracle customers are running old versions of the Oracle database. Every new advanced feature Oracle adds significantly increases the overhead and cost of Oracle — in staff hours in addition to the price. It is now a bloated DB that Oracle constantly pressures its customers to use in wasteful manners. The Oracle database’s later versions are a liability to all but customers with the most elaborate requirements and extravagant budgets. But more broadly, there is not much of the new functionality beyond 8 and 10 that most companies need.

So the real technical need to upgrade is small.

And why don’t we hear about this issue with Oracle? As with SAP, the providers are on the payroll (Evans Strategy Communications being just one example). It is not to the same extent as SAP — SAP is unparalleled in their control over information providers. However, the income streams still flow to media, analysts, and consulting entities that support Oracle’s talking points.

Thank You, Larry Ellison — for the Cash?

“Indeed, the Cloud Wars will be much more interesting if Oracle can parlay its leadership position in the traditional database business into big success in cloud PaaS and IaaS.

That’s surely the bet Larry Ellison is making.”

It looks like Bob Evans is really impressed with everything he heard — and also impressed with the check Evans Strategic Communications received to write this “article.”

Bob Evans was described by TechCrunch in the following terms.

Bob Evans has a colorful past. He works at Oracle these days as what I would call a king’s blogger except that he isn’t doing very well even with the apparent influence of the king himself.

Bob used to write for SAP where he penned his own gems about Oracle. The watchmen at Oracle thought Bob did such a good job that they decided to hire him. Now Bob turns on his blog flame against Oracle’s critics.”

Other Explanations for 2018 Q4

Oracle undoubtedly would have trials of the Autonomous Database, but this only means that Oracle DBAs are “Wizard of Ozing” the AD from behind the scenes. However, this will not scale as it is fake automation. But there is nothing to stop Oracle from pulling off this fiction for quite a while. There is no Toto to go and pull the curtain back at Oracle Cloud colocation centers. You can’t get access to the buildings unless you have the right badge!

A far more likely reason for Oracle’s Q4 performance is found in the following explanation.

“Its revenue rose 1% annually (4% on a constant currency basis) to $11.1 billion, beating estimates by $210 million. Its adjusted net income rose 3% to $4.1 billion, while its adjusted earnings per share — boosted by buybacks and a lower tax rate — surged 22% to $1.16 and beat expectations by $0.08. Those growth rates looked decent, but the headline numbers mask some serious issues with the aging tech company.

However, that growth was inflated by an accounting standard change in fiscal 2019. Excluding that shift, which changed the way subscription services were reported, both units posted roughly flat sales growth from the fourth quarter of 2018.

In other words, most of Oracle’s revenue growth can be attributed to an accounting standard change. Its cloud-based businesses, once touted as the company’s core growth engines, clearly aren’t offsetting the softness of its legacy database and business software businesses.

Oracle is now following that pattern by “buying” earnings beats with buybacks instead of “earning” them with higher-margin sales growth. Oracle spent a whopping $36 billion, over two-thirds of its free cash flow, on buybacks throughout fiscal 2019. Those buybacks boosted its EPS growth and tightened its valuation by reducing its diluted share count by 16% — but did absolutely nothing to widen its moat or strengthen its cloud businesses.

Oracle is an aging tech company that lacks real growth engines and repeatedly props up its earnings with buybacks. It’s stuck in the same downward spiral as IBM used to be” – Motley Fool

As a synopsis, the Motley Fool has two explanations for Oracle’s Q4 performance.

  1. Change in accounting and reporting
  2. Stock buyback

With these two large influences, it is actually curious how little Oracle’s revenues grew in Q4. As the Motley Fool explains, this is a carbon copy of what IBM has been doing — financial engineering to mask weakness in the business.

Conclusion

The natural occurrence of hiring a PR firm to get “your story out” Bob Evans article, restates uncritically information provided by Oracle. The statements made in the article are false, and they hide the real reason for Oracle’s modest Q4 performance.

The real issue is how much Oracle’s real business must be in decline as the twin effects of the accounting change, and the large stock backs would have had a very significant impact on the financial numbers.

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 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 that 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 General Content

References

*https://cloudwars.co/oracle-q4-earnings-call-autonomous-database/

*https://techcrunch.com/2012/08/09/open-yeah-sure-sorry-oracle-youre-still-full-of-it/

“Oracle put the “cloud” name on its products. But that’s just cloudwashing. Now if Oracle came out in support of OpenStack that would be another matter.

Oracle makes its money selling enterprise licenses. In the future, enterprise shops will use a variety of different database environments such as Riak, Cassandra and Mongo DB.

Bob also brings up IBM. Here’s the difference between the two companies. IBM has a legacy product portfolio but its behavior is entirely different. IBM is associated with the Linux movement. Oracle has been a terrible steward of Java and MySQL. Reese makes that point and it is what you hear often in the open source community.”

https://finance.yahoo.com/news/oracle-looks-old-ibm-210000672.html

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 Percentage of Oracle Customers are on What Oracle Database Version?

Executive Summary

  • What percentage of Oracle database customers are on which version of their database?
  • We cover the implications of these percentages for Oracle customers.

Introduction

Oracle has been introducing increasingly sophisticated versions of its flagship database products in the past few years. Garnering little attention in the technology press, unfortunately, is the resistance of many large enterprises to migrate to those databases and the resulting waste of Oracle support dollars.

Oracle Database Version Usage Percentages

The data for this chart was acquired from HG Insights. This is the data that was pulled from their website on June 1, 2019. This company verifies the usage of applications and databases, but not all information is confirmed to the most recent month. The verifications are performed in a cycle, and this is how these verification services work.

By taking the counts for each Oracle database version, we were able to construct the following pie chart.

Overall, roughly an insignificant 6% of Oracle customers have migrated to the most recent version of the Oracle DB.

The question is why.

Our observation is that the Oracle database has become overly bloated in its most recent versions, and most companies do not need the extra functionality or the extra bloat and expense involved with Oracle 12c. For example, Oracle 12c adds a column store, which was put in place to combat SAP HANA, but which there is little use for in the database, as we covered in the article How Accurate with Bloor Research on Oracle In-Memory?

Implications of the Slow or Stunted Migration

The evidence is that a minority of customers have shown any interest in migrating to Oracle 12c, even though it was released in 2013. It also means that each successive release of the Oracle database is less capable of migrating the customers on the previous versions to the latest versions of the database. This means that Oracle is discussing features of its database at conferences and in the IT media that their installed base by in large does not see.

This has several important implications. And they are as follows:

  • The Usage of Open Source Databases
  • The Oracle Support Question

The Usage of Open Source Databases

When Oracle discusses their database, they nearly always discuss the most recent version. The standard Oracle sales tactic is to state that only the Oracle DB has (insert in the ____ ) functionality. This is often stated by Oracle about HA (High Availability) or RAC (Clustering), even though these functionalities are, in most cases, better and more efficiently deployed from the virtual machine instead of the database layer. Secondly, some of the functionality, such as that contained in the Autonomous version of 18, for example, does not work. We covered this separate topic in the article How Real is Oracle’s Autonomous Database?

Other areas of functionality have a low overlap with the primary Oracle customer market. For example, Oracle 12c offers multitenancy as a main new area of functionality. However, multitenancy is primarily used by SaaS vendors, that are less likely to be customers than companies that use the Oracle database internally. This is illustrated by the very low penetration of the Oracle into the startup market, as we covered in the article How Appealing is the Oracle Global Startup Ecosystem?

Beyond these topics, the majority of customers do not agree with Oracle that they need the most up to date features that the more recent databases provide. Oracle would have a very difficult time explaining this if it was brought up in discussion. Oracle representatives state that they know their customers very well and that they have the best RDBMS in the world, and that they know how to develop their RDBMS to meet the needs of customers. Given the fact that the vast majority of Oracle DB customers are not running anywhere near the more recent versions of the Oracle database indicates one or several of these assertions are not true.

To determine the extent to which a high percentage of Oracle customers are using versions from years ago, we have compiled the following table.

Year of the Database Version Introduction

 
Database Version
Year of Introduction/Stable Release
1Oracle 192019 (not enough customers to track)
2Oracle 182018 (not enough customers to track)
3Oracle 12c2013
4Oracle 11g2007
5Oracle 10g2003
6Oracle9i2001
7Oracle 8i1998

What is the Proper Comparison of Open Source Databases to Oracle?

Open-source databases are easy to upgrade and have no license or support liability. This means that when customers compare open source options, the comparison most of them would need to is to compare say the 2003 version of the Oracle DB (10g) to the 2019 version of PostgreSQL or MariaDB.

Why is this the proper comparison?

Because this is the version that the customers of the Oracle DB are most often using, however, this framework is nearly never used when discussing the Oracle database. Invariably the discussion switches back to the most recent Oracle database version.

Secondly, Oracle’s newer or more advanced database functionality is increasingly in direct competition with virtualization technology. Our view on Oracle’s approach is that they are stuffing their database with functionality that, in the vast majority of cases, does not belong in the database. Oracle does not have effective virtualization technology. Oracle VM is very poorly thought of and very infrequently used.

Secondly, virtualization is a primary strategy deployed to reduce the number of CPUs necessary to run the same number of database licenses, and therefore as Oracle prices their databases per CPU, they have a built-in financial incentive to push CPU utilization down, not up. In part because of this, most of what Oracle has done to its customers is to provide inaccurate information about virtualization, even questioning the legal right of companies to perform software partitioning full stop when there is nothing in any of Oracle’s contracts that denies this right.

The Oracle Support Question

The support question regarding Oracle (that is should companies continue with Oracle support or look for other alternatives including taking support internal), and applies more to companies that use the Oracle database rather than the database along with the applications.

The Multiple of the Initial License Paid Per Database Version Since Purchased

 
Database Version
Overpayment Multiples of Initial Net License Charge
% of Oracle DB Customers
2Oracle 12c
N/A
3Oracle 11g
2.75
31%
4Oracle 10g
3.75
29%
5Oracle9i
4.25
21%
6Oracle 8i
4.75
13%

This table shows the multiple of the initial license price that has been estimated to be paid by customers since the software was purchased, and what percentage of the customers (roughly speaking) have paid this support money to Oracle over the years. So for Oracle 10g, a typical customer would have paid 3.75 times the license cost in support if they purchased the database version around the release of the software in 2003.

There are two factors that would reduce this multiple, and this is the deployment of 3rd party support and the second being companies that bring Oracle support internally.

  • There is some leakage of the support payment. “Leakage” is the loss of support revenues to Oracle through companies pulling support internal or using 3rd party support. However, even the largest 3rd party support company, Rimini Street, has revenues of less than $250 million per year. While Oracle support business is roughly $18 billion per year. Although it should be noted that as Rimini Street prices its support at either 1/2 or less than 1/2 of what Oracle charges, each dollar of Oracle support that goes to Rimini Street (or other 3rd party support providers) cuts Oracle’s support revenue by over 2x the revenue of the 3rd party provider. However, we estimate that while Rimini Street provides support for other vendors that at least 80% of its revenues are from Oracle support.
  • There are other 3rd party support companies of course. Still, all of them significantly smaller, it is difficult to see third-party support combined with bringing support internal reducing Oracle’s support revenue by even $1.75 billion per year.

Estimated Leakage From Oracle Support

 
Support Revenue Consumer
Support Revenues
Percentage of Total
1Oracle Yearly Support Revenues$18 Billion91%
2Estimated Leakage to 3rd Party Support and Support Brought Internal>$1.75 Billion9%

If this estimate is roughly correct, then Oracle still has at least 91% of the overall support market for Oracle support. Oracle does little to improve its acquired applications, and Oracle customers are not purchasing the most recent versions of the Oracle database.

This means that every year that passes, Oracle Support becomes an increasingly wasteful proposition. That is, support is being paid on items where the bulk of development is at least ten years old. Any software vendor would love to collect support revenues on stable old applications into perpetuity.

The Oracle Consulting Advice Question

Oracle Consulting Partners can be useful suppliers if the objective is to perform work that is line with what Oracle wants the customer to do, however, as soon as the objective contradicts what Oracle wants, the Oracle Consulting Partners become a liability because they lack any independence from Oracle. They lack the right to provide information that is contrary to Oracle’s views, even if they wanted to.

A lack of independent advice from Oracle Consulting Partners is a particular problem as many customers are seeking to reduce their Oracle exposure. Oracle repeatedly scores as the vendor that customers would most like to minimize their exposure to in the future in every survey of this type.

  • Oracle Consulting Partners want customers to upgrade their Oracle database versions, not necessarily because it is good for customers, but because they can charge for making the change, and they add skills and experience to their resumes.
  • Oracle Consulting Partners cannot credibly advise on license matters or on 3rd party support or on using open source databases. This is because every answer to every question from Oracle Consulting Partners is to maximize the money paid from the customer to the Oracle Consulting Partner and to Oracle.
  • Oracle Consulting Partners are conduits of information about the customer to Oracle, as they have frequent calls and meetings with Oracle, particularly the sales rep, that the customer is not informed about occurring.

Conclusion

The vast majority of Oracle customers do not believe that the more recent versions of the Oracle database are worth the time or effort or expense to migrate to. This topic has garnered very little attention in the IT media as Oracle funds most of the IT media entities in the form of paid placements and advertising. One must “run the numbers” to see the degree to which the Oracle customer base is diverting from Oracle’s roadmap.

The Oracle database’s compelling value and its differentiation are in significant decline. This has led many companies to avoid or at least postpone the most recent versions of the Oracle database, but in most cases, they have not taken the second logical step, which is to cut ties with Oracle support and to begin migrating in earnest to other databases.

Why?

Because not moving to the later versions of the Oracle database is a simple matter.

Moving off of Oracle and off of Oracle Support is a much more complicated affair than not upgrading the database.

Oracle uses fear tactics against its customers that any divergence from using Oracle support puts the business at risk.

How Oracle Responds to a Potential Support Contract Loss

 
Oracle Strategy
Description
1
Provide Inaccurate Information
Oracle provides inaccurate information regarding how this impacts risk which is intent on maximizing the level of fear at their customers, even though many companies have quite effectively pulled support internal or moved to 3rd party support.
2
Fake Concern for the Wellbeing of the Customer
This FUD is communicated by Oracle cloaked as a genuine concern for the wellbeing of their customers, which is not credible as this is Oracle. Oracle shows an interest in their customers in two specific periods, when desiring to sell more software to them, and at the support renewal timeframe.
3
Distribute the FUD
The intent of Oracle is to reach out to people within the customer that are less aware of the real implications and benefits of moving off of Oracle Support and to try to sow seeds of concern among anyone who is susceptible. This is most effective when it can get to the most senior levels of the company, therefore, Oracle seeks to send their warnings to the widest possible distribution list, hoping that it will reach even distant decision makers. The intent is to get them to put pressure on those closer to the situation and who have the domain expertise to know what Oracle is doing.
4
Talk Up Legal Implications
Letters are sent to legal to try to bring extra "gravitas" to the situation. These are clearly intended to make an impact, rather than be anything real. Oracle cannot sue customers for not renewing support contracts. But Oracle has an enormous number of attorneys and they use them for maximum effect.
5
Frame the Issue as One of "Rationality" Versus "Irrationality"
Oracle presents staying with their support as the "rational" decision, while the moving off of their support as "irrational" and dangerous to the company.
6
Don't Bring Up Oracle's 90%+ Support Margin to the Customer
And at no point during the Oracle histrionics does Oracle make it known that they have a greater than 90% margin on support. Oracle presents the entirety of opposition to losing support is their "concern for the customer." This is not about money or margin.

Performing a Full Spectrum Analysis

Moving away from Oracle Support is a perceived risk that requires a great deal more investigation by customers than simply not upgrading the Oracle database. And part of that analysis requires fact-checking claims made by Oracle that have no other objective other than maintaining their high margin support business.

The Problem: A Lack of Discussion and Fact-Checking Around SAP and Oracle Support Costs and Value

Oracle, SAP, and their consulting partners, as well as the IT media entities all, have something in common. They don’t want the total costs of support, the margin obtained from support by these vendors, or the value of this support provided discussed.

The total costs of Oracle and SAP support are enormous, and they pull resources from IT departments with little commensurate value provided. This is why these entities don’t want these topics discussed.

Oracle and SAP benefit from the lack of quantification or the hidden nature of support costs. Upgrades, many of which cannot add value over their costs, are absorbed into the IT budget and considered “business as usual.”

Being Part of the Solution: What to Do About Oracle and SAP Support

The first step is to calculate the total costs of support — not just the 22% base level, but the extra costs with support additions as well as the cost of upgrades, etc. Then to quantify the value provided by ticket closure and determine which applications are actually planned to be upgraded. Paring support costs is not an all or nothing decision, even though SAP and Oracle sales reps make it sound like paring support costs is close to the end of the world.

If you need independent advice and fact-checking that is outside of the vendor and vendor 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 Other Oracle Support Content

References

https://discovery.hgdata.com/

Extracted data from the website on (June 1, 2019) As the months pass, one would expect to see customers migrate to more recent Oracle database versions.

*https://palisadecompliance.com/why-companies-cant-move-off-oracle/

Application Interaction: Most of the Oracle applications require Oracle database licenses, even if a different database is used. This reduces the incentive to cut the cord to Oracle Support.

https://en.wikipedia.org/wiki/Oracle_Database

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.

Brightwork Comparison and Scoring of Oracle Support Options

Executive Summary

  • All of the providers of Oracle support are very aggressive about providing the best option in the market.
  • We cover the options for Oracle support.

Introduction

Oracle usually presents Oracle Support as the only option for customers. And Oracle uses a wide variety of pressure tactics and false information to prevent customers from choosing other support options, as we covered in the article How Accurate Are Oracle’s Criticisms of Rimini Street? All of this posturing leaves out how poor a value Oracle Support is for customers.

Increasing Options and Making Sense of it All

As the number of options for Oracle support has increased, the complexity of decision making has also increased. Analyzing the support options takes time, but there can be significant benefits to doing so. This comparison is designed to focus on and score some of the essential criteria for each option.

To see the details of each Oracle support modality, select the link.

Oracle Support Options

 

Brightwork Oracle Support Scoring Criteria

The CriteriaCriteria Definition
1. PriceThe direct price of the support.
2. Total CostsThe overall cost of being supported by the entity. It includes costs for internal support, costs in communication, costs in time from unanswered or slowly answered support calls, etc...
3. ResponsivenessHow quickly the initial response is to the ticket, and then how quickly it is followed up to a resolution.
4. Support BreadthHow broadly the support practically covers. (not what the entity says it covers)
5. End of Life ArgumentThe argument that all third party support is only for companies that intend to move off of Oracle.
6. Support for CustomizationsWhether the entity provides support for the customizations made by the customer.
7. UpgradesWhether the support option provides upgrades.
8. SecurityThe security provided by the support option.

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 Oracle Support 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.

Brightwork Comparison and Scoring of Rimini Street Oracle Support

Executive Summary

  • All of the providers of Oracle support are very aggressive about providing the best option in the market.
  • This is our Oracle Support rating across the most critical criteria for support.

Introduction

Oracle normally presents Oracle Support as the only option for customers. And Oracle uses a wide variety of pressure tactics and false information to prevent customers from choosing other support options, as we covered in the article How Accurate Are Oracle’s Criticisms of Rimini Street? All of this posturing leaves out how poor a value Oracle Support is for customers. But the question is, what are the alternatives? In this article, we compare and score Rimini Street for Oracle support.

How Rimini Street Stacks Up

Any entity that attempts to provide support for software they did not create will be at some disadvantage. This comparison shows how Rimini Street Oracle support stacks up.

If the text is cut off, select the box to see the larger view.

The Scores Per Criteria

 

Brightwork Oracle Support Scoring Criteria

The CriteriaCriteria Definition
1. PriceThe direct price of the support.
2. Total CostsThe overall cost of being supported by the entity. It includes costs for internal support, costs in communication, costs in time from unanswered or slowly answered support calls, etc...
3. ResponsivenessHow quickly the initial response is to the ticket, and then how quickly it is followed up to a resolution.
4. Support BreadthHow broadly the support practically covers. (not what the entity says it covers)
5. End of Life ArgumentThe argument that all third party support is only for companies that intend to move off of Oracle.
6. Support for CustomizationsWhether the entity provides support for the customizations made by the customer.
7. UpgradesWhether the support option provides upgrades.
8. SecurityThe security provided by the support option.

*This article should not be construed as an endorsement of Rimini Street. Brightwork Research & Analysis does not endorse any third-party support provider.

View the Index

Back to see the index of all of the Oracle support options. 

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 Oracle Support 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.