What To Do About the Extreme Monopoly Implications of Hyperscale Public Cloud Providers

Executive Summary

  • Hyperscale public cloud providers are tremendously efficient, but they are natural monopolies.
  • Why the issue of public cloud monopolies needs to be discussed and regulated.


It is only possible to name a few public cloud hyperscale providers. This is because the hyperscale providers have enormous economies of scale in their facilities as well as in how they enable their services to be easily consumed — and other factors. Even large vendors such as Oracle and SAP have been unable to provide a competitive offering to the hyperscale providers. (One might argue they could have put up more of a fight, but lack the appetite for such long term investment, Oracle for example prefers to spend money on stock buy backs).

How Monopolistic Are the Cloud Service Providers?

There is little doubt that these providers are monopolistic.

  • GCP’s parent company, Google has taken control over the majority of online advertising.
  • AWS, has a specific business model to eliminate competition from the markets in which they compete. AWS seemingly unlimited funding is described my monopoly expert Matt Stoller as a type of counterfeit capitalism, and it has many copycats in software and outside of software (see the links and quotes at the bottom of this article).
  • Azure’s parent company Microsoft, is well Microsoft.

Curiously, one of Azure’s arguments to customers is that AWS is such a monopolist, that they use the data they gather from providing cloud services, to compete against their customers, at least in some circumstances as the following quote explains.

Microsoft has been telling potential clients that if they use its Azure service, they won’t need to worry that they are placing valuable customer data or product information with a rival who can use the data to compete with them. According to the Journal, Julia White, corporate vice president of Microsoft Azure, said in an October interview that unlike with AWS, Azure is “not about using customer data and competing with them.” – Forbes

This is an amazing development, with one of the largest monopoly vendors in the enterprise software space making the monopoly argument against a competitor.

While this is all known, the far less frequently discussed topic is what to do about it.

Non Hyperscale Providers Losing Market Share

Data centers and colocation operators are steadily losing market share to the hyperscale providers. So much so, that as we cover in the article How Gartner and IDC Help Vendors Co-Opt Things, They Are Unrelated To, even huge companies like Equinix have found it necessary to change the narrative. They have turned to IT analysts like Gartner and IDC and paid them most likely a substantial fee to try to discourage companies from viewing Equinix’s “non public cloud” offering as relevant and as valuable as the public cloud. As we cover in the article, Equinix’s arguments, repeated through Gartner and IDC make little sense.

The Role of Regulation and Natural Monopolies

The answer to this is the same answer to any natural monopoly, namely regulation.

The definition of a natural monopoly is as follows.

natural monopoly is a monopoly in an industry in which high infrastructural costs and other barriers to entry relative to the size of the market give the largest supplier in an industry, often the first supplier in a market, an overwhelming advantage over potential competitors. This frequently occurs in industries where capital costs predominate, creating economies of scale that are large in relation to the size of the market; examples include public utilities such as water services and electricity.[1] Natural monopolies were recognized as potential sources of market failure early as the 19th century; John Stuart Mill advocated government regulation to make them serve the public good. – Wikipedia

The understanding of monopolies, much less natural monopolies in even the business general public, is quite weak. We accept highly regulated natural monopolies in areas ranging from railroads, water works to power generation, without giving it a second thought.

The prices paid for our monthly power bill are not set by the “market” and from among multiple options. In each city in the US, for example, there is one power provider — a regulated utility. Most of the world works in the same way.

A dam, which produces power, and is a natural monopoly does not work under a competitive model. First dams are extremely expensive to build and have large ecological implications. How does a “free market” work for dams? Should a second dam be allowed a few miles from this dam? That won’t work, as a dam creates lake behind it. 

Large infrastructure items like dams, railroads, power generation, water works, and hyperscale providers do not fit within the construct of open competition.

The outside of a Google data center. 

The inside of a Google data center.

The Failure of the Low Regulated Mobile Phone Services Market

In cases where natural monopolies have been fragmented, such as in the US with mobile phone services, the costs have become much higher than necessary. And there has been a duplication of infrastructure, and a corresponding increase in expenditures on sales and marketing. A discussion with any Canadian quickly illuminates how Canada kept their cellular service a regulated monopoly, to the satisfaction of many Canadians, whereas the US followed a “free market” model of trying to have multiple cellular service providers for what is a natural monopoly.

Why There is No Other Historical Solution than Regulation

There is no other answer to natural monopolies but regulation. Without regulation, natural monopolies coerce excess returns from their customers. This has been found to occur in virtually every case where a monopoly is present.

Currently, the hyperscale providers like AWS, GCP, and Azure provide low prices (with only AWS and GCP being public prices). Still, history shows that as these providers continue to drive out competition, these prices will not stay low. Low prices are the early stage of monopolies (and often used to justify the monopoly), mid and later stage monopolies use their market power to raise prices. Consumers lack alternatives to the monopoly, and once most of the competitors are run from the market, it is difficult for new entrants to bring back competition. Monopolies are also intertwined with government lobbying and protected by governments. With the rise of not only hypercloud public cloud providers but several giant technology companies (including Facebook and Apple), the size and influence of these companies are making them close to unregulatable.

Such political power is also suffused into policy unrelated to regulation but which nevertheless makes it even more difficult to compete with the monopoly. As an example, Apple barely pays taxes due to its tax haven in Ireland, and General Electric (an older monopoly) has many years where it receives a billion-dollar or more reverse tax from the US government. That is, it not only pays no tax but is paid to exist by the US government.

International Concern Over the Concentration of Hypescale Public Service Providers

While AWS, GCP, and Microsoft/Azure are multinationals with offices all over the world, they are all based in the US. As concentration continues to occur, each non-US country will have to come to terms with higher and higher percentages of government and private industry data being kept on US servers. And beyond the privacy concerns within each vendor, the US government has come up with a variety of excuses to obtain access to this data as is explained in the following quotation.

However, those using third-party cloud solutions are relinquishing some of their control over their business data. For example, the U.S. Cloud Act (Clarifying Lawful Overseas Use of Data) gives U.S. authorities access to data stored in the cloud – even if local laws in the data storage location prohibit it. Enterprises will increasingly use their data to create value – increasingly in real time, for example, in the production environment, ”said Dr. Karl-Ulrich Köhler, CEO of Rittal International. “Data sovereignty will be an important success factor for international competitiveness,” adds André Hiddink, product manager IT Infrastructure. – Data Center Works

The primary regulatory body internationally that has been able to fine and otherwise punish US companies has been the EU.

The US and Europe have had good relations for many decades. Still, it is difficult to see the US government accepting the current and predicted future situation if the roles were reversed.

This leads to the following quotation.

In the EU there is a move towards regulation to counter the dominance of the USA Tech giants which will hurt AWS, Google etc and leaves the door open for Tier 2 cloud providers (some using OCP hardware) that want to use colocation centers. This may or may not hurt Equinix if the EU include Equinix in with the other USA based companies.

I have been advised by a small colocation provider in the UK that provides an On Ramp services.

One of the main CSPs (mobile network provider) in the UK used them recently to connect to Google Cloud, and it was the only way they could do it apparently. And only networking gear was installed in their colocation center, that is no servers were installed. – Mark Dansie

And the following quotation also.

The European major digital project Gaia-X, an initiative of the German Ministry of Economic Cooperation and Energy (BMWi), is to start in 2020. The project aims to build a European cloud for the secure digitization and linking of industry and forms the basis for the use of new AI applications (artificial intelligence). In this context, the Fraunhofer-institute the initiative ‘International Data Spaces’. This virtual data room allows companies to exchange data securely. Compatibility of a proprietary solution with existing (cloud) platforms – interoperability – also exists. This means: geographically dispersed smaller data centers with open cloud stacks can create a new class of industrial applications that perform the first data analysis directly at the source of the data and use the cloud for later analyzes. – Data Center Works

Advice on Enjoying the SAP and Oracle Cloud Quiz

To see the full screen just select the lower right-hand corner and expand. Trust us, expanding makes the experience a whole lot more fun.



The US has done very little in the past few decades to enforce its antitrust regulation, and without a national security concern (as all of the hyperscale providers are based in the US), the EU is the likely regulatory entity that would do something to regulate the market. The EU has a significant weapon in the fight, which is the EU market.

If forced to do so, the hyperscale providers would have to accommodate the EU regulations. The hyperscale providers are quite new, especially at their current scale. This is an issue that is creeping up on regulators, and that becomes more important as they continue to grow and pull market share from public cloud providers.

Quotes on Counterfeit Capitalism

These quotes are from a landmark article on capitalism titled WeWork and Counterfeit Capitalism, where the competition is primarily based upon access to capital.

Today I’m going to continue on this theme, and discuss the increasingly common tendency of capital markets to finance loss-making companies, which is an important trend I call “Counterfeit Capitalism.” The most hilarious example is WeWork, because it’s just such an obvious example of self-dealing couched in New Age management consulting speak. Its CEO, Adam Neumann, was just forced to step down. Both Neumann’s rise, and his fall, have important lessons if we want to correct serious errors in our political economy philosophy as a society.

This is of course Amazon’s model, which underpriced competitors in retail and eventually came to control the whole market. And Amazon has spawned a host of imitators, including WeWork. It has also reshaped venture investing. The goal of Son, and increasingly most large financiers in private equity and venture capital, is to find big markets and then dump capital into one player in such a market who can underprice until he becomes the dominant remaining actor.(emphasis added)

In this manner, financiers can help kill all competition, with the idea of profiting later on via the surviving monopoly. – Matt Stoller

AWS is profitable. However, it hasn’t been for long. And in fact, most of Amazon’s profits come from AWS, not from its larger retail revenues.

There are few companies that the capital markets would have allowed to make the investments that AWS did into its infrastructure. This is an extra barrier to entry, that is the capital markets allow some companies to go years without profits or only rarely profitable quarters, while requiring profits from other companies. Tesla is another company that the capital markets to make enormous promises, and to come to raise enormous sums of money, even when they repeatedly say they won’t.

Matt Stoller continues…

What predatory pricing does is to enable competition purely based on access to capital. Someone like Neumann, and Son’s entire model with his Vision Fund, is to take inputs, combine them into products worth less than their cost, and plug up the deficit through the capital markets in hopes of acquiring market power later or of just self-dealing so the losses are placed onto someone else. This model has spread. Bird, the scooter company, is not making money. Uber and Lyft are similarly and systemically unprofitable. This model is catastrophic not just for individual companies, but for their competitors who have to *make* money. I’ve written about this problem before. Amazon has created a much less competitive and brittle retail sector. Netflix’s money-losing business is ruining Hollywood.

Then Stoller goes on to explain the impact of this on society generally.

This kind of counterfeit capitalism is terrible for society as a whole. At first, with companies like Walmart and Amazon, predatory pricing can seem smart. The entire retail sector might be decimated and communities across America might be harmed, but two day shipping is convenient and Walmart and Amazon do have positive cash flow. But increasingly with cheap capital and a narrow slice of financiers who want to copy the winners, there is a second or third generation of companies asking Wall Street to just ‘trust me.’

As euphoria in capital markets takes hold, predatory pricing scheme come to entirely wastes capital on money losing enterprises, and eventually these companies become Soviet-style generators of white elephants and self-dealing. The men and women who run them have to be charlatans, because they are storytellers justifying losses.

One of the results was the establishment of the Securities and Exchange Commission, which was designed to stop monopolization and fraud enabled by stock manipulation. As it turned out, it worked quite well. And as corrupt as the SEC has become, these principles even work now, in 2019, under the Donald Trump administration. Pure disclosure and public markets managed to stop Jamie Dimon, Masayoshi Son, and Adam Neumann.

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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The Public Cloud Revolution Book

The Public Cloud Revolution: How Open Source is Displacing IT Mega Vendors

Interested in how to open source is powering public cloud providers like AWS and Google Cloud and what this means for the different modalities of computer hardware (cloud, on-premises proprietary server, mainframe, and appliances?). This book covers many topics that are greatly underrepresented in the common IT media coverage of these topics.

Why Government Entities Should Use Open Source Over Commercial Software

Executive Summary

  • Commercial software vendors are being subsidized by taxpayer dollars while keeping their code private.
  • Public money should go to public, not private code.


Little thought is given when governments buy commercial software that is sold under a restrictive license.

However, upon reflection, this is a strange and inconsistent arrangement. This is because when the government funds something, it is typically placed into the public domain. This is true of public research and public publications as just two examples. For instance, in the US, when taxpayers fund the research of the Office and Management and Budget, their reports are available for everyone to see.

The Public Money: Public Code Video

The following is an excellent video that explains the concept of requiring government entities to direct resources into open source or public code projects.

The things pointed out in the Public Money: Public Code video is unseen. This is because the ASSUMPTION is that applications should be in the hands of private entities and closed.

It is normally assumed that governments should buy their software as the private sector does. However, governments have a public function, and this differentiates them from private companies that have no other charter except to look out for their concerns.

A Long History of Faking Innovation

Commercial vendors have a long history of taking from open source projects, making some small changes, and then marketing the work on the part of the open-source project as their own.

We cover in the article Why Both Superconvergence and Hyperconvergence are Hollow Marketing Constructs. Nutanix helped created the marketing construct of “hyperconvergence,” however, a major thing they did was take the open-source Linux KVM virtualization technology, add some tiny thing, make it private, and then claim innovation. One the basis of a slightly adjusted Linux component and their propriety dashboard, Nutanix claims to be a “one-stop-shop” for all data center needs. Their actual contribution to the “party” is a dashboard, and yet if you read the Nutanix website, it makes claims of revolutionizing data centers.

And this is the problem with commercial vendors. The profit incentive often drives them to make false claims. However, media entities and IT analysts can be hired to say that whatever the marketing department at commercial vendors has cooked up is correct.

The History of Commercial Vendors Ripping Of Governments

As for the government examples given in the video, in the US, government entities are known as easy pickings for the vendors. I am currently tracking several US government entities who are being robbed by SAP and by several SAP consulting partners. The Air Force once spent 1/2 billion on an ERP implementation from Oracle that they canceled after they figured out that Oracle had lied to them when they said Oracle ERP could replace all of the specialized Air Force systems.

Rather than buying ill-fitting solutions and exorbitantly priced solutions from SAP or Oracle, as it is taxpayer dollars, the US government could support open source, which is released back to the movements.

The video makes an excellent point and challenges existing assumptions by asking the question which can be paraphrased as follows.

Why are public taxpayer dollars going into the pockets of closed source commercial vendors?

Taxpayers should insist that open-source alternatives be evaluated first. However, right now, the opposite is occurring.

Under the Trump Administration, a highly functional award-winning and internally developed application called VistA at the Veteran’s Administration (VA) is being replaced by a commercial system from Cerner, which has also given large donations to the right places. This application is a horrible fit for the VA because it was developed for the private health care industry and has a significant functionality focus on billing management, which is irrelevant for the VA because the VA does not bill its patients.

Choosing to be Lied to By Commercial Vendors Like SAP

Various US departments are purchasing a database called SAP HANA right now.

SAP HANA is even a more limited option from a licensing perspective than Oracle. SAP HANA comes with what is called indirect access liabilities, which we cover in the article The HANA Police and Indirect Access Charges. And it means that the US government has restrictions as to how it can move data to and from the HANA database, which SAP uses to force companies into purchasing more SAP software and databases.

Even more appalling is that the US government is buying a database that has enormously false claims about its superiority to other databases How to Deflect That You Were Wrong About HANA. And the database has, in part, been reverse-engineered from open source databases!

And this is admitted to by SAP (although not willingly).

The Teradata v SAP Lawsuit

In a lawsuit against Teradata, as we cover in the article How SAP Admitted in Court Documents to Copying from MySQL, their defense is that they did not take the idea from Teradata (as accused by Teradata), but from MySQL!


Because this was denied for quite some time after published in the article that Did SAP Reinvent the Wheel with HANA? that HANA had been reversed engineered. And then, when pressed in court, it turns out this was true all along. It is interesting what lawsuits can get companies to admit.

If you are backward engineering your database from open source, then why are taxpayers paying a license fee and dealing with the license restrictions (and the INCREDIBLE license restrictions on HANA) for it?

HANA is of such poor quality that I proposed merely replacing it with an open-source database, but keeping the HANA name so that the executives could feel good about their purchase.

These are the types of topics that I consistently point out the IT media sphere will not touch. Why? Because commercial vendors and consulting firms exclusively fund them. I have been privy to how the ad sales departments at IT media entities work — and they continually send out emails to vendors and consulting firms and ask them to increase their advertising levels.


There needs to be serious discussion around this proposal because there is little reason for governments to be using public taxpayer dollars to fund commercial vendors. This is particularly when commercial vendors and their consulting partners have such a terrible history of taking advantage of government entities.

If governments began to fund open source projects, open-source would explode — because open source projects have proven to be extraordinarily efficient at converting funding to quality output. They are so good at it, that commercial vendor’s trip over themselves to try to take efforts from the public sphere and make it private, and claim that it was their invention.

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.

What We Do and Research Access

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The Public Cloud Revolution Book

The Public Cloud Revolution: How Open Source is Displacing IT Mega Vendors

Interested in how to open source is powering public cloud providers like AWS and Google Cloud and what this means for the different modalities of computer hardware (cloud, on-premises proprietary server, mainframe, and appliances?). This book covers many topics that are greatly underrepresented in the common IT media coverage of these topics.

Why SAP and Oracle Have Such Problem Building their Clouds

Executive Summary

  • Oracle and SAP have built virtually nothing in their cloud services.
  • We cover why Oracle and SAP appear incapable of creating competitive clouds.


While currently, both vendors cannot talk enough about the cloud, both vendors fought against the cloud for many years (and we have the evidence in this book). These vendors behaved this way as they knew that the cloud cut against their on-premises business model. Moreover, once they embraced the cloud (not that they wanted to, but Wall Street told them they did not have an alternative), their approach to the cloud has not been to improve IT efficiency or to reduce prices. Instead, it has been merely to lift and shift their business model to the cloud and then to deceive their customers and prospects as much as possible about the cloud.

For instance, for years, Oracle has been crediting cloud sales to customers who use the same on-premises version of the application. Information from actual projects as well as Oracle sales reps is that the cloud version of the Oracle application is not implemented (but booked as revenue) while the on-premises version is not booked as revenue, but is used.

Seeking Alpha also explains this.

“Oracle management likes to talk a lot about new customers and competitive wins. I get that. I am sure that there are workloads new to Oracle on the cloud. How much these are I cannot say. But the fact is that core IT applications are simply not growing by all that much-they have long since been saturated. Most of the time when Oracle sells a cloud application, it is selling it to someone who has the selfsame application running on-prem.”

Thus the customers of both of these vendors are prime candidates to harness AWS and Google Cloud to improve their value.

The following quotation on this topic comes from Ahmed Azmi.

Why does AWS, Google, and Alibaba have a good cloud product while SAP, Oracle, and IBM don’t? Because AWS, Google, and other cloud-natives had to build global scale infrastructure to support their internal workloads for e-commerce, search, and ads. They are now offering surplus capacity and a subset of their own tools to “external” customers. They understand the problem domain better than anyone else and they’re a decade ahead.  Oracle, SAP, and IBM never had to operate a global e-commerce platform or host software at scale. They’re software houses who built (mostly acquired) then sold packaged software to customers and customers did the hosting on-premises. The institutional knowledge is not there.

Ahmed’s point about SAP and Oracle’s lack of experience in implementing software internally is a good one. SAP and Oracle have only ever talked about and sold technology to others.

What are Oracle and SAP Investing in Cloud?

Both Oracle and SAP have tried to argue that they have made major investments in the cloud. Let us take a closer look at these claims. SAP’s lack of investment in the cloud has been well documented, one source being the book SAP Nation 2.0.

  • SAP’s Steve Lucas stated that they were not going to open their application to the cloud as it would be a “race to the bottom.” But then SAP introduced their multi-cloud strategy as covered in the article SAP’s Multicloud Announcement, where they fundamentally changed strategy from proposing that they would not open their solutions to the other cloud providers. To doing a 180 and stating their solutions would be to being complimentary with AWS, Google Cloud and Azure. Currently, SAP Cloud connects to AWS, Google Cloud, and Azure.
  • Oracle, on the other hand, has promoted its investment into the cloud and to directly challenging AWS. As we will discuss further in detail, Oracle has had to answer pointed questions as to why for a company which such enormous resources their investment in the cloud has been so small compared to the major cloud providers.

We conclude that neither Oracle nor SAP has any particular technology interest in the cloud. (Of course, they have a genuine monetary interest in the cloud, but this is to defend their on-premises ecosystems.) Instead they rightly viewed the cloud as a threat to their account control within their enormous respective account bases. And this is why both companies have a history of being so dismissive to the cloud, particularly in the cloud’s early period.

This video from 2009 shows Larry Ellison getting a lot of laughs applying a straw horse logical fallacy where he implies cloud merely is hosting.


In this amusing rant, it is difficult to critique the performance. However, he misses on the shared resource aspect of the cloud, the multi-tenancy of cloud, the sever-ability of cloud terms. Instead, Larry prefers to focus on arguments that were not particularly prevalent at time-related to the cloud having “no hardware”.

Moreover, nine years later, the Oracle Cloud is a non-factor on Oracle accounts. At the time of this video is 2009, while Oracle and SAP were “running down” (a bit of deliberate FUD perhaps?) cloud, AWS, and Google Cloud were investing in their offerings. Larry thought he and Oracle could ride the on-premises model forever. Now, after doing little aside from cranking up the cloud marketing machine for over a decade, Oracle is lost in making progress in its cloud. In September 2018, Thomas Kurian, the head of Oracle Cloud, stepped down. Thomas Kurian’s exit from Oracle (it is at least strongly rumored) was due to his view that existing Oracle customers should be able to choose which IaaS they wanted to run their software on, which conflicted with Larry Ellison’s vision. After all this time, and so little progress, Oracle is still trying to figure out its strategy, and appears headed in an unsustainable direction concerning the cloud.

The Threat to SAP and Oracle from the Cloud

How is cloud a threat to both Oracle and SAP? Well, cloud naturally undermines the on-premises assumptions around which both these vendors developed their business model. That is everything from their internal skills to their contracts and internal incentives. Cloud companies are not configured like Oracle or SAP and would impose a great deal of unwanted change if they had to adapt. Change, mainly when one is so financially successful doing things for decades one way, is historically put off as long as possible.

Cloud also threatens their consulting partners that are also based around the on-premises model. Once the cloud is employed, the number of consulting resources drops and hence consulting revenues. This is the primary reason why SAP and Oracle partners fought the cloud. Behind closed doors, they still fight the cloud, although they can’t admit it publicly. SAP and Oracle and their consulting partners would like to move with the times. Still, the problem is they want to move with the times while keeping their inefficient and dated methods of operation, and their margins, perhaps even increasing them as we will see later in the book. We have reviewed the internal SAP consulting company slides that promoted the idea that the cloud would help them increase their revenues. Perhaps this consulting company does not fully appreciate how the cloud works, but the cloud reduces the number of resources required for a project. Moreover, consulting companies function with the following formula.

Deloitte Revenues = The Number of Resources on the Project x The Number of Weeks on the Project

Cloud reduces both of the inputs.

Fewer resources are required, and they are required for a shorter period. This is not good news for consulting companies. Senior members of SAP and Oracle consulting partners have stated to the authors that they would never “recommend the cloud.”


Because if they did, they would not be able to staff a sufficient number of resources, to bring in enough money, to maintain their position in their companies.

The marketing these same companies do around the cloud looks much different. In public communications, SAP, Oracle, Accenture, Deloitte, etc.. are “all in on the cloud.”

However, what do all of these entities really want, and how do they plan to react to the cloud?

It is all straightforward. They will superficially promote the cloud while keeping everything else the same, which means defending their on-premises revenue model. If a customer is utilizing entities that only have a history in on-premises software, the likelihood that they will benefit from real cloud efficiency rapidly shrinks. There are no precedents where entities passively accept lower revenues without fighting that change. As we will discuss, the fact that so many people are still employed in IT consulting is evidence that we are still early in the cloud transformation of IT.

SAP and Oracle can only slow the process, and they must do what they can to either co-opt cloud (i.e., pretend they are more involved in it than they are) or adopt it. So far, they have chosen to co-opt the cloud rather than become true cloud vendors.

What is the Difference Between Real Cloud and Faux Cloud?

While SAP and Oracle and their partners dislike the arrival of the cloud, they are financially incentivized to “pretend to move to the cloud.” They have spent most of their efforts trying to cloud wash or to co-opt the cloud, which means to miscommunicate either their on-premises revenues or support revenues as the cloud. SAP and Oracle will tell Wall Street anything they want to hear if cats are popular on Wall Street, SAP, and Oracle loooove cats. If its dogs….well, you get the picture. The fact is that most of what SAP and Oracle offer customers is a faux cloud, as we covered in the article How to Understand Oracle as Faux Cloud Versus AWS.

We have investigated true cloud versus faux cloud in-depth for several clients. What we discovered was shocking to us. The vast majority of notably more prominent companies that say they are cloud/SaaS are not the cloud. Salesforce, a company that started as cloud, now has restrictive cancellation clauses and other account control terms & conditions. Cloud computing has a specific meaning and a particular set of requirements. While reviewing all the marketing literature, it is very tempting to forget what the actual definition of cloud, which is why we always refer back to earlier research we performed on this exact topic.

Cloud is frequently diluted to mean the service is merely off-premises. So, let us take this opportunity to get clear on what the cloud is, and what features are necessary for an offering to be considered cloud.

The following eight conditions must be met for a service to be the cloud.

  1. One codebase
  2. No customization
  3. The vendor provides the hosting (i.e., the vendor provides and maintains all infrastructure for the application)
  4. Flexible cancellation
  5. Published and transparent pricing
  6. Using a cloud salesforce
  7. Using self-guided demo systems
  8. Vendor-provided Software maintenance


One codebase is what allows for multi-tenancy. This means that multiple customers use the application logic and, in some cases, the same database. Multi-tenancy flows directly into the topic of no customizations. No customization is necessary because if different customers were allowed to make customizations, then the application could no longer be multitenant.

To provide IaaS capabilities, vendors invest in their own data centers. However, as we will cover further on in the book, only a few companies are interested in making these investments. If we look at SAP, while they tout cloud, in many cases, they have other entities hosting their applications and databases. In the past, this was more commonly a consulting partner like CapGemini. Also, if your hosting is with Deloitte or Accenture, which has shown no true cloud capabilities, even to manage multitenancy, one has to wonder about the effectiveness of this strategy.

Definition of Multitenancy

This is the first time we have used the term multitenancy. Multitenancy means more than one “tenant,” the tenant, in this case, being a customer. Multitenancy is critical to the understanding cloud. Multitenancy can be considered the core characteristic of the cloud. It allows resources and costs to be shared across a pool of users. It means that in the case of database multitenancy, the data from many customers can be kept in a single database instance, and the database can be maintained at very low overhead and high economies of scale. At the application level, it means that updates can be implemented for all users at once. We will discuss multitenancy in depth further in the book.

Objectivity on the Cloud

Think about it in these terms, does anyone go to Deloitte or Accenture or CapGemini for cloud IaaS if they are not pushed there by SAP? This appears more geared toward giving business to partners rather than doing something that is in the customer’s best interests.

In summary, it seems that SAP is not all that interested in investing in data centers. This raises questions about how a vendor like SAP deals with third parties hosting their software.

SAP’s marketing materials show many cloud acquired applications. SAP’s marketing investment in the cloud is undoubtedly substantial. However, SAP maintains what has been described by others as a “puny” data center investment and capability. SAP’s acquired application typically suffer from chronic data center underinvestment.

This is explained in the following quotation.

“There is another concern about SAP’s S/4 public cloud. The data center in Sankt LeonRot Germany, while close to SAP’s impressive Walldorf headquarters, does not itself inspire much confidence. It has been called puny and primitive compared to the data centers of infrastructure as a service providers like Amazon, Microsoft Azure and Rackspace. Indeed competitors like Info and Unit4 are using infrastructure-as-a-service (using data centers from Amazon and Microsoft respectively) rather than trying to compete with their scale.”

“Even where SAP offers public cloud options-for example with its SuccessFactors and Concur customers– the individual data centers are undersized and often supported by co-location vendors around the globe. SAP’s about 82 million cloud users are fragmented across products and across geographies. Little attempt appears to have been made to date, to consolidate data centers that support them. While compliance requirements dictate regional diversity in such facilities, they are further reminders of Balkanization in the SAP economy.”

The Truth Around S/4HANA

Most of SAP’s database and applications revenue is from on-premises applications. S/4HANA is an internally developed application. There is an on-premises and a cloud version of S/4HANA. Yet out of 1500 “live” implementations, we estimate around 10% are S/4HANA Cloud. On quarterly calls, SAP does everything it can to distract from this reality. The reality is that outside of the acquired applications, SAP does not have a cloud application business of any significance.

The cloud customer should have a month-to-month contract with the software vendor or service provider, which allows for flexible cancellation. This relates to preventing lock-in, although it should also be acknowledged that some applications have more lock-in than others. ERP systems, by their nature, have more lock-in than other applications, like CRM applications, which are far easier to switch between. Although regardless of the application, there is some stickiness factor that reduces the actualized flexibility in changing to a different system.

AWS and Google Cloud offer highly flexible cancellation terms. It is the ability to bring up and bring down services and to pause services. For example, we can close down any one of our AWS or Google Cloud services at any time. The services are billed in hours or minutes or second or millisecond. When the service is turned off, the billing no longer runs. This is not a “month-to-month” cancellation capability, but an immediate canceling capacity. The account stays active at AWS and Google Cloud, but that is separate from the services that are billing or not billing as the case may be. We have become used to this type of flexibility, but it is easy to forget how unusual this is in the history of enterprise software.

SAP and Oracle are not experienced in working with this type of business model.

SAP has only very recently begun to offer month to month subscriptions to their products. We reviewed this same pricing page in June of 2018, and at that time, the price was listed as monthly, but it had a yearly term. The vast majority of SAP’s products have secretive pricing. We were not able to verify if a monthly term applied to S/4HANA Cloud if a discount was applied. SAP responded that they would only answer that question if we provided a customer name.

Being Forced to Adjust to the Cloud

SAP has to respond to market pressures. SAP could have done this years ago, but they didn’t. SAP is being forced to adjust to the cloud, and these changes are being fought tooth and nail by SAP (and by Oracle). And, as our example of SAP’s unwillingness to verify the interaction between a discounted price and the monthly cancellation term, often when one gets into the details, it turns out that the promised cloud terms are not a cloud at all.

Even now, SAP and Oracle operate on the on-premises model where projects are made about software capabilities, usage, implementation difficulty, product maturity, and other product features without testing the item. Some might respond to this by contradicting the statement and pointing to proof of concepts. However, evidence of concepts is run by the vendors. Vendors run the POC to “prove the concept” not to “test the concept.” The POC intends to convince the customer to purchase the software. It is not at all, like when the customer tests the software themselves. By contrast, the cloud puts the customer in the “driver’s seat” rather than trying to control the process of evaluation.

On the topic of the necessity for a self-guided demo system, generally, on-premises application sales teams tightly control exposure to the application. The prospect is only allowed to see a demo of the system for short periods. Specialized resources called presales consultants to walk prospects through a demo. This approach does not provide or allow a thorough evaluation of the usability of the system. Demonstration consultants, who are very familiar with the application, can do many things that average users often cannot. Alternatively, when cloud vendors provide access to a cloud demo environment, the experience becomes self-guided. This gives the prospect more control and allows them to understand whether the application is a good fit for them in a shorter period.

Published Versus Secret Pricing

Published pricing is a fundamental feature of cloud providers. For AWS and Google Cloud, they chose to outsource much of the presales effort to its customers. They do this by doing what was in the past unthinkable; that is, by publishing their pricing and making it virtually non-negotiable. In doing so, AWS and Google Cloud remove an enormous obstacle for customers to adopt their services. Also, then customers can begin testing the capabilities and the cost without even needing to, in many cases, interact with AWS or Google Cloud representatives.

As any reader of this book will likely know, SAP and Oracle have unpublished pricing. Just a few pages ago, we showed an example of published pricing for SAP’s S/4HANA, but this is new, in part faux cloud pricing, and most of SAP’s product catalog is still secret. The same applies to Oracle. And when we say secret, we don’t just mean unpublished. We mean secret. On the first page of SAP’s pricing page, it states that sharing the pricing spreadsheet could expose the person sharing the pricing sheet to legal jeopardy.

“All rights reserved. The contents of this work are confidential and proprietary information of SAP AG. Improper and/or unauthorized reproduction in whole or in part of the information contained in this work is a violation of SAP’s proprietary rights and could cause irreparable damage. No part of this work may be reproduced or copied in whole or in part in any form or by any means (including without limitation graphic, electronic, or mechanical, including photocopying, recording, taping or information storage and retrieval systems) without the prior written permission of the publisher.”

Interesting isn’t it? According to SAP, its pricing is protected information. Furthermore, if one is in possession of this pricing spreadsheet, the recipient has specific responsibilities.

“This SAP Software Price List may only be distributed by an employee, agent, or representative of SAP AG / SAP subsidiary. If you have received it by any other means, you are hereby notified to return it to SAP AG to the attention of the Contracts Manager.”

Oh yes, a company that writes these types of clauses around its price list is TRULY ready for the cloud!

Complicated Pricing

Both SAP and Oracle’s pricing is so complicated that sales reps for each company seem to spend at least as much time working out pricing as focusing on technology. For example, we had to completely revamp the SAP pricing sheet before we were able to use it because, as it is given initially to salespeople and pricing consultants, it is tough to use. Secondly, even if the pricing sheet is obtained, there are so many discounts that the pricing can’t be known with certainty. This applies equally to Oracle.

It even goes even beyond this. If you go through an official SAP representative, there are still frequent problems getting a firm price. At clients that we advise, SAP sales often postpone giving out pricing even when the customer specifically asks for a price. For some reason, the pricing has to be a run-up to the higher levels in SAP….or at least that is what customers are told. It is quite odd when you can’t even get a price for weeks because of a large number of behind the scenes mechanizations and scheming that has to take place. However, this is the world that SAP and Oracle have created for their customers. And these are the type of things people outside of the field don’t find out because it is not the sort of thing that is published.

AWS and Google Cloud have estimates per configuration. The example we have in this screenshot is for SAP HANA, express edition. This for the HANA database that can be run without a base edition, platform edition, or enterprise edition license. SAP does this to encourage development on HANA. Because the only change here is from Google Cloud, the pricing is transparent. However, as soon as one makes the switch to the SAP HANA “Bring-Your-Own-License,” while the hosting costs are the same, the overall pricing immediately becomes secret. In that case, neither AWS or Google Cloud has anything to do with the pricing of the license. That license pricing is set by SAP, and now “the games begin,” as one must work through an archaic and time-consuming process called the on-premises sales model.

The Low-Cost Distribution and Sales Model

The original cloud vendors followed a low-cost distribution and sales model. This means employing fewer salespeople, focusing less on relationships, and on manipulating relationships. It says cloud salespeople are closer in many ways to presales resources than sales resources. This dramatically lowers the cost of sale, and it also reduces the amount of inaccurate information being communicated to customers. This also happens to be how AWS and Google Cloud operate.

When considering this context, while SAP and Oracle declared they were moving more to the cloud, they did not reduce their sales force.

SAP and Oracle are both highly aggressive sales cultures with vast numbers of salespeople. Oracle employs 35,000 at last count. That should tell anyone who is paying attention that SAP and Oracle are not migrating to the cloud anywhere near as fast as they are saying. If a company is following a cloud model, the need for salespeople steeply declines, as the primary means of interaction is through the website, not through phone calls and on-site visits. (And the skills of the salespeople also change.) If one compares the revenue to employees in AWS and Google Cloud versus SAP and Oracle, AWS and Google have a higher ratio of revenues to employees.

Cloud Service Providers and Support

Cloud began with the cloud vendors providing the maintenance. This means that this is taken off of the customer’s plate. Under SaaS, the customer only uses the application; they don’t worry about the infrastructure, database, updates, etc. The updates are supposed to be so automatic and well managed that the customer does not notice the update being made. An excellent example of this is Gmail, which is a cloud application that most people use. Gmail has gone through many updates, but Gmail users do not observe the changes occurring. The story with AWS and Google Cloud is a bit more complicated because customers are not using AWS and Google Cloud just for applications (SaaS), but for their development and infrastructure (PaaS, IaaS). But this applies very readily to AWS RDS and Google Cloud SQL, where much of the maintenance of these databases is managed for the customer, and the customer can focus on using the database.

The following quotation explains this from Google.

“Let Google manage your database, so you can focus on your applications. Cloud SQL is perfect for WordPress sites, e-commerce applications, CRM tools, geospatial applications, and any other application that is compatible with MySQL or PostgreSQL.”

SAP and Oracle Sell Technology Rather than Use Technology

Neither SAP or Oracle ever built anything themselves. Internally they have roughly the same technological accomplishments of a large consulting company.

Say a Deloitte or Accenture. They have an HR system, systems for recording sales and expenses, invoicing, etc… Anything of any significance that is accomplished with SAP and Oracle products is accomplished in their customers.

SAP’s Underinvestment in Cloud Infrastructure

The underinvestment in SAP cloud infrastructure is covered in the following quotation.

“There is another concern about SAP’s S/4 public cloud. The data center in Sankt LeonRot Germany, while close to SAP’s impressive Walldorf headquarters, does not itself inspire much confidence. It has been called puny and primitive compared to the data centers of infrastructure as a service providers like Amazon, Microsoft Azure and Rackspace. Indeed competitors like Info and Unit4 are using infrastructre-as-a-service (using data centers from Amazon and Microsoft respectively) rather than trying to compete with their scale.”

The next quote gets into how the SAP data centers are undersized.

“Even where SAP offers public cloud options-for example with its SuccessFactors and Concur customers– the individual data centers are undersized and often supported by co-location vendors around the globe. SAP’s about 82 million cloud users are fragmented across products and across geographies. Little attempt appears to have been made to date, to consolidate data centers that support them. While compliance requirements dicate regional diversity in such facilities, they are further reminders of Balkanization in the SAP economy.”

The following quote covers the enormous costs of the SAP cloud.

“Customers also report that SAP’s recent software economics (as against business network economics described above) are uncompetitive whether it is proposing on-premise or its cloud solutions. For example, in a recent deal, its five-year software cost was three times as much as the winning competitor cloud bid. SAP’s annual maintenance cloud by itself exceeding the subscription cost of the competition, which also included hosting, apps management and upgrades in its price.”

Did SAP Successfully Implement its Learning from SuccessFactors on the Cloud?

The following is a quote from a paid placement by SAP into Fortune.

But it has put some of the right pieces in place—the CEO of recently-acquired SuccessFactors, Lars Dalgaard, has joined the company’s executive board and is now tasked with running all of its cloud efforts. Cloud revenue is small but growing at a much faster rate than traditional software sales: SAP reported that the SuccessFactors business grew bookings by 69% compared to the first quarter of 2011. And the company is pouring marketing muscle and manpower into HANA and other innovative efforts like mobile apps.

The idea was that SAP would learn a lot about cloud from SuccessFactors, and talking to those inside of SAP, they did. Yet, the exposure has not translated into any of the expected improvements in SAP’s cloud offerings, which is very much lagging the market.

Next month, at a conference in Florida, SAP is expected to unveil more details on its cloud strategy. It’s sure to talk up HANA, mobile and analytics as well. But what about its core business, enterprise resource planning software? It’s long-overdue for a serious overhaul on its less-exciting core product, which accounts for the bulk of current revenue. Of course, redesigning complex software isn’t easy and takes time. But it’s a necessary step for SAP to truly become the innovation leader in the enterprise.

Whatever SAP announced, it has not resulted in anything of substance over five years later.

Coercing Companies into the Cloud

SAP and Oracle have been in the position of having to force companies into the cloud as we cover in the article How SAP and Oracle Coerce Customers into the Cloud.

Upcharging for Private Clouds

SAP has a minimal cloud capacity and relies upon very low-quality partners that work under their HEC brand, which we cover in the article Our Comparison of SAP HEC with Virtustream Versus AWS Analysis. SAP really marks up the cloud services of these companies, as we cover in the article How to Understand SAP’s Upcharge as a Service Cloud. As with Oracle, none of these private cloud offerings are multitenant, as we cover in the article Why Oracle Cloud is Not Multitenant.

SAP and Oracle and Consulting Partner Information Quality

Migrating from SAP and Oracle, or portions of SAP and Oracle to AWS has many implications. Some of them are related to corporate strategy, contracts, and related factors. We will cover as many of these as we can.

Customers have, for decades, chosen SAP and Oracle applications and databases. In some cases, the selections made sense. However, in many cases, when there was no logical reason to select the options presented by SAP or Oracle, except they felt like safe choices. This is buying on the basis of a brand rather than an actual analysis of the pros and cons of the purchased items. SAP and Oracle have not only extensive sales and marketing budgets, but an army of consultants built up that both implement, but also serve to promote more and more SAP and Oracle sales.

Brightwork Research & Analysis frequently performs analysis of statements by SAP and Oracle consultancies to their clients is that the average information quality provided by them is low. As it happens, right now, we are aware of Oracle partners who are lying to companies about Oracle Cloud. They are falsifying the customers they have live on Oracle Cloud. They are doing this so they can sell Oracle Cloud and get experience in Oracle Cloud.

SAP and Oracle spend mightily to influence people, and it works, which we cover in How SAP Controls IT Media. The vast majority of SAP sales reps and SAP consulting firms spend their time talking about how SAP “could be used” (according to a brochure), not how it is used. Brightwork Research & Analysis is one of the only entities that discuss how it is used in reality. Moreover, discussing this topic is very bad for sales, which could cause you to “lose the deal” and then get fired as a sales rep for these companies.

The problem is financial bias.

Implementation companies don’t implement things from many vendors. They implement software from a few vendors. If the consulting company has a financial bias, it is logical and is borne out by observations that they will recommend what is best for them financially. SAP and Oracle consulting companies are not fiduciaries as we cover in Do Consulting Companies Have a Fiduciary Duty. They are under no obligation to place their client’s financial interests ahead of their own.

While they may be safe politically, they are, in many cases, not safe in reality. Here are several examples of why this is the case.

  • Immature Products: SAP has a history of bringing out immature applications that have major implementation failures and have to be written off. SAP implementations have so undermined some companies that they were sufficiently weakened to become acquisition targets.
  • High Cost and Maintenance Database: The Oracle database (Oracle 18, 12, 11) has many upper-end features, but it also historically has the highest maintenance overhead of any database in its class (until SAP released HANA that is, which took the crown). Furthermore, many of the Oracle DB’s more advanced features go unused by customers. Like SAP, Oracle accounts suffer from high TCO. SAP and Oracle’s high TCO is how they can pay at the top of the market for sales reps.
  • A History of Overpromising: Both SAP and Oracle have a long-established history of overpromising what their applications and databases can do. They often promote the upper level of functionality that is very rarely reached by customers because of the effort and maintenance overhead in getting their offerings tuned. The result is the “average usage” is far below the potential theoretical usage. So what customers see in the sales phase is not anywhere close to what customers get.

All of this is possible because, under the on-premises model, the application or database is purchased first and then tested after. Customers buy cloud services by the SLA, not by the sales pitch.

Advice on Enjoying the SAP Cloud Quiz

To see the full screen just select the lower right-hand corner and expand. Trust us, expanding makes the experience a whole lot more fun.



Both Oracle and SAP’s clouds are based upon smoke and mirrors and not long term investment. They significantly lag other cloud service providers, and they provide false information to customers about their clouds.

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.

What We Do and Research Access

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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.

Will Thomas Kurian Bring Oracle’s Sales Sleaze to Google Cloud?

Executive Summary

  • Thomas Kurian, the head of Oracle Cloud, took the reins at Google Cloud.
  • The WSJ covered Kurian’s plans at Google Cloud. We ask a specific question from this coverage.


The Wall Street Journal wrote an article (What’s Been Lacking at Google’s Cloud? Enough Humans), where the WSJ delves into Thomas Kurian’s plans as the recently named head of Oracle Cloud.

In this article, we will review the most important quotations from the WSJ article and provide our take on the likely changes to be put in motion by Kurian.

Thomas Kurian’s Observation on Google Cloud

The WSJ article begins by pointing out Kurian’s observations on Google Cloud after leading the organization for several months.

“Weeks into his new job as head of Google’s cloud business, Thomas Kurian identified a chief complaint from big business customers: They often didn’t have account managers to call.

Understanding corporate customers is precisely why Google hired Mr. Kurian, who spent two decades at longtime adversary and competitor Oracle Corp. , including running product development. Customers are happy with Google’s technology, he said, but not their lack of access to sales managers to cater to their needs—a basic business tactic.””

Oracle is not an adversary of Google or any other cloud service providers because they have a nearly unmeasurable cloud services presence.

Something left out of this observation on the part of the WSJ is how do Oracle customers feel about the Oracle Cloud, the division of Oracle that Thomas managed before he left to work for Cloud.

So how do they?

  • Customers were unhappy with the technology and customer service. You could access Oracle customer service, but it was and is exceedingly poor, with high turnover.
  • Secondly, because the Oracle Cloud lacks self-service capabilities, you end up having to reach out to people. Oracle’s solution to the Cloud seems to be people people people. It is ridiculous in that everything seems to require some engineer setting things up for you. This is one (among many reasons) that Oracle’s claims to have reached equivalence with AWS and GCP have always been ludicrous.

Oracle Cloud seems less like something built, and more like something that is built when requested. As Ahmed Azmi states, “if they come, we will build it.”

Unsurprisingly, Oracle’s CAPEX for the Cloud is tiny, as covered in the article The Problem with the Oracle Cloud and Colocation. AWS and GCP have built something; they are not just using their clouds to attract people and then put people to work building stuff after someone has asked for it.

Under Kurian, Oracle Cloud and now has no understanding of how to manage a cloud services operation, and they also have no idea how to build one, despite hiring people from AWS and GCP. This is something the WSJ should always keep in the back of their mind as they are listening to Kurian.

The WSJ continues.

Simplified Contracts?

“Mr. Kurian said he has simplified contracts for different types of businesses instead of a one-size-fits-all approach, and has moved to more predictable pricing, in a way corporate buyers appreciate. He intends to dramatically boost Google Cloud’s sales and support staff.

Google Cloud already had a simplified contract. Secondly, Oracle is known for the most byzantine contracts in enterprise software, and Kurian brought simplified contracts to Google?

That is a bit of a pill to swallow. Let’s spit that pill out.

On pricing, Google’s pricing has always been predictable and auditable, unlike Oracle Cloud’s. All of this is easy to verify. Let us go to our Google Cloud account.

Google Cloud, like AWS, has predicted costs for various instances. The price auto-adjusts as soon as you make a change to the deployment. Oracle Cloud has never had this. 

And Google Cloud already has far more transparent billing than does Oracle Cloud. 

WSJ should recognize that Thomas Kurian will say that he will do some things, but only a portion of those statements will be true. 

The WSJ continues.

Kurian = Customer Expert?

“There are certain things that you learn having dealt with enterprise customers for 22 years,” Mr. Kurian said in an interview.”

Kurian may have dealt with enterprise customers for 22 years, but it is not clear that he satisfied them. If you check Oracle’s customer satisfaction, it is the lowest in the software industry. So why does Kurian have any credibility when he makes this statement? Southwest Airlines knows how to satisfy customers. The Marriot Hotels know how to satisfy customers.

But Oracle knows how to satisfy customers?

The WSJ continues.

Kurian is Bringing Oracle Support Knowledge

“Google Cloud had prioritized developing technology over sales and support, said Gene Reznik, strategy chief at the consulting firm Accenture PLC, which helps clients deploy tech from major cloud services including Google’s.

“There is a lot of hand-holding required” with big corporate customers, Mr. Reznik said. But Google often had product engineers rather than account managers handle customer calls. “It really wasn’t their day job,” he said, adding that Mr. Kurian brings a corporate credibility to Google’s “consumer-centric culture.””

It is difficult to see who besides Gene Reznik thinks that Kurian brings credibility for customer support from Oracle to Google.

  • Oracle routinely receives the lowest rating for support. Comments on Oracle support are frequently laced with profanity for how Oracle support let them down.
  • Oracle’s support has a 90%+ margin because Oracle prefers to make its support revenue almost entirely margin versus investing anything in it or its support resources. We covered this in the article, How do SAP and Oracle’s Support Profit Margins Compare to Pablo Escobar?
  • Oracle spends a disproportionate amount of its money on salespeople versus people that “hold people’s hands.”

It is a bit curious how Gene Reznik missed all of this. Its almost as if Gene Reznik has no idea how Oracle operates.

The WSJ continues.

The Disaster Area That is the Oracle Cloud Can Be Overlooked Because of the Oracle Database?

“Mr. Kurian, who regularly met with customers at Oracle even as a top engineering executive, said he recognizes the challenge. He has his first big chance to lay out his vision for closing the gap with Amazon and Microsoft when Google begins its annual cloud-computing conference Tuesday in San Francisco.

There, he plans to pull from the playbook of Oracle, which has struggled in cloud computing but has been a leader selling database software.”

The assumption here seems to be that Oracle has been successful with their database because they are a leader in customer service or pleasing customers.

This is not true.

Oracle has very well documented monopoly power in the database market; it is not used because Oracle has demonstrated superior or even adequate customer service capabilities.

Time for Oracle’s Sales Sleaze?

“Mr. Kurian will detail a dramatic ramp-up in Google Cloud’s sales team and unveil new technology enabling programmers to develop applications that can run on Google Cloud as well as on services from Amazon and Microsoft—comparing it to Oracle’s widely used Java computing language.”

Well, of course. And where will these salespeople be primarily drawn from? Well, it begins with an “O.”

  • The pattern with Oracle is for companies that receive Oracle executives to be quickly inundated with ex-Oracle employees.
  • This usually rapidly decreases the ethics within this organization, and soon the pre-existing employees begin to refer to the new ex-Oracle employees as “the Oracle mafia.”
  • People who are good actors will often seek to leave a company after it has been infested by Oracle employees.
  • The overall moral tends to decline.

As for technology, it is doubtful that Kurian is enabling anything technologically within Google. Remember, the Oracle Cloud technology was and is terrible. Kurian had several hires from AWS and Google Cloud, but he was not able to get much out of them.

The WSJ continues.

Kurian’s Sales Changes

“Mr. Kurian declined to provide specific figures but estimated his sales force is between one-10th and one-15th the size of sales forces at Amazon Web Services and Microsoft’s Azure, which don’t disclose such figures. Within two years, Mr. Kurian expects his sales staff to be about half their size.

Some customers, though, hope Mr. Kurian won’t bring Oracle’s famously high-pressure sales approach. “As much as he brings the enterprise focus to the table, there are some who worry that he brings Oracle to the table,” said Andy Zitney, chief technology officer at the tech unit of McKesson Corp., referring to hardball sales tactics some Oracle customers had criticized.”

But the problem is that Kurian will bring not only high pressure and hardball tactics but a sales force that makes fallacious claims.

Oracle type claims.

Oracle, by all accounts, has the most dishonest sales force in enterprise software, beating out SAP, which holds the number two spot in our rankings. Kurian has 22 years of working for a company that sets the low bar for honesty in software.

Why would Kurian not bring this sales approach to Google Cloud?

Alienating the Google Cloud Engineers

And this is alienating to engineers. Google Cloud has some outstanding engineers. How will they appreciate being held responsible for statements made by new Oracle sales reps who are lying out of every orifice in their bodies?

I can say as a person who has been in this position, and they won’t like it.

When I worked out of the Singapore of i2 Technologies, I was covered on all sides by highly sleazy salespeople. This group would say anything to get a sale. The only experience any of them had with the software was reading marketing literature. One day one of the salespeople stuck their finger in my chest and told me…

“You need to get with the vision that the VP of Sales is creating for this company!”

He was hopped up on some sales extravaganza she had just attended. And took her ignorance out on my chest.

That particular office was just known for that. I was one of the few consulting resources in that office. The rest of the consultants in that office had been beaten down after years of abuse by these salespeople.

So what did I do?

I promptly found projects that were in other countries where I could get away from the sales team out of that office.

That is what unethical salespeople do to those with domain expertise, make them want to leave either the office or the area that they inhabit. And recall, Google Cloud engineers are incredibly marketable. They can be snatched up at a premium over their current salary. This means that Kurian’s legion of Oracle sales cheezeballs imported from Oracle has an excellent chance of reducing the technical talent within Oracle Cloud. The ex-Oracle salespeople will be looking for technical yes men, so there should be some turnover in Google Cloud organization as the less talented meeker replace some of the best talents that Google Cloud has.

In light of this, we developed the following advertizement for Oracle, which they can use against Google.

This could be an effective advertising campaign for Oracle against Google Cloud. Its a little confusing, but it could work. 

Kurian’s History at Oracle

As well as the underhand tactics being used to create and prop up cloud sales, the suit also notes that 22-year Oracle stalwart Thomas Kurian, then President of Product Development at Oracle – and responsible for leading their transition to the cloud, started selling a significant number of his personal shares. During the class period (March 15, 2017 to June 19, 2018) he sold almost 4 million shares which amounted to over $191 million. The court documents detail how a number of these stock sales came shortly before Oracle announcements which caused the share price to drop.

Potentially relevant is that Kurian took a leave of absence at the start of September 2018, and then resigned before the month was out. Apparently, this related to a falling out with Ellison over whether Oracle should open up more of their portfolio to run on Amazon AWS and Microsoft Azure. – ITAM Review

What Google Cloud Needs

Google Cloud does need improvements, but it is not necessarily adding unscrupulous salespeople from Oracle that will only increase business in the short term. We have little doubt that Google Cloud will see some growth in the next few quarters as their newly Oracle infused salesforce makes all manner of promises that can’t be kept. However, Google Cloud is losing business right now because they could invest more money into making Google Cloud more self-service than it is. Google Cloud is decent in this area, but with their internal skills, they could get better.

This is the same issue that we see with AWS. Standing up Google Cloud and AWS instances in various areas would be made more logical and self-service. For example, just doing basic things, like connecting a backup to the Google Drive API, takes too long and is overly complicated. This should be dead shot easy, but it isn’t. This is on our mind as we were doing this just recently. And we decided to go with a different backup provider because it was too complicated in Google Cloud. We were investigating ElasticSearch on AWS and ran into the same issue when attempting to create a sitewide search engine with more sophistication than is generally available. But again, this will be another research project for us. There are many opportunities to compete against the hyperscale providers, even if the price is higher, buy making the technologies more usable.

Why have these things not been made more straightforward?

So we have to spend hours reading the documentation to figure out how to get this done. We don’t want to talk to anyone at Google, and we don’t want our “hands held.” This should be worked out so that the customer can figure out how to do this.

Self-service is what separates cloud services from on-premises vendors that have tried to offer cloud services. It is not adopting the high sales orientation and top consulting and service support of vendors like Oracle. That is the exact opposite of what the Cloud is supposed to be all about.

Advice on Enjoying the SAP and Oracle Cloud Quiz

To see the full screen just select the lower right-hand corner and expand. Trust us, expanding makes the experience a whole lot more fun.



The quality of information provided the customers went down when Thomas Kurian joined Google Cloud, and the more he brings in “his people,” the worse it will become. And it won’t stop at just impacting the sales side, overzealous and unethical salespeople alienate technical resources. This is a major reason that Oracle has not developed anything outside of their database where they have a particular and historical advantage in development. Oracle has not made 137 acquisitions because it is good at internal development.

  • This article by the Wall Street Journal did not analyze the statements made by Kurian to see if they fit with Kurian or Oracle’s history.
  • Kurian’s strategy is going to make Oracle Cloud more like the offerings of the major on-premises vendors, with more sales, more overhead, more sales exaggeration, and less of an emphasis on what makes cloud services self-service. The idea of cloud services was to work against the on-premises vendor model, not to copy it.

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.




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 Appealing is the Oracle Global Startup Ecosystem?

Executive Summary

  • Oracle developed a program to push Oracle Cloud for startups specifically.
  • We review the logic of this program.


Oracle came up with the idea to increase cloud sales by marketing to startups. This story illustrates both the disorganization within Oracle, but also a misunderstanding on the part of Oracle regarding the capabilities of Oracle Cloud.

Marketing the Oracle Cloud to Startups

We can still see Oracle’s Startup Ecosystem page.

Below, Oracle explains that they understand startups because they were once a startup.

Collaborate and Co-Develop with Oracle?

We Get It. We Used to be a Startup. In the global marketplace, one size does not fit all. That is especially true for today’s vibrant, diverse, and competitive startup ecosystem. Oracle is reimagining enterprise and startup relationships through true partnerships that foster collaboration and codevelopment while inspiring global innovation.”

These terms at the end of the paragraph are key. They are collaboration and co-development. Just imagine co-developing something with Oracle?

There are several problems with this.

  • Co-Develop with a Company That Cannot Itself Develop Products: Most people who know something about this consider Oracle to be primarily a marketing/sales organization combined with a law firm with a tiny technology component mixed in. Outside of its database, Oracle does not have a history of developing anything. Oracle lauds salespeople and attorneys while pushing down its developers. If you intend to co-develop with Oracle, you will be dealing with depressed and marginalized developers. Therefore, why is Oracle a good partner with which to “co-develop”? Oracle is a better partner if you want to learn how to sell products based upon false statements or how to sue companies, not if you’re going to develop a successful product.
  • Trust and Expose Your IP to the Worst of the Worst?: Oracle is widely considered the least ethical company in technology. Even their customers can’t stand them. How could any company reveal its IP to Oracle? Imagine who is going to walk away with the IP, you, or Oracle. With Oracle’s litigation capabilities, how do you win a case against Oracle for IP infringement? How much would that case cost to take even to settlement?

Do you want to co-develop with Oracle? 

If Oracle is not evil, then what is the definition of evil? If you have to change the meaning of evil not to be called evil, you are probably evil. We could run a survey to get views on who is the evilest entity in the software industry, but really what is the point?

Quotes from the Oracle startup program page continue…

“Startup Ingenuity. Enterprise Expertise. Global Resources.

Oracle’s mission is to build a thriving global startup community to drive the digital economy based on collaborative partnerships that enable next-generation growth, business development, and drive cloud-based innovation for startups throughout all stages of growth. The Oracle Global Startup Ecosystem works with startups at various stages, from founders in university-affiliated incubators to early stage to scaleups.”

No, this is false.

Oracle is trying to sell its Oracle Cloud.

Cut and dried.

Anyone who has worked for Oracle can tell you that the top leadership and most of the company only cares about money. It did not care about any of these things listed in this explanation. Oracle does not care about the growth of other companies.

We quote from Larry Ellison.

“It is not enough to win, all others must lose.”

Filed Under “Amazing”: Oracle Requires No Equity in Return for Customers Using The Oracle Cloud?

The fact that Oracle is not asking for equity is a selling point of the startup program. However, as we will see, the entire program is made up of highly suspicious promises. The program amounts to is getting startups to use Oracle Cloud in return for nothing some empty promises to promote the startup.

See the quote from Oracle below.

“What Makes Oracle Different, We don’t take equity”

Considering how little Oracle did for startups, it would be very odd for Oracle to take equity. This would be like Home Depot declaring that they do not ask for equity for you to come and buy building materials from their store. Right. You shop at Home Depot, and they don’t take equity. In the common vernacular, this is called being a customer.

Run by Oracle’s Global R&D Team?

Oracle tries to promote the idea of access to its R&D team.

“The program is run by our global R&D team

Oracle sales will most likely run the program. Oracle’s R&D team has enough problems and lacks the bandwidth to support such a program, and if we know Oracle, they will not give the R&D team more resources to support the program.

Oracle Has a World Class Product?

Oracle claimed on the startup program page to offer the following…

Startups benefit from world-class product and partner ecosystems”

This statement regarding having world-class product is strange because Oracle’s database is world-class, but it is not appropriate for startups and is described as follows.

“Oracle is kind of like an F1 racer – you need a full pit crew with years of training to keep it running at peak proficiency. Or you can just buy a Porsche (SQL Server).”
This is why the database is very rarely used by startups. It is simply too high in maintenance overhead. This is in addition to being many times more expensive than open-source alternatives that can do almost everything that Oracle can do. Still, more importantly, it can do 100% of what virtually any startup needs.
Oracle promises the support of the Oracle partner ecosystem. But this is a promise on which Oracle we predict will never follow through. The Oracle partner ecosystem is self-serving; they exist to bill Oracle customers and have no interest in promoting startups for free.

Helping Startups Grow, Providing Access to Oracle’s 430,000 Customers?

Possibly Oracle’s most significant promise that we doubt will ever happen is access to its customer base.

“Startups gain from engagement opportunities with Oracle’s 430,000+ customers.

Exposure to global marketing, events and PR resources”


“And it offers engagement opportunities with Oracle’s 430,000+ customers in 175 countries—providing pathways to growing a startup’s business locally, regionally, and globally.”


“This is a multimillion-dollar investment with the global resources and expertise of our mentors, customers, partners, technologies, and more. Additionally, Oracle will further support startup ecosystems through active participation with global and local sponsorships, events, PR, thought leadership, and other resources.”

Now, this is the promise that Oracle would help the startups grow by allowing startups access to Oracle’s customer base. Anyone who knows about Oracle knows that they are a poor fit for startups, and their cloud is not functional and entirely uncompetitive with AWS, GCP or Azure. However, this is offering something that all startup need, and here Oracle is promising some exposure to Oracle’s massive customer base.


You can get a sample pitch on the startup program from this podcast.

Free Oracle Cloud Credits?

A big selling point of Oracle Cloud for startups is that in the beginning, it would be free with cloud credits.

Free Oracle Cloud credits

This is key.

Startups were going to need cloud credits to use Oracle Cloud. By using the cloud credits, startups could be claiming to use Oracle Cloud, and Oracle could count them as a customer. And Oracle needs to report customers for its cloud. But the cloud credits have been tiny…in the 5k to 10k range.

Oracle is continually offering free starter access to the Oracle Cloud. Oracle compensates employees for clouds sign-ups, they provide various goodies in return for signing up, but they have put the cart before the horse. You first have to build a usable product before free trials have any effect. This demonstrates how extreme the Kool-Aid drinking at Oracle has become. They cannot evaluate the capabilities of their products. This happens when executives with no product exposure don’t know what they are promoting. Even today, if you engage with Oracle resources on LinkedIn, they will tell you Oracle Cloud is good! And “you should try it!”

  • Oracle resources persist in telling us to try Oracle Cloud before we judge Oracle Cloud, even on articles where we explain we tested Oracle Cloud.
  • Most Oracle resources have ruined their credibility with us because they continually tell us things that we know to be false. No reality seems to penetrate Oracle.

And the problem with Oracles cloud credits has been brought up by Palisade Compliance.

“Under the “Monthly Flex” payment plan Oracle is pushing most aggressively, customers pay Oracle in advance for cloud services, which they may or may not fully utilize. Ask Oracle what happens to those services you don’t use.

Those same terms mean if you over-utilize, you will incur a penalty – much like overage charges on a mobile phone plan with limited minutes. Rather than getting a volume discount, the more you use the software over your cap, the more you’re going to pay.

You can pay more than what your contract appears to require. The rules on when discounts do and do not apply are complex and tend to result in customers paying more than they would expect, according to Palisade’s analysis.

Make sure you understand whether, in the process of adding cloud credits to your contract, Oracle will be adding or changing other terms of your existing licensing agreements for software not in the cloud.”

Cloud…..But Without Multitenancy, Self Service, or Flexible Termination?

All of these points discussed by Palisade Compliance are odd because one of the defining features of a real cloud is flexible termination. If one uses AWS or GCP, services can be shut down immediately, and billing ceased. Oracle offers none of this and is why (along with other reasons related to lack of multitenancy. One of which we covered in the article Why Oracle Cloud is Not Multi-tenant – and a lack of self-service capabilities) we have declared that Oracle Cloud and Oracle’s other cloud offerings are not cloud.

Those that are possibly lulled into getting started with Oracle Cloud should consider the quote from Mark Hurd.

“When a customer who is on-prem paying us support moved to the cloud, they pay us more money, 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.” – Mark Hurd

Oracle (and SAP’s) Coercive Cloud

One should really consider this sentiment, as it is a problem with both Oracle and SAP and the cloud, and why both have been so unsuccessful. Both Oracle and SAP (and Deloitte and Accenture, etc..) view the cloud as a way to increase the cost of sale to customers. That is, their plan is to, in essence, hijack the cloud, make the cloud inefficient, provide services that are not at all cloud, to further upcharge their customers. We covered the coercive aspects of this in the article How SAP and Oracle Coerce Customers into the Cloud.

SAP’s entire strategy for cloud services is now about up-charging other cloud service providers, as we covered in How to Understand SAP’s Upcharge as a Service Cloud. Companies should stay away from entities that view the cloud through this lens.

Migration Credits and Technical Support?

Quotes from Oracle’s website on the startup program continue.

Migration credits and technical support

The technical support that is promised is already severely lacking for current Oracle Cloud customers, as all the entities that have used Oracle Cloud have reported to us up to this point. Oracle Cloud is unlike AWS and GCP in that you can’t set things up without reaching out to someone at Oracle. Oracle Cloud is not cloud. It is hosting.

Oracle created several blog posts that were designed to promote the startup program, but they did not matter because Oracle Cloud does not work. Media like this can only be leveraged if your product works. 

Thomas Kurian, Strategic Genius?

Thomas Kurian would have had his hands all of the Oracle Cloud Startup Global Ecosystem programs before he left Oracle and to join Google Cloud eventually. We hear a lot about how effective Thomas Kurian is as a leader, but this program appears to be doomed. It seems to be based upon the idea that Oracle has a usable cloud.

Who outside of Oracle thinks that is true? If one reads the Oracle message boards, Oracle Cloud is one of the most lampooned items in the enterprise software space.

Up to this point, Oracle Cloud and Oracle’s other cloud products like the ex-Fusion applications that are known as Oracle Procurement Cloud, Oracle Manufacturing Cloud, etc.. is that they don’t have to go beyond brochureware.

Oracle is not able to develop applications, and Fusion required development, which outside of the Oracle database, is not something that Oracle can do (all of Oracle’s applications are acquisitions, which stagnate in development after the acquisition). The concept or dare we say the strategy is to sell on-premises applications and the same application in “the cloud.” Then report the cloud sale while the customer uses the on-premises application. This is widely known in the Oracle community at this point.

Faux cloud has always been Oracle’s cloud strategy. Therefore, any program that moves towards customers using the cloud is not going to work. Oracle is a cloud company, but only for PR and Wall Street purposes.

In the movie, The Matrix Morpheus declared that…

“No one could be told what The Matrix is, you must be shown.”

Oracle Cloud is the opposite of The Matrix.

Oracle can talk about Oracle Cloud all day..

  • Oracle can talk about how they are ahead of AWS and GCP.
  • Oracle can promote Oracle Cloud with customers and Wall Street analysts.

…but the Oracle Cloud cannot be shown. (or should we say….should not be shown)

You can’t have a strategy where the customer uses Oracle cloud products. Thomas Kurian should have realized this. How could he have known? Well, he could have signed into Oracle Cloud and used it. We have to ask. As the head of Oracle Cloud, how many hours did Thomas spend using Oracle Cloud versus how many hours did he spend in meetings with other Oracle executives? The previous quotation from Larry Ellison was that…

“We eat our own dog food.” 

However, this does not seem to be the case.

What is the point of having such a fearsome reputation and being paid so much in yearly compensation if you can’t figure something like this out? Their top people are just not getting the job done.

Give us a call Oracle.

Problems with Oracle’s Startup Program

There are a few problems with the program that became immediately obvious.

  1. The Program is Anticompetitive: Oracle would gain users of its cloud by providing the lure of access to markets rather than based on the quality of the cloud offering. This is a tying arrangement. The startup gets something, in a completely unrelated field, for using SAP’s cloud. If this works, Oracle will report its cloud number to Wall Street as if the startups had selected Oracle Cloud without its relationship to accessing Oracle’s customer base. This was the thrust of the lawsuit filed by the Fireman’s Fund that Oracle did not make investors aware that many Oracle customers were coerced into the cloud as we covered in the article Oracle Sued for Making False Claims About Cloud Growth.
  2. The Program Sells Out Oracle’s Customers: Oracle does not promise access to customers because they think the startups had a good product or a product that matched their customer’s needs. Notice the offer is made to any startup that signs up for the program. So no matter how poor the startup’s product, will it be pitched to Oracle’s customers if they use Oracle’s Cloud. This means that Oracle is selling out the interest of their customers to gain startup cloud customers.
  3. Oracle’s Disaffected and Disillusioned Customer Base: Oracle has many customers, but few satisfied customers. Many Oracle customers already feel as if Oracle takes too much money from them, with many customers mostly dodging their sales reps, and hoping they don’t call. Many Oracle sales reps consider their unreturned calls on the part of customer’s rudeness, but there is a reason their customers don’t want to talk to them.
  4. The Program’s Perverse Incentives: This program creates an incentive to sign up for Oracle Cloud, but not use the program beyond the credits. Oracle can’t convince even large companies with little focus on technology to use Oracle Cloud, their ability to convince technologically savvy startups to use Oracle Cloud is far lower. But startups will sign up to use “something” if they could get access to Oracle’s customers.
  5. Oracle’s Customer Service and Bureaucracy: Anyone can begin using AWS or GCP immediately without speaking to anyone. Instances can be brought up or down without any human interaction. The Oracle Cloud does not work like this. Everything in the Oracle Cloud is manual, and you have to speak with an Oracle resource to get things done. Startups will not have the patience to deal with the high manual component of Oracle Cloud.

Advice on Enjoying the SAP and Oracle Cloud Quiz

To see the full screen just select the lower right-hand corner and expand. Trust us, expanding makes the experience a whole lot more fun.




The Oracle Startup program looks exceedingly unappealing. First, the solution being offered is highly uncompetitive, and we very much doubt any of the enticement that Oracle is stating regarding helping startups to sell into Oracle’s customer base will come true.

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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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.

A Comparison of SAP HEC with Virtustream Versus AWS

Executive Summary

  • SAP is aggressively pushing HEC or HANA Enterprise Cloud and other private cloud providers.
  • We compare HEC versus AWS.


Virtustream and AWS are two differently positioned cloud service providers. AWS is the largest cloud provider in the world by far and was the early pioneer in the public cloud. Virtustream is a niche private cloud provider. AWS provides support for a wide variety of applications, which Virtustream is focused on SAP.

The Comparison

AWS supports some SAP applications. However, there are extra complexities to running SAP on AWS. One of the easiest items from SAP to run on AWS is HANA. SAP offers some images of HANA on both AWS, GCP, and Azure under a free development license to entice people to use HANA. This does not extend to SAP’s applications.

Virtustream bristles as the comparison of AWS as a direct competitor. This is explained in the following quotation by the CEO of Virtustream.

While AWS focused on serving scale-out cloud native applications, we architected our cloud platform to solve a different engineering problem: to run scale-up, I/O-centric enterprise applications that require higher availability and security.– Diginomica

Part of this quote is more marketing positioning than a reflection of reality. Here are some interesting points.

  • Scalability: It is unlikely that Virtustream can scale up more than AWS, that it has higher availability than AWS.
  • I/O: The points around I/O might be correct.

Security: Private cloud/hosting is considered to be a good fit for customers with the highest security requirements. But it is difficult to make the argument of higher security than AWS considering all of the security clearance focused government entities that use AWS.

The previous points, combined with the fact that Virtustream is a private cloud means that Virtustream is a premium-priced offering over AWS. Virtustream uses miniaturized virtual machines, with their product call uVM, that it claims improves resource utilization. Virtustream claims 250 production instances (that 1000 SAP total instances, but 250 in production) of HANA and S/4HANA. This seems to be relatively small for a company that makes a big point about how it specializes in SAP.

The Comparison Matrix Provided

We found this comparison matrix sent to a client of ours.

Something of note is that no “cons” are listed with using HEC and Virtustream. However, there are, in fact, cons to using them. The only compared item that has any cons is AWS. The message from this comparison matrix is that AWS is the clear laggard of the compared providers.

This matrix was received from the firm contracted with to perform analysis for the procurement.

This matrix does not do an excellent job of drawing the distinctions between the various cloud providers listed in the matrix. It appears designed to dilute the differences. And second, some of the differences listed in the matrix are inaccurate. The first impression is that this matrix was rigged to push the client down a predetermined pathway. That is the only way the matrix could be so specifically inaccurate.

Let us review each of the line items for accuracy.

  • Instance Size?: According to the matrix, AWS only supports “medium instances?” First, AWS offers very large instances, and these are priced right on their website. We will show the large instance sizes available right from the AWS website further on in this document. Secondly, AWS has very large customers running large instances. All of this is exceptionally well known among those that work in or research cloud service providers
  • All Cloud Providers Lead AWS in Automation?: According to the matrix, AWS only has planned automation, while the other providers have automation currently. What services are considered automation in HEC, HPE, and Azure? It’s difficult to understand what is meant here without more specifics. However, there are many automated services in AWS. Something to consider is that AWS is the leading innovator of cloud service providers. There is virtually nothing that other cloud service providers have that AWS does not have. Examples of automation in AWS include Chef for infrastructure automation. Another is AWS System Management Automation. And a third is Ansible for AWS. Overall, Brightwork ranks AWS in the leader category in automation.
  • All SAP Products Work on All Service Providers?: This matrix proposes that all SAP products can be run on all the cloud service providers. That is incorrect. Not all of SAP’s products will run in the cloud. SAP has very little in the way of production instances in the cloud, particularly as a percentage of their on-premises numbers. SAP’s application has specific limitations in this regard, which need to be overcome during the migration/implementation. There are overall, a low volume of SAP internally developed applications currently residing in a public cloud or even hosted (private cloud). The vast majority of internally developed SAP applications are still delivered on-premises. Products like SuccessFactors or Ariba, primarily acquisitions that were in the cloud before they were acquired by SAP, are designed to run natively in the cloud. The majority of S/4HANA on-premises versions of the application are on-premises rather than the private cloud/hosted.
  • Greenfield Implementations?: Why does AWS only support Greenfield implementations? If the issue is one of hybrid cloud, both Cisco and VMware have introduced hybrid cloud extensions of AWS. This matrix may be dated as both VMware and Cisco hybrid extensions are recent developments.
  • All of the Cloud Service Providers But AWS Support EMEA and APAC?: Which three cloud service providers have the highest CAPEX in the world? The answer is AWS, Google Cloud, and Azure.

Where are the (supposed) missing data centers for AWS in EMEA and Asia?

The following few pages provide coverage of the testing of latency, which contradicts the statement regarding AWS’s limitations internationally. For those interested in the main topic of the overall comparison, scroll past this section.

International Latency Testing

However, of the three hyper-scale could service providers, AWS does lag both Azure and Google Cloud in their network connectivity. This topic is covered in the research by ThousandEyes, which is a company that works in networking and network analysis.

Why AWS chooses to route its traffic through the Internet while the other two big players use their internal backbone might have to do with how each of these service providers has evolved. Google and Microsoft have the historical advantage of building and maintaining a vast backbone network. AWS, the current market leader in public cloud offerings, focused initially on rapid delivery of services to the market, rather than building out a massive backbone network. Given their current position, increasing profitability and recent investments in undersea cables, it is likely that their connectivity architecture will change over time. Enterprises considering a move to the public cloud should consider connectivity architectures to evaluate their appetite for risk while striking a balance with features and functionality. Enterprises should also be aware that even though public cloud backbones are each maintained by a single vendor, they are still multi-tenant service infrastructures that typically don’t offer SLAs. Furthermore, public cloud connectivity architectures continuously evolve and can be subject to precipitous changes at the discretion of the provider.”

However, even though there are differences that give the advantage of Azure and GCP over AWS, in testing, the bi-directional latency was quite similar.

From the US to other regions, the results are quite close, with AWS lagging somewhat in 4 of the five comparisons. But the differences are small.

From Singapore, there is no discernible pattern of advantage between the three providers.

Azure appears to lag both other providers. Each provider only has one location in Central and South America.

Therefore, while AWS lags the other service providers in the physical infrastructure sense, the outcome is that AWS records a very similar performance to Azure and GCP.

There is no possible scenario where Virtustream would compare against AWS or the other two hypercloud service providers listed in the Thousand Eyes study as Virtustream has far fewer data centers than do any of these providers. Even Oracle has only four regions and has historically had a small cloud CAPEX versus the hyperscale providers.

Therefore why is Virtustream listed in the matrix as having a larger geographic scope than AWS? It certainly appears nonsensical.

Conclusion on the Matrix

The matrix provided that is designed to compare HPE to Virtustream to AWS and Azure is has low accuracy. It is inaccurate to the degree that it develops a natural curiosity as to the reasons for why the matrix was developed as it was. Is this a matrix designed to show the technical capabilities of the cloud service providers, or is this a matrix intended to highlight those companies that have the most robust partnership with SAP? Finally, why are so many critical technical details missing from this matrix?

Without any partnership or financial relationship with SAP or any of the cloud service providers, the Brightwork matrix of comparison looks quite a bit different.

These criteria are far more relevant for the client when choosing a cloud provider, and this matrix also illuminates the distinctions between a private cloud offering and a public cloud offering.

What is Private Cloud (in Real Terms) Again?

A final problem with the matrix is that it treats the public cloud (HPE & Virtustream) and public cloud (AWS & Azure) as if they are almost the same thing. However, they are entirely different.

Private cloud is merely a new word for what has historically been known as “hosted.” For example, IBM and CSC have been very dominant in this market for decades before the public cloud ever existed. However, IBM and CSC are very small in revenues in the public cloud. Private cloud/hosted and public cloud providers tend not to play in each other’s spaces. However, nearly all the growth in the cloud is the public cloud, not a private cloud/hosted. Private cloud/hosted does not scale well and is often referred to as just “moving the location of the hardware.”

Technology providers know they have to break into the public cloud market, as that is where the overall market is headed. (hence the IBM acquisition of Red Hat/Open Shift).

Private cloud is not the cloud. The term “private cloud” was created by entities that offered hosting, as a way to rebrand their offering into something that was “cool,” and to piggyback on the concepts of innovation and growth that is primarily in the public cloud.

One cannot get any sense of this from reviewing the matrix above.

The Issue of Private Pricing

One of the requirements of public cloud (sometimes referred to as just cloud) is that it has transparent pricing. Though this public pricing, it can be determined that SAP has been marking up AWS cloud services in some cases that we checked by a factor of 10x. This client was aware of the price difference between Virtustream direct and Virtustream through SAP, but only because Virtustream has provided a separate quote from SAP on Virtustream services. Ordinarily, SAP would prefer that Virtustream not give a quote to this client. SAP would consider a referral back to SAP if this client were to reach out to a private cloud/hosting provider as “good partnership behavior.” If Virtustream repeatedly circumvented SAP to sell directly to SAP customers rather than giving them a markup, Virtustream would immediately disappear from SAP’s recommended providers listing.

The benefit of the public cloud options is that as the pricing is easily determined (online actually from within the cloud service provider consoles), the markup from SAP is a known quantity.

This slide from a presentation by AWS shows a complementary relationship between AWS, SAP, and a number of partners. However, the reality is quite a bit different. Not only SAP but many of the partners on this slide intent to significantly intermediate between AWS and the final customer.

This slide (by AWS) shows what is feasible, but not necessarily what is desirable for customers. Under the scenario where the SAP Cloud is the origination, the prices are dramatically higher. The table to the right shows that AWS claims a far more complete offering than GCP or Azure.

All of SAP’s recommendations for cloud come with a markup over the cloud provider, which SAP does not discuss and pretends does not exist.

Why SAP should be marking up cloud services at all is an interesting topic as they will not be doing the work. For example, SAP does not make a margin on the IT department for an on-premises implementation (that is SAP cannot say, pay us 2x of your internal cost to host our applications), so it is odd that SAP would ask for compensation for something that has nothing to do with.

The Issue of Dedicated Servers and the Public Cloud

As stated, a primary issue is not explained in the matrix, which is that SAP’s internally developed products (not acquired products like Ariba or SuccessFactors) have traditionally run on dedicated servers. This should not be all that surprising. ECC and BW were developed before the public cloud is a delivery mechanism or what we describe as a “hardware modality.” Therefore there are several challenges entailed in moving these applications to the private cloud.

How SAP Uses a Dedicated Server

The primary issue with SAP’s need to use a dedicated server and a primary reason for this is that SAP applications use a dedicated IP address. Private clouds use primarily dedicated servers. However, AWS now also offers dedicated servers.

Amazon/AWS allows for dedicated instance, which means that the instance runs on dedicated hardware. One pays a price premium for this, but dedicated hardware is appropriate in some circumstances. It is desirable to choose a cloud service provider that has both cloud/shared and dedicated capabilities. Some people will comment that AWS only offers shared, but that is no longer true. Although there is little doubt that the vast majority of AWS’s revenues come from shared services.

Notice the instances recommended by AWS for SAP. They lean towards “Memory Optimized” or “EC2 Bare Metal” or dedicated.

Bare Metal is a recent addition for AWS (notice 2H of 2018 in the slide). However, bare metal is far easier to manage than shared resources. It is more of a matter of installing the bare metal infrastructure.

The dedicated instance pricing with AWS is also transparent.

There are instances of S/4HANA that can be used that have transparent pricing. This is called BYOL, or “Bring Your Own License.” A license from SAP could be run on AWS following the BYOL model, which would provide pricing transparency. Under this approach, there is no intermediary.

The price paid by the client would be the AWS price, which is far lower than if SAP plays the middleman.

The screenshot above is the largest S/4HANA instance before one moves to bare metal (which, of course, costs more) in AWS. This configuration has 4 TB of memory and 128 virtual CPUs.

AWS Dedicated Instances

Dedicated instances are available from AWS. As for the need for dedicated instances, we will address this issue from two directions.

  • Experience from the company AutoDeploy, which migrates customers from on-premises to the public cloud, is that this issue of SAP requiring a static IP is overstated, there are some straight ward things that can be done to adjust for this restriction that can be changed.

This need for a dedicated server is waning. The evidence for this is that SAP instances can be brought up directly onto cloud/shared instances.

Even though AWS is the largest cloud service provider in the world, it does not have very many images for S/4HANA. And the ones they do have are previous versions rather than the latest.

This lack of images extends to BW as well.

Some of the images for SAP aren’t much more than Linux images that have been tuned for SAP. In discussions with companies that move applications out to AWS, it is likely they would not use these images, as they are restrictive. Instead, they would build their own.  

  • Something interesting to note is that there are very few images for SAP on AWS outside of HANA and Adaptive Server. This brings up the question of “why.”
  • SAP databases aren’t used outside of supporting SAP applications and SAP reporting, so this shows a large discrepancy between the SAP database and the SAP applications available on AWS. (And BTW, GCP has like no SAP applications.)


*Document Note

The coverage on Containers and Firecracker is of a more technical nature than may be digestible for some readers. It is informational for those with the right background. For those less interested in how to optimize bringing up SAP on the cloud, scroll through this section.


Using Containers & Firecracker

Placing an SAP application on AWS, one would most likely use containers to reduce the number of VMs (virtual machines). Reducing VMs normally has the effect of reducing the price. This is something that could be tested before or during the implementation.

  • Firecracker is a very lightweight virtualization technology or virtual machine manager that is new but already very highly regarded.
  • A new item adopted recently open-sourced by AWS is Firecracker, which could also be tested for improving the cost and performance of placing SAP on AWS.

Firecracker combines the virtues of both virtual machines and serverless (or autoconfigured servers).

Firecracker creates extremely lightweight VMs (called MicroVMs) for the Linux Kernel Virtualization Machine (KVM).

“The number of Firecracker microVMs running simultaneously on a host is limited only by the availability of hardware resources.” – Github

However, from within SAP Cloud, it is feasible to bring up a variety of SAP applications and HANA, where one has a choice of AWS, GCP, and Azure.

Including BPC 11.


  • We brought up S/4HANA 1809. It took 1.5 hours to be available. We found some missing login information restricting our ability to access the application.
  • This trial was brought up for testing purposes, but Brightwork recommends against going through the SAP Cloud for moving SAP applications to AWS, GCP, or Azure.

Virtustream’s Internal Changes as a Company

The cloud area is growing very rapidly, but Virtustream is not growing in US employment in the US, and in fact, appears to be shrinking. Virtustream is moving to a lower-cost model for its employees with less experience and more offshore resources. Overall, Dell’s acquisitions have been negative for the company and for Virtustream customers. (acquired through the EMC acquisition).

The following comment found off of GlassDoor is unheard of in the public cloud space.

“No one is sure of the direction Dell is looking to take this company in, seems they are trying to dissolve. Extremely cut throat atmosphere, major layoffs happening (I heard in the ballpark of 20%). When the most common word that pops up in the company reviews is ‘circus’ that should probably tell you something…”

This quotation also gets to the reputation of Virtustream as a sales-oriented organization that significantly overpromises the ability to deliver.

  • Customers should expect to have lower performance in operations than in the past, as Virtustream is turning over its more experienced technical resources.
  • What Virtustream was before, as they readied for acquisition, is not the company that they are presently, or will be in the future.
  • This will be an issue for the client as delivery will lag the promises of Virtustream.

Company Profiles

In this section, we will provide a profile of each company.


“AWS continues to invest and innovate in the cloud services that it offers. It has evolved to include sophisticated tools for development including machine learning capabilities, a wide range of storage options, IoT and mobile platforms and others. AWS has taken a very proactive approach to compliance with GDPR. AWS global footprint continues to expand to satisfy the needs of its expanding customer base and services offered. It now has: fifty-three availability zones across 18 geographic regions, one local region, and has announced plans for 12 new availability zones and four more regions: Bahrain, Sweden, Hong Kong, and a second US GovCloud region.

The AWS Migration Acceleration Program (MAP) is designed to help enterprises migrating existing workloads to AWS. MAP provides consulting support, training and services credits to reduce risk, to build a strong foundation and to help offset the initial costs. It includes a methodology as well as a set of tools to automate and accelerate common migration scenarios.

AWS has a clear and open approach to security and compliance. It has a very wide range of independent certifications for compliance. AWS has led the CISPE code of conduct to provide clarity to cloud customers around the shared responsibilities for compliance with GDPR and to confirm the steps they are taking to support this.

AWS remains the leading IaaS Global service provider, offering the widest range of services across the greatest number of geographies.” – Ahmed Azmi

AWS Strengths

Strong basic IaaS platform

Rich DevOps capabilities

Speed of innovation of new services

Global footprint for availability and compliance

Hybrid / Private deployment support to cloud enable existing workloads

Independent certifications for a wide range of compliance

Strong security – Ahmed Azmi

AWS Challenges

While AWS has made significant progress in attracting enterprise customers, to retain this leadership position, it must continue to enhance its attractiveness to these customers

Competition from other CSPs that are evolving to challenge AWS position. – Ahmed Azmi


There is a large amount of public information available regarding AWS. This, combined with the ability to test AWS directly, an advantage to all public clouds, provides a low-risk option for the client.


Virtustream is a U.S.-based subsidiary of Dell Technologies, is focused solely on cloud services and software. Virtustream was founded in 2008. It was acquired by EMC in July 2015, and EMC’s managed services and some cloud-related assets were moved into Virtustream before EMC was acquired by Dell in September 2016.

Virtustream’s xStream cloud management platform and Infrastructure-as-a-Service (IaaS) are intended to meet the requirements of complex production applications in the private, public and hybrid cloud. Virtustream is headquartered in New York, NY with major operations in 10 countries.

Virtustream Enterprise Cloud uses patented xStream cloud resource management technology (μVM), to create secure, multi-tenant cloud environments that deliver assured SLA levels for business-critical applications and services. Virtustream provides managed services to help organizations to migrate legacy applications to their cloud platform. It also enables production and mission-critical applications to take advantage of technologies such as Big Data analytics such as SAP HANA and Hadoop, as well the advantages like agility, backup, and disaster recovery offered by cloud computing.

Virtustream Enterprise Cloud offers assured application level SLAs with up to 99.999% availability. High levels of security are provided as standard including 2-Factor authentication; Intel TXT Trusted Computing, separate application zones, integrated GRC, and continuous compliance monitoring. Flexible deployment options from the private cloud (on-premises), virtual private cloud, public cloud, public plus private cloud (hybrid) and trusted federated cloud exchange. The Virtustream offering is SAP certified and is independently certified as being compliance with a wide range of regulations and laws. – Ahmed Azmi

Virtustream Strengths

Innovative platform for migration and deployment of complex applications

Managed services available to support this migration and deployment

Strong security and compliance characteristics

Backing from Dell Technologies – Ahmed Azmi

Virtustream Challenges

Focus on enterprise workload migration rather than DevOps.

Differentiating their offering against the major CSPs evolution towards enterprise solutions. – Ahmed Azmi


Virtustream has a limited footprint and inadequate DevOps and automation compared to AWS. The rate of innovation is low, and internally, the company is facing sustainability issues due to its management.

The key to Virtustream’s differentiation is bundling services like migration, maintenance, and upgrades with hosting, so the customer needs to deal only with Virtustream. AWS has a far superior IaaS, global presence, and automation capabilities. Also, AWS offers a much more full range of services in analytics, database, and more so, the customer will get access and can grow on AWS integrated products. However, AWS provides services via partners, so customers will have to work with two providers rather than one.


Virtustream Enterprise Cloud is hypervisor-neutral but typically supports VMware and KVM. It is offered in both single-tenant and multitenant variants; furthermore, it can support single-tenant compute with a multitenant back end, as well as bare metal. VMs are available by the hour, bare metal is available by the month, and both paid-by-the-VM and SRP models are available. The offering embeds a tool for governance, risk management and compliance (GRC) leveraging capabilities from Virtustream’s Viewtrust software. A similar offering, Virtustream Federal Cloud, targets U.S. federal government customers. The Virtustream Storage Cloud offers S3-compatible object storage that can integrate with some EMC storage products. Managed services are optional. Virtustream also offers its CMP, xStream, as software. – Ahmed Azmi


Virtustream has multiple data centers in the eastern and western U.S., the U.K., France, Germany, the Netherlands, Australia, and Japan. It has a sales presence in the U.S., the U.K., Ireland, Germany, Lithuania, Australia, India, and Japan. Virtustream’s service portal is provided in English, German, Japanese, Lithuanian, Portuguese and Spanish. Documentation and support are provided in English only. – Ahmed Azmi


Virtustream’s roadmap is inextricably tied into other Dell entities, such as VMware, EMC, and Pivotal, which each have their own sets of differing, and possibly competing, priorities. Customers should treat Virtustream as a specialized provider for the workloads that suit the strengths and weaknesses of its technology platform.

Although Virtustream supports self-service capabilities, it primarily targets complex, mission-critical applications where it is likely that the customer will purchase professional services assistance for implementation, and managed services on an ongoing basis.

Virtustream is a compelling and unique provider for particular enterprise application use cases, but it is better suited to implementations where an environment will be carefully and consultatively tuned for the needs of particular applications, rather than general-purpose environments where workloads are deployed without oversight. Prospective customers should ensure that they have a clear understanding of roles and responsibilities and that their expectations match what is actually written in the contract. – Ahmed Azmi

Gartner’s View of Virtustream and AWS

Observe the discrepancy between AWS and Virtustream. In many Gartner Magic Quadrants, the fees paid to Gartner are instrumental in determining the ranking. However, these MQ’s match our viewpoints, and neither AWS nor Google are significant contributors to Gartner. The funds paid by Microsoft show their impact, because we do not see Microsoft anywhere near AWS, and they are significantly behind Google/GCP in the offering, although Microsoft/Azure is larger due to Microsoft’s ability to cross-sell existing customers into Azure.

Advice on Enjoying the SAP Cloud Quiz

To see the full screen just select the lower right-hand corner and expand. Trust us, expanding makes the experience a whole lot more fun.



Whichever way the client decides to go, Brightwork thinks the client must have an accurate representation of these two providers.

A large part of the decision is also related to how much the client wants to take control of their cloud services, versus having everything managed for them. Virtustream by the nature of their business model will provide less transparency than AWS as to the cloud services, as AWS is entirely open to customers. With Virtustream, the infrastructure and the services are combined with one company. With AWS, one can select from many partners ranging from “white-gloved” to smaller partners that tend to provide more specific technical support. Virtustream and AWS are appealing to a very different type of customer.

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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For example, Brightwork estimates that roughly 10% of S/4HANA implementations are S/4HANA Cloud.

AWS and Google Cloud Book

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

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

How to Understand SAP’s Fictional Cloud Revenues

Executive Summary

  • SAP presents fictitious cloud revenues that are blindly accepted by Wall Steet.
  • Wall Street shows close to zero interest in understanding SAP’s cloud revenues.


SAP released the following explanation for a recent layoff.

“Yet key indicators showed signs of weakness in the fourth quarter, with growth in new cloud bookings slowing to 23 percent from 37 percent in the third quarter.

Underlying non-IFRS operating margins, at constant currency, were squeezed by 1.5 percentage points in the quarter to 33.2 percent as SAP implemented hyperinflation accounting for crisis-hit markets in Latin America such as Venezuela.

Mucic noted that margins were stable at 28.8 percent for 2018 as a whole following years of declines as the company invested in its transformation. “Now we are at the point where we can start to see rising margins,” he told a news conference.”

Repeating Fiction

Something none of the analysts mention is that SAP’s cloud revenues are pure fiction. I find analysts strange. They report or comment on numbers as if they are real. Financial analyst firms hire from the most prestigious universities, yet its increasing evidence that they don’t bring anything to the table except repeat things said by companies. Companies that have a massive incentive due to stock options to misinform analysts (who can then go and mislead investors).

It is a bit like people talking specifics about unicorns (did you know they only come out on Thursdays, and they have a golden hue when the light hits them a certain way? Did you know they enjoy eating at Burger King?). SAP does not get significant revenues from cloud acquisitions (although they pay a big multiple for every purchase).

SAP’s Cloud Markup Layer

SAP Cloud is just a markup layer on AWS/GCP, which we covered in the article How to Understand SAP’s Upcharge as a Service Cloud, SAP HEC is markup machine on private cloud/hosting. SAP’s cloud revenues growth are coming from charging cloud services by using their account control. It is quite disgusting. It is a welfare queen’s strategy. Let someone else do the work, let them produce new services, make the investments. Then put a layer on top of their stuff and pretend you are a cloud provider. This is how Oracle also operates; it is called “cloud through PowerPoint.” While these companies are the cloud in their marketing literature, they are on-premises in their software. That is SAP, and Oracle’s hybrid cloud strategy is PowerPoint Cloud/On-Premises.

SAP could come with a marketing campaign…

“Through our upcharge layer, you can access all of the innovation that you could also access just by going directly to the cloud service provider.”

Oh, and it is worse than that because if you spin up SAP through SAP Cloud, you get stuck with SAP’s cloud knowledge and configuration.

The analysts, utterly unaware of any of this sit there saying

“SAP said ABC so XYZ.”

And that ladies and gentlemen are how you make an excellent paycheck. Learn to repeat and copy statements from companies. However, it is unclear if the term “analyst” should continue to be applied. When information is not analyzed but just repeated, usually the term that is used is a copy device or a stenographer. Some might also call it a “parrot.” The parrot can make precise vocal intonations but does not know what they are saying.

Cloud growth! Cloud growth……wayyyyyyyyeee! 

How Accurate Are SAP’s Claims Around SAP Cloud?

Observe how SAP tries to propose the openness of the SAP Cloud Platform (now SAP Cloud) with the following quotation.

“SAP Cloud Platform is an open platform-as-a-service (PaaS) that delivers in-memory capabilities, core platform services, and unique microservices for building and extending intelligent, mobile-enabled cloud applications. The platform is designed to accelerate digital transformation by helping you quickly, easily, and economically develop the exact p Platform offers complete flexibility and control (emphasis added) over your choice of clouds, frameworks, and applications.”

Based Upon Open Systems?

First, by the nature of their business models, SAP and Oracle do not create open cloud offerings. Therefore, this claim is highly dubious. SAP and Oracle can’t market their clouds effectively without embellishing their closed nature with open terminology.

Now while it may be true that the SAP Cloud “can” be connected to non-SAP assets, that rest assured that SAP would do everything it can to direct customers to use more SAP if they use the SAP Cloud. For instance, for some time, SAP has been proposing that the SAP Cloud improve SAP’s integration capabilities.

“Easily exchange data in real-time with SAP Cloud Platform Integration. Integrate processes and data between cloud apps, 3rd party applications and on-premises solutions with this open, flexible, on-demand integration system running as a core service on SAP Cloud Platform.”

How is this accomplished? Other questions naturally come to mind:

  1. Better Than Other Integration?: Why is this better than using another integration application? SAP has been guilty of making many previous exaggerated claims about its “platforms” that end up not being easier to use than competing offerings.
  2. On-Demand Integration?: What does “on-demand integration mean”? Any integration harness or application is on-demand for the people that use it.
  3. Runs as a Core Service?: What does it mean that it runs as a core service as part of the SAP Cloud Platform? Isn’t it part of the SAP Cloud Platform anyway?

SAP goes on to say the following about the SAP Cloud and integration’s key benefits:

“Access a deep catalog of integration flows.
Integrate both processes and data through unified technology engineered for the cloud.
Get an integration service that is secure, reliable and delivered and managed by SAP in SAP’s secure data centers across the globe.
Lower TCO with an affordable, pay-as-you-go subscription model and minimal up-front.”

The Evidence for Lower TCO with SAP Cloud?

Does SAP have any independent studies that can demonstrate that the SAP HANA Cloud Platform lowers TCO, or is this just a sales statement that has nothing to back it up? That is, of course, a rhetorical statement. We know SAP doesn’t. SAP usually does not provide evidence of TCO claims. One of the few times they did, when they paid Forrester to estimate HANA’s lower TCO claim, the study was unusable.

SAP goes onto say more:

“With SAP Cloud Platform Smart Data Integration, you can replicate, virtualize and transform data from multiple sources and store it in your SAP HANA instance on SAP Cloud Platform. Smart data integration offers pre-built adapters to common data sources plus an adapter SDK that lets you get data from any source for a 360-degree view of your business. Thanks to a cloud-first architecture your data is securely transferred from on-premises applications to the cloud without putting your business at risk.”

How about the SAP Cloud Platform Smart Data Integration item? SAP capitalizes this as if it is a product, not a process within a product. On the Cloud Platform’s pricing sheet, SAP Cloud Platform Integration is what pushes the customer into the $4,600 to $17,000 per month version of the SAP Cloud. However, we have seen very little use of this component or discussion of the component. SAP does not have a history of having developed a useful integration product, with their on-premises offering, SAP PO/PI becoming less popular with customers as time passes. Therefore it is no “slam dunk” that the SAP Cloud Platform Integration will become a desirable component to use. The probabilities are firmly against that ever happening. We cover this in more detail in the article How Accurate is SAP on SAP HANA Cloud Integration?

Also, most SAP customers don’t have HANA, and looking at the low growth rate of HANA, most never will. So what if the customer does not want HANA, can they use the SAP HANA Cloud Platform to store in Oracle, MongoDB, PostgreSQL, Tibero or another non-SAP database? The fact they can’t is a problem. SAP is all in on its databases being used in SAP Cloud. However, SAP’s databases are not that widely used.

SAP has begun to offer a very limited number of non-SAP database options, including PostgreSQL and Redis.

However, when we select PostgreSQL, we find that it is not available for our environment, which is the more limited environment. Why? Because SAP does not offer it themselves, but through AWS, Google Cloud, or Azure.

Once we switch into the Cloud Foundry, which has access to AWS, Google Cloud, or Azure, we can progress a short way in bringing up PostgreSQL, that is until we get this error. These types of errors do not come up when attempting to create a PostgreSQL instance in AWS or Google Cloud directly. This makes us wonder how much PostgreSQL or Redis, which is non SAP databases, have been added to SAP Cloud for marketing rather than for real usage purposes.

How Accurate was Fortune Magazine on SAP Cloud?

On Jan 22, 2016, published the article SAP Meets Cloud Sales Expectations, and Then Some.

In this article, we will review the accuracy of this article.

Article Quotations

“SAP convinced big businesses to sign up for cloud subscriptions to its business applications faster than anticipated during 2015—with a 103% increase in bookings to €883 million (or $955 million).”

SAP has a history of cloud washing, as it is what Wall Street wants to hear. The 103% figure is a doubling of cloud bookings. Which seems high.

SAP’s Cloud Growth Is Responsible for Margin Decline?

“But that growth is putting pressure on operating margins, which slipped to an estimated 25% compared with the 35% that SAP (SAP, +0.70%) used to earn traditionally, according to the company’s financial results.”

This seems to be the thrust of the article. SAP wants to convince people that their margins declined because they are transitioning to the cloud. However, the cloud portion of SAP’s business is not very large. SAP gets most of its revenue from on premises applications like ECC and the BW. Secondly, over 50% of SAP revenue is from support, and not from the software at all. Therefore, the explanation provided here sounds fishy.

“SAP executives say that’s to be expected, since the cloud model spreads out fees, which reduces short-term profits. They’ve already prepared investors for that eventuality, projecting margins in the 30% range during the multi-year transition period. “The margin is really uninteresting to me,” SAP’s CFO Luka Mucic said during a call to discuss the results. “There’s no reason cloud margin shouldn’t reach the level of on-premises software, but that will take substantially longer than this decade.”

A More Likely Explanation for Margin Decline

Yes, but that may not be the right explanation. Oracle and Microsoft and IBM are as a group facing lowered margins. But transitioning to the cloud is not the reason why. These are companies that have grown beyond the core offering that put them into their current positions. However, when expanding to new things, they do not have the same margins of the earlier offerings. For example,

  • Microsoft: Microsoft receives 3/4 of its margin from just Windows and MS Office. Microsoft could shed the rest of its business and be a much smaller company with enormous margins. Microsoft has Azure, which provides little in the way of profits. However, lower profits are a feature of all of Microsoft’s offerings outside of Windows and MS Office, most of which are on premises offerings.
  • Oracle: Oracle also has a lower margin outside of databases. Oracle receives 55% of its margins from its database business. Oracle expanded into a $38 billion behemoth. However, its investments in acquisitions did not have the profit margins of their databases — or their original product offerings.

Plenty of companies still prefer to buy traditional licenses for SAP’s software. That portion of the German software giant’s revenue generated 13% growth last year, reaching €14.9 billion (or about $16.1 billion).

SAP is mostly an on premises business, and outside of acquired applications that were already cloud, SAP does not do much in the cloud. Offerings like the HANA Cloud Platform are more for cloud washing than actual usage. And the quotation above makes it sound like customers have good options for the cloud for many other SAP offerings when they do not.

SAP Now Gets Over 60% of Revenue from the Cloud?

“When can we expect SAP to generate more value from cloud sales than traditional software licenses? That crossover could happen sometime in 2017. By that year, SAP expects revenue for cloud subscriptions and support to reach 63% to 65% of total revenue.”

That is entirely inaccurate. It is currently past the midpoint of 2017, and SAP does not get anywhere near 63% of revenue from the cloud.

Conflating Cloud and Support Revenues

“SAP’s cloud momentum inspired the company to boost its 2017 revenue projection to €23 billion to €23.5 billion (or $24.9 billion to $25.4 billion). Its cloud subscriptions and support revenue should reach €3.8 billion to €4 billion (or $4.11 billion to $4.33 billion) during that timeframe.”

What does support revenue have to do with cloud subscriptions? Support revenue is higher than this, but SAP is underplaying this number because it does not want to be seen as a Computer Associates type of company. But much of SAP’s software is out of date, and they are increasingly relying on the support.

SAP’s Core Offerings the Slowest Growing Part of Cloud?

“The fastest growing piece of SAP’s cloud business last year centered on the “business network” services provided by Concur (travel and expenses) and Ariba (procurement and supply chain services). Bookings reached €309 million ($334 million) in 2015, up 187%.”

So the fastest-growing part of SAP’s cloud business is the acquired products like Concur and Ariba. These were cloud vendors before being acquired by SAP. This means the products that SAP internally developed that are cloud are growing more slowly. Fortune could point this out, but this is a puff piece, so they are not going to do anything to contradict anything SAP says.

SAP Once Again Exaggerating S/4HANA

“Another big part of SAP’s cloud portfolio, the “Employee Central” component of the SuccessFactors human resources app, surpassed the 1,000-customer mark during the fourth quarter. SAP also reported more progress for S/4HANA, its next-generation suite of business applications. More than 2,700 SAP customers are using the technology, which means growth doubled quarter over quarter last year.”

That is not that many customers for Employee Central. S/4HANA sees very little progress and a lot of implementation problems. This is natural as SAP has exaggerated the completeness of S/4HANA, as is covered in the article Why the S/4HANA Suite is Not Yet Released. 

On Aug 10, 2012, I published the article Competing For The Cloud: SAP.

In this article, we will review the accuracy of this article.

Article Quotations

Cloud computing has made life easy for millions of users. But it’s a different story for software companies providing those cloud-based services: the field is small, the game is fast and the battle for dominance is fierce. SAP is determined to win.

Nearly four decades ago, in center city Philadelphia on the East Coast of the USA, in a bohemian-chic historic little side street, stood a popular fantasy-filled boutique named “Vendo Nubes” – “I Sell Clouds”.

Today, in 2012, Jim Hagemann Snabe sells clouds, too, and he makes a lot more money at it than Vendo Nubes imagined was possible – not just for him but for the shareholders of enterprise software-maker SAP.  As co-CEO (he’s the engineer, in charge of product development), Snabe’s mission is to actually own the cloud – the next stage of online computing.

“We have declared our intent to be the leader for business software in the cloud,” Snabe told INSEAD Knowledge on the sides of the Global Business Leaders Conference in Paris on July 6, 2012.  “We are already the largest player today in terms of numbers of users consuming our services. We have more than 15.6 million users.”

But despite being Germany’s largest listed company by market capitalisation, SAP is not yet the number one player in the clouds. That spot is occupied by the legendary Salesforce.com. Snabe is duking it out with Larry Ellison, CEO of Oracle for the number-two position.

Forbes Pushing the Establishment View Regardless of Facts to the Contrary

This complete introduction reads like an establishment article that seems intent on reinforcing the positions of the largest software vendors. Salesforce is 100% SaaS, while SAP and Oracle are not. And many vendors are also SaaS and innovators in SaaS, so, curiously, Forbes would be talking about SAP and Oracle in this way. This article smells a bit like a paid placement on the part of SAP to make itself seem more “cloudy” than it is.

It’s a competition with a history of acrimony:  in November of 2001, SAP lost the largest software privacy suit in history – a US$1.3 billion – to Oracle, conceding it had “inappropriately downloaded” Oracle software via its subsidiary, TomorrowNow, Inc.  The verdict was overturned less than a year later but competition between the two companies remains.

Right, but what does that have to do with how much Oracle and SAP get in revenues from the cloud? Forbes moves from the contention on SAP and Oracle being competitors for the cloud, into the topic of their acrimony. This seems like a Kelly Ann Conway type pivot.

Buying Size and Expertise

Consequently, SAP is modifying its organic-growth policy to make key acquisitions in order to scale up fast: Sybase, Inc. as well as SuccessFactors, Inc., and this past May made a US$4.3 billion offer for California-based supply-chain global network operator Ariba, Inc.

Yes, SAP is buying its way into the cloud, as is covered in the article How SAP is Buying its Way into the Cloud. Although Sybase is not an example of this.

Combined with SAP’s resource planning and back office software, the system would be able to oversee operations all the way to network tracking and managing corporate purchases. Real streamlining. The U.S. Department of Justice thinks so, too – so much so that it’s concerned the Ariba purchase could accelerate an SAP-led price war and has asked for enough additional information under the Hart-Scott-Rodino anti-trust laws to nudge the deal’s closing into Q4 instead of Q3.

This is curious. Why is the FTC not doing this?

“Ariba is the next wave of cloud computing,” says Snabe. “We don’t believe in acquisition to consolidate the past. When we acquire, it’s been about identifying new categories where there was significant value-add for new customers. And the question we always ask ourselves is: are we able to get there faster through our own organic innovation or do we need a quantum leap to get into that market fast? Ariba run the largest marketplace for buying and selling between companies…they are the eBay for businesses (to date more than 730,000 customers), so it was obvious for us to go for the leader.”

That is the charitable explanation. Another explanation is that SAP’ cannot develop cloud offerings internally. I believe the second is true, as SAP has no examples of successes in the cloud that were developed internally.

It was also not obvious to go after Ariba, as Ariba’s primary domain expertise is indirect procurement. SAP would have been better off purchasing a procurement vendor that has focused on direct procurement, as a direct procurement application can be connected to the current procurement functionality within SAP’s ERP system.

Is SAP Growing in the SMB Space?

This acquisition also speaks to SAP’s changing customer base. When the company was founded in 1972 by five former IBM engineers in Mannheim Germany, ICI (Imperial Chemical Industries) was their first client. Early customers were specimens from the Fortune 500. Today, it’s small and medium-sized (SMEs) companies who are filling the order books. The kind of companies that really need help managing data, beyond traditional corporate data.

No, that is false. SAP has been trying to capture this customer base, but SAP is still highly concentrated in the largest companies. As a longtime SAP consultant, I can say that SAP’s software is inappropriate for the SMB market because its TCO is so high, and it is so complicated. Anything I need to do in SAP, I can do much more easily in just about any other application. SAP’s acquired products have a smaller customer size, but the internally developed products do not.

“In today’s world, you need to be able to analyse Twitter sentiments in order to understand your impact in this market and guide your efforts and promotions in the right directions,” points out Snabe. “In the cloud, the speed of innovation is extremely high and the deployment and delivery of services is hugely simplified.”

This is a comment about Big Data, which is a market SAP does not have much to do with and has little to offer companies. This is a throwaway conference-type statement. And Forbes does nothing to validate any of these statements. By challenging nothing, even when the information is false, they implicitly endorse it.

SAP has a history of cloud washing, as it is what Wall Street wants to hear. The 103% figure is a doubling of cloud bookings. Which seems high.

Yes, it does. SAP’s cloud sales are not growing 103% year over year.


These kinds of new technologies are changing the way businesses are run and, says Snabe, the way we work and live. As an engineer, “What really gets me up in the morning is the opportunity for us to solve some of the resource-constrained challenges that this world has: we are now seven billion people; in the next thirty years we could be nine billion. We need to find new ways to solve challenges around water, energy, food, ways to optimise healthcare.” For example, SAP software can analyse the DNA of a cancer patient and identify the mutation to find the most effective medical treatment.

That is what gets Snabe up in the morning, or his extremely high compensation? If SAP is pitching the idea that they are focused on social good, they can drop the pretense. SAP is challenged in even treating its customers fairly. It has no history of doing anything, but profit-maximizing by any means necessary. So the idea that SAP is the new UNICEF is a bit difficult to swallow. Secondly, I study the quotations and the comments of the top executives at SAP, and this would be the last group of people I would want to come up with solutions to water, energy, food, or optimizing healthcare. The top executives at SAP are about monopolizing areas so they can maximize profits for SAP. They also lack the domain expertise to offer solutions in these areas. Instead, I would suggest they stick to selling software.

One problem that particularly worries Snabe is youth unemployment today, particularly in Europe. “Many of the innovations of the future require young people’s open mindset, and the diversity of bringing young people together in solving problems around energy, etc. We are in the final stages of launching a programme where we will offer education in our technology to unemployed young people in Europe…we have a very strange dilemma: on the one hand, unemployed young people; on the other, in the IT sector there are a lot of positions we can’t fill. So we felt that one of the obligations we have is to offer education to unemployed people and with that increase the level of skills and technology in Europe.”

You have got to be kidding. But this quotation is good to have as it is useful for sharing for comedic purposes.

SAP’s global presence is far-flung: a strong engineering force in Germany, Canada and Brazil; a huge lab in Palo Alto, California; more than six thousand people in India and a rapidly growing presence in China – 32 locations in all. Snabe is also able to identify significant growth in Europe, “We are able to grow through an increase in SMEs, who are in many ways global companies; they’re just smaller, but they still need world-class technology, just as the large companies get.”

Again, SAP is not growing its SME business.

SAP has had nine consecutive quarters of growth and ambitious plans to double the size of the company by 2015. It won’t be easy: the company’s “Business by Design” cloud service is still very short of its 2011 goal of 10,000 customers needed to keep pace with Oracle. But Snabe is undeterred. He owes it to long-distance running (it clears his head and lets new ideas come in) and a love of classical music.

It missed that plan. I notice how Forbes did not discuss how short ByDesign is of SAP’s projections. It is estimated that ByDesign has around 1100 customers. So yes, that is quite a bit short of 10,000. Because Snabe likes long-distance running and classical music, SAP should not be held accountable for repeatedly making inaccurate projections in the future. Right.

Leadership Rhythm and Self Indulgent Personality Preferences

“I like classical music because it’s on the one side a very structured form, where there’s no ambiguity about what’s being played; yet the real fantastic classical experience comes when there is an element of creativity in that system, coming from the individual musicians and the conductor.”

Wow, that is fantastic. We now know what it is like to be on a date with Snabe, but we are unsure what value this adds to the topic being covered. We are, however, waiting with bated breath to determine what Snabe likes about long-distance running!

It’s an echo of his leadership style and one which underscores his goal to be the dominant player in the cloud. “I don’t believe in the leader taking all of the decisions,” he says. “It’s my role to bring the best people together. But I also believe you need to be a very ambitious-type leader who sets ambitious targets for the team. Because if you’re not competing to be number one, you’re not competing.”

This quotation sounds like it came from George W Bush.

How Accurate was Fortune Magazine on SAP Going All-In on the Cloud?

On May 08, 2013, published the article SAP Goes All-In With the Cloud.

In this article, we will review the accuracy of this article.

Article Quotations

“FORTUNE — In case you haven’t heard, SAP is serious about the cloud. On Tuesday the enterprise software giant announced it will offer HANA, its in-memory database, as a monthly subscription service, delivered via the cloud.”

Years later, HANA is very rarely deployed from the cloud. We cover in the upcoming book How to Leverage AWS and Google Cloud for SAP & Oracle. SAP is trying to increase interest by offering a trial version of HANA on AWS, but it is still primarily an on-premises database in its deployment.

HANA Cloud?

“A limited cloud-based version of HANA was already available through Amazon (AMZN, +0.22%) Web Services. But SAP (SAP, +0.27%) says customers will now be able to access applications powered by HANA — think enterprise resource planning and customer relationship management tools — via SAP’s own cloud, which consists of seven data centers around the globe. Next week, the Germany-based company is expected to unveil more cloud-related announcements and share additional details on this new flavor of HANA at its annual customer conference in Florida.”

SAP had almost no customers for HANA on the web when this was written. Years later, little has changed. Fortune could have investigated this but decided not to.

“Last month, in its lastest reported earnings announcement, SAP said HANA software revenue tripled year-on-year, contributing 86 million euros in the most recent quarter. Along with mobile and web-based software, HANA represents new revenue opportunities for the company, whose bread and butter is selling large, on-premise software installations — and charging costly fees to support and maintain them.”

That part about costly fees is true. That is about it.

Why Fortune Thinks SAP and Oracle are Cloud Software Vendors

“Of course, SAP’s not the only traditional software company trying to branch out and prove it’s “all in” on the cloud. Late last year rival Oracle (ORCL, +0.25%) unveiled its ambitious goal of owning the entire cloud computing “stack” — from the underlying infrastructure to the apps. And earlier this week Adobe Systems (ADBE, +0.68%) announced it is getting rid of packaged software; from now on, creatives will have to buy their digital tools via a cloud-based, subscription model only.”

And neither of these companies get very much revenue from the cloud. Both Oracle and SAP built their business for decades on the basis of on-premises software.

Getting False Information From Vishal Sikka

SAP says its new offering aims to enable faster deployments and lower, more flexible pricing.

“Customers want more and more options in how they take advantage of the value SAP HANA brings,” Vishal Sikka, SAP’s head of technology and innovation, said in a release issued Tuesday. “With the SAP HANA Enterprise Cloud, we are delivering HANA at scale with instant value and no compromise. We are simplifying customers’ experience and expanding their choice in how they want to adopt SAP HANA, now bringing it to a massive scale for enterprise mission critical applications — and we are doing this without disruption through the cloud.”

Vishal Sikka is a completely unreliable source of information on anything related to SAP. One of his primary jobs was to mislead people about HANA. SAP HANA Enterprise Cloud never obtained many customers. HANA has customers, but they are almost entirely only premises and concentrated in the SAP BW application. HANA has seen no broad-scale adoption outside of BW.

As I write this article, four years after this article was written, HANA’s popularity is on the decline.

Simplified Experience?

SAP and HANA never simplified the user’s experience as is covered in the article Is SAP’s Run Simple for Real? Run Simple was a marketing program that was eventually dropped. It was deceptive because nothing that SAP did or introduced ever made SAP any more simple. HANA dramatically increases the complexity of managing databases as HANA is such a high overhead database.

General Fortune Foolishness

“But SAP has yet to announce pricing for the new delivery method for HANA. And while getting up and running will be easier without having to invest in (and wait for) a dedicated, on-premise appliance, it isn’t as quite as quick and painless as ordering a book on Amazon.”

This is a fatuous statement, as HANA takes a lot of effort to maintain. And earlier versions of HANA are not compatible with later versions of HANA, as is covered in the article How to Best Understand Bloor Research’s HANA Paper. Why would Fortune compare this to buying a book?

Why would Fortune compare this to buying a book?

“In order to use HANA, customers first need to obtain licenses for HANA and applications that run on top of it. They then need to consult with SAP services workers, to help determine which applications are best moved to the HANA cloud, and to assist in “onboarding and migration.”

Why is Fortune explaining how a system implementation works?

Fortune Back on HANA Being Cloud-Based

“And just because HANA is now available as a subscription, cloud-based service doesn’t necessarily make it easier or cheaper to use.”

The assertion is correct, but irrelevant because almost no customers buy HANA as a cloud product.

“It’s still the same product, just delivered via a different mechanism. The proof, as they say, will be in the pudding. For now, stay tuned to next week, when SAP unveils more details on the new, cloud-based HANA.”

No, you can’t rely on information released by SAP. One must research everything SAP says.

Advice on Enjoying the SAP Cloud Quiz

To see the full screen just select the lower right-hand corner and expand. Trust us, expanding makes the experience a whole lot more fun.



SAP’s cloud revenues will increasingly come from their cloud markup business. SAP’s most significant cloud acquisitions, like Ariba and SuccessFactors, bring in little revenue. The only play that SAP has to get profits from the cloud is to use account control to customers and markup the cloud investments of real cloud service providers.

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AWS and Google Cloud Book

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

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

Categories SAP

Why Cloud is at a Crossroads

Executive Summary

  • AWS and GCP have pushed the envelope on value and innovation.
  • However, monopolistic vendors like SAP and Oracle want to redirect the cloud into up charging and waste.


While AWS and Google Cloud keep improving the value for customers, the fake cloud entities, SAP and Oracle are doing their best to confuse their customers about the cloud, and to try to make the cloud as expensive as possible and to maintain their account control. This is covered in the article How to Understand SAP’s Upcharge as a Service.

In this article, I will describe the battle of the pure cloud against those that would undermine the cloud. I will cover the fact that the hyperscale providers are partnering with highly corrupt consulting companies as well as the problems with executives leaving evil entities like Oracle to assume leadership positions in the hyperscale providers.

What SaaS or Cloud Is

SaaS and Cloud emerged as a more efficient delivery method of software that leveraged the infrastructure of the web along with database capabilities called multitenant, which means that a single database could serve multiple customers. This allowed a significant reduction in the cost of managing each customer. SaaS and Cloud vendors focused on more straightforward applications, such as HR, travel, expense management, and CRM. These were applications that most companies could deploy without having to perform customization.

This is what I call the pure state of SaaS or Cloud. This is an important distinction between pure SaaS or Cloud and co-opted or faux SaaS or Cloud. There are several reasons, but one of the most important reasons why is contained in pure SaaS’s or Cloud’s multitenant architecture.

Multitenant Architecture

This was an essential point as customization meant breaking the advantage of having multiple tenants on a single server and a single database. SaaS applications should have just one code base for the software used by all customers. This is referred to as a multitenant architecture. Lower sales and marketing costs also defined saaS and Cloud vendors. These vendors would allow customers to test their software by offering trials and to purchase the software incrementally. They often allowed customers to buy a single license on a month to month basis. True SaaS vendors want to get prospects to use their demo system as quickly as possible because it is their primary tool for turning a prospect into a customer. Faux-SaaS vendors use to access to a demo system (either online or in the standard demo presentation) to move the prospect to a standard on-premises sales process.

Similarity to Gmail

Just as with a Gmail account, each entity uses the applications independently without conflict or issues, even while others are using the same applications. Multitenancy is accomplished by setting up a separate database schema per tenant. Multitenancy is an essential component of SaaS. While the single-tenant design outsources the hosting of the application to a third party, multitenancy provides economies of scale to the management of users because only the data is separate. Pure SaaS vendors provide their hosting, and this allows them to upgrade their applications as needed. When another company performs the hosting, this may contribute to a staggered upgrade. When hosting is moved to a third party, it can indicate there may no longer be a multitenant environment.

Optimally, the customer should never even realize when their software is upgraded. For example, Gmail is often upgraded, but the users of Gmail don’t know when this happens because it is not apparent to the user. The same is true of Google Docs. , a new feature is added, or some backend change occurs, and you keep using the application. Over time you find out about the addition if you search through the help or if you receive an email from Gmail on the topic of how to leverage the change.

Fake Cloud

Many vendors who market their applications as SaaS are not truly multitenant, because they are not operating from one codebase. There could be many different versions of the application running on each hosted instance. Good examples of this are SAP and Microsoft.  Accordingly, the one code base SaaS model is not as prevalent as so-called SaaS providers would have us believe.

SAP frequently talks about hosting applications itself, but the vast majority of its hosted applications are only the result of acquisitions that were initially designed for the cloud. The reality is SAP sells a few of its internally developed applications as SaaS to be hosted by SAP. This issue, for instance, applies in spades when Bill McDermott makes comments about how SaaS or Cloud SAP is becoming, but leave out the analysis that S/4HANA Cloud only has tiny customers. Or when Bill McDermott continually brings up its Cloud offerings such as SuccessFactors or Ariba but leaves out how neither SuccessFactors nor Ariba offers flexible terms like pure SaaS vendors do. For instance, here are the terms for AWS.

“AWS offers a range of Cloud computing services. For each service, you pay for exactly the amount of resources you use. There are no minimum commitments or long-term contracts required. This pricing model helps replace your upfront capital expense with low variable cost.”

SaaS and Cloud Patterns

Those are pure SaaS or Cloud contract terms. But SAP does not offer anything like this. SAP uses on-premises terms that they have become accustomed to, and that lock in the customer, but they apply those terms, as much as they possibly can to their SaaS or Cloud applications. Additionally, SAP, by in large, does not provide pricing transparency. SuccessFactors was a well-regarded SaaS vendor even before it was purchased by SAP. However, SuccessFactors’ website has no pricing published, and no public trial available. We checked back in 2010, prior to SAP’s acquisition and also found no pricing published and no public trial available. So while SuccessFactors followed some of the rules of being a SaaS vendor, it is another example of a vendor that did not follow all of the SaaS rules

I don’t want to overstate the optimality of pure SaaS or Cloud vendors as a dependency is created, and of course, they also don’t like customers to leave. This video by Craig, one of the Founders of Arena Solutions, explains quite well how pure SaaS effectively aligns the incentives of the customer with those of the vendor.


However, if the SaaS or Cloud offering is faux SaaS or Cloud, then these incentives are not aligned, and one goes back to the misalignment that has plagued on-premises software, where the vendor has the incentive to sell the most software as possible whether it is implemented or not. Pure SaaS or Cloud vendors live on their rate of subscription renewal.

Accepting Cloud Washing

Those that cover SAP also miss out on reporting that a massive amount of SAP’s offering is not deployed on from the Cloud. That is, they allow Bill McDermott to present any story he wants without questioning it. And unsurprisingly, these same media entities also, in most cases, receive funding from SAP. In the example of S/4HANA, due to its ongoing development, it is not feasible for SAP to offer multitenant due to versioning. That is, different customers are using different versions of S/4HANA. This is why the following comment is entirely incorrect.

“However, there is no reason why a partner couldn’t duplicate this offer for its customers – even exploiting HANA’s multi-tenancy feature included as part of SP9.” – Diginomica

It turns out there is a big reason why customers won’t be able to address this. And that is due to versioning. And does Diginomica happens to be funded in part by SAP? So big surprise Diginomics repeats anything that SAP tells it to say.

The Crossroads

Companies now want to move to the cloud, and the question is whether the on-premises vendors with basically nothing to offer for cloud services (that is you SAP and Oracle) can use their marketing muscle and their control over their consulting partners, IT media and user groups to get their customers to make bad decisions.

These are powerful companies that will get a number of customers to engage in huge cloud waste. Several years from now, articles will be written about how the cloud transition, in many cases, leads to no price increase or price increases. What will be left out from those articles is that SAP and Oracle added a significant margin on the actual cloud service, and they added that margin for doing nothing.

SAP’s Two Cloud Areas (Not Offerings)

SAP has two distinct areas of cloud service coverage. One is SAP Cloud. SAP Cloud is the portal through which companies can be upcharged on cloud services from AWS, GCP, and Azure.

The second area is called the “HANA Enterprise Cloud” or HEC, which is SAP’s name for what amounts to the outsourced cloud.

SAP has no interest in doing the hosting work themselves, and so they have opened the gates to any operator that will agree to allow them to keep a large margin.

Furthermore, because of the lack of quality control on the HEC cloud partner ecosystem, HEC is experiencing substantial failure rates. Oracle follows a similar cloud model to SAP. Is this the same thing happening with Oracle?

The Problem with Cloud Partners

Mark Graham states the following on this topic.

What I have found is movement to the cloud often involves getting a “cloud partner” to help transition and then manage the systems. 

What is little known at first is that these “cloud partners” have less expertise managing the systems than the companies had in-house.  The companies hoping to reduce overhead actually find they still cannot reduce or re-direct their in-house support.   Something else that happens is companies realize that the cloud is not as inexpensive as they once thought.  It takes in-house people to manage the usage of the systems to optimize cost savings.  Also, if a few errant programs/poor coding kick off they will find costs going up.  When they had “restrictive” hardware in-house they didn’t have to worry as much about this happening. The flexibility of the cloud environments is more limiting than they thought.  They have to pick what is available, get updates along with everyone else, and just can’t seem to get the cloud provider to work at 2:00 a.m. in the morning like they used to be able to do. The biggest reason to go cloud is to be able to scale and implement tools more quickly.  Of course if everyone is doing it you are not innovative. Finally, control over IP/data.

And Ahmed Azmi in response to Mark’s comment.

Thanks for sharing these lessons. I definitely relate especially regarding partner expertise. I have seen this unfold with some managed hosting providers. In one case, the internal IT backlog actually increased after the migration because change requests involved multiple teams in different time zones and no specialized product expertise. Your point about cost is spot on. Cloud is often more expensive than on-premises for many use cases. The real benefit is agility and lowering the cost and risk of experimentation via self-service and consumption based pricing with no upfront long term commitments.

SaaS or Cloud as Seen Through the Lens of the Big Vendors and Consulting Companies

To the prominent vendors and to consulting companies, SaaS and Cloud are entirely negative.

  • The prominent vendors had tended to use large and expensive sales and presales teams. They most often did not allow their customer to use their software as a trial before purchasing.
  • For consulting companies, SaaS and Cloud software would mean a significant reduction in their consulting revenues. Consulting companies rely heavily upon implementation business for on-premises vendors and are now trying to recast themselves as indispensable for SaaS or Cloud. The overall delivery model is more efficient, and that translates into fewer inputs for the same or more output. If the software implements quickly and is primarily implemented by the vendor, this leaves the consulting companies cut out of the loop.

Therefore, both the prominent on-premises vendors and the consulting companies were aligned against SaaS. Thus, both the leading vendors and the consulting companies concluded that if SaaS and Cloud could not be blocked (which they tried to do by playing on security concerns), then the next best thing would be to co-opt the concepts of SaaS and Cloud but undermine the actual model of SaaS and Cloud. Also, there was a dramatic change in how Wall Street interpreted and therefore rewarded companies that self-identified as SaaS or Cloud, giving those companies that either was SaaS or Cloud or posed as SaaS or Cloud substantial premiums in the marketplace. At that point, the decision on the part of the significant vendors was clear, they could not obstruct the movement to SaaS or Cloud (which was strategy #1), so they need to move to the second strategy, which was to co-opt SaaS or Cloud.

Revenues from Cloud to Exceed the Revenues from Y2K?

One of my favorite quotations is a senior partner at a major consulting company who stated that he expected the revenues from SaaS or the Cloud to exceed the revenues from Y2K!

That is, consulting companies would like their revenues to significantly increase by implementing software for which the history of the software delivery method has been not to have a consulting company involved. They want to adopt the marketing cache of SaaS or Cloud, but not be impacted by one of its primary benefits, which is to move consulting companies out of the environment. This intent is explained quite clearly in a quotation from Larry Ellison on this exact issue.

Larry Ellison once commented on the topic of cloud computing:

“The interesting thing about Cloud computing is that we’ve redefined Cloud computing to include everything that we already do.”


“We’ll make Cloud computing announcements because, you know, if orange is the new pink, we’ll make orange blouses. I mean, I’m not gonna fight this thing … well, maybe we’ll do an ad. Uh, I don’t understand what we would do differently in the light of Cloud computing, other than market … you know, change the wording on some of our ads.”

That is right. Larry Ellison will be bringing out ads that will be actively designed to deceive you into thinking that Oracle offerings that are not SaaS or Cloud actually are.

Vendors such as Oracle, Microsoft, and IBM have been accused of “cloud-washing.”

A Replay of the Package Solution Fiasco?

If this sounds like a replay of the packaged software “revolution” in the 1980s and 1990s, it should. Custom solutions were replaced by ERP systems that promised to have all best practices. Companies let go of people supporting internally developed solutions, only to find that the external systems were not created for them. Deloitte and Accenture got rich billing for what was re-coding many requirements that were already covered by internal applications into ERP. Cloud knowledge in most companies is still low. We are seeing sort of a gold rush of very bad quality companies getting referred business from major software vendors. And the only reason they are getting the contracts is that they are “partners,” and the vendor can take their margin on top of the cloud consulting firm/provider.

Notice this quotation from an article by Mark Hurd, CEO of Oracle.

“The most important difference between consumer and business technology isn’t the amount of spending; it’s how the money is spent. Consumer tech spending is mostly on offense, as people buy the latest, most innovative devices, applications, and services to improve their lives. The vast majority of business tech spending is still on defense: maintaining, integrating, and protecting legacy systems.

In fact, most company CIOs still spend 80% or more of their IT budgets in this defensive mode, managing the applications and infrastructure they’ve had for a long time. That leaves precious little time and money for innovative new technologies, digital capabilities, and digitally inspired business strategies.

Those legacy applications, as well as the servers, storage, and other infrastructure that support them, amount to a form of technology debt. Think of the staff time and maintenance fees companies must keep plowing into their on-premises systems as mounting interest on the tech debt—time and money that do nothing but keep companies at status quo.”

The legacy argument was used by ERP vendors to denigrate the internally custom-coded applications that the ERP vendors wanted to replace. We covered in the article How SAP Used and Abused the Term Legacy. Now the term is being repurposed to apply to on-premises environments.

But there is a problem. Migrating to the cloud is proving far more complicated than initially thought.

Notice the following graphic from IDC.

We have several questions about this study. The study declares cloud repatriation activity (great term, by the way, kudos to whoever created it). As you see from my previous statement, a lot of scammers and shady operators are making deals with SAP and picking up cloud contracts. (which are hosting contracts because they cannot convert/port SAP to cloud and the terms are on-premises terms — with contracts going out for around five years).

These cloud deals have a high failure rate. The vendor is pretending they are involved when they are not. So an important question is how much cloud failures are related to customers going to the wrong place for information on the cloud.

In our book How to Leverage AWS and Google Cloud from Oracle and SAP Environments, we explained that one should never look to vendors like Oracle or SAP for advice on the cloud. But this is what companies are doing. They are listening to IBM or other incumbent vendors when they could go directly to AWS or GCP or other real clouds and begin testing themselves.

How to Dilute the Terms Until they are Utterly Meaningless

The most significant marketing budgets in enterprise software are maintained by the largest software vendors and the largest consulting companies. Therefore, this gives them enormous power to reframe SaaS or Cloud in a way that benefits them. SAP, for example, has zero interest in offering pure SaaS or Cloud software. Deloitte has zero interest in implementing SaaS or Cloud software, and for self-evident reasons. Interestingly, this goes without comment.

  • SAP: One of the most controlling and extractive software vendors in enterprise software is suddenly interested in providing its customers with flexible lower cost applications?
  • Deloitte: Deloitte is a consulting company that routinely pulls out $50 to $100 million out of clients for low quality finished systems suddenly wants to be sidelined and see its revenues shrink dramatically because it “believes” in SaaS or Cloud? Because Deloitte is concerned with the value being delivered on projects?

And this ridiculous narrative mainly goes without mention. Most analysts repeat what SAP says in their articles, and assumes that it is true. That is, they grant SAP SaaS or Cloud status before SAP has proven the capability. They spend no time trying to understand if SAP is producing a misleading press release by adopting SaaS or Cloud terminology.

What they would like to do is to undermine the terms so SaaS or Cloud becomes utterly meaningless. So that basically, the customer and Wall Street think they are getting SaaS or Cloud, but that everything from the terms is changed to the cost, and especially the cost is as high or even high than for on-premises software. The more that the big consulting companies and the prominent vendors can co-opt SaaS and Cloud and reduce its benefits, the more they can ensure that they lose no business during what was supposed to be, and still has the potential to be a massive change in the enterprise software market.

Cloud Washing by SAP and Oracle

SAP has been relentlessly bringing out press releases as to how dedicated they are to SaaS. SAP has created products that are explicitly designed for cloud washing. This is covered in the article The HANA Cloud Platform Designed for Cloud Washing. SAP has also come out with entirely impractical adjustments to the SaaS or Cloud concept called the hybrid cloud, which is entirely disingenuous and is a way for SAP to necessarily rebrand it’s on premises offering in a highly confusing manner to customers. SAP has to do this because most of SAP’s application sales are still on premises. This is covered in the article SAP’s Cloud Chaos Offering with Hybrid Cloud. Pure SaaS or Cloud vendors do not have to twist themselves into pretzels the way that SAP does because pure SaaS or Cloud offers real cloud naturally. Arena Solutions, Salesforce, etc.. do not bother with these types of shenanigans. SAP has been hiding who is hosting much of its software. This topic is covered in the article How SAP Has Secretly Been Outsourcing Hosting. 

Cloud Terms for SAP?

One of the most surprising developments is that SAP has become a significant promoter of its products as SaaS or Cloud, but it uses SAP terms and conditions, which are anything but SaaS. SAP does not allow you to cancel quickly on a month to month contract. Quite the contrary, SAP has long term contracts and restricts and controls its customers.

SAP is moving into full harvesting mode. HANA puts in a series of rules and regulations which, combined with indirect access, create a maze that customers have to walk through. In this time where we thought SaaS was going to open up IT implementations to greater freedom, SAP has adopted or co-opted the term SaaS but is becoming even more controlling than it was previously. And in the short term, this will probably drive revenue (financial analysis is not my area, so that is a guess), but in the long term, it makes SAP obviously out of touch and vulnerable.

Paying Top Dollar for the Worst Possible Advice

If you follow SAP, Oracle, or SAP or Oracle partner’s advice, you are headed for significant cloud waste. They have to make their customers give them a considerable markup because that is their model. We are seeing the deceptive advice on the cloud provided by these companies first hand as we are sent documents from clients. The problem is once again; there are virtually no independent consulting entities. Each of them is aligned with one of the major vendors, and that means supporting the markup doctrine that will allow the vendors to meet Wall Street objectives.

If a consulting firm does not follow the marketing talking points of the vendor, they will be appropriately punished by the relationship management arms within those companies. Overall this is a bad time to be taking advice from any consulting firm with a history of on-premises consulting. It continues to amaze us how companies are paying top dollar to consulting firms so they can get the absolute worst advice on the cloud.

Giving Out Fake Information on the Cloud

Oracle has the worst explanations of the cloud we have ever read. Oracle keeps hiring people at the top of the market from AWS and Google. Still, the Oracle Cloud is not improving, and the Oracle explanations of cloud in the product documentation are entirely nonsensical. Larry Ellison’s statements where he tries to critique AWS or state that it costs less to run the Oracle database on Oracle Cloud are altogether false. 

Why Major Consulting Companies Ruin the Cloud

Something that should be eliminated, as a concept, is that major consulting companies have any interest in improving the condition of their clients. The major consulting companies are first and foremost focused on their bill-ability – and the problem is that their bill-ability is directly contradictory to the interests of their “clients.”

Trusting Major Consulting Firms on Technology Advice?

No major consulting company can be trusted to provide advice on technology because no major consulting companies place their client’s interests above their own. They have not fiduciary responsibility to their clients. SaaS is the most crucial development in enterprise computing, but significant consulting companies are slowing its adoption? They do this because SaaS will mean that they shrink as entities and the software vendors take control of the implementation and the maintenance, at a far lower cost.

Major consulting companies have a severe conflict of interest when it comes to advising buyers of low support applications because they make more money from high rather than more moderate maintenance applications. Correspondingly, they are significant proponents of the highest implementation as well as maintenance applications, and why they have come out so strongly against SaaS.

Accenture published a document entitled “Why Big Systems Are Here to Stay,” which perhaps should have been called “Why Big Systems Are Here to Stay: Because We Make Tons of Money That Way.” In this document, Accenture makes the following contentions:

“And a third advantage of an ERP environment has to do with how data is managed, integrated and secured. If not properly integrated, cloud and software-as-a-service solutions can create a more chaotic, less reliable and less secure data environment.”

Data Management and Advantage for ERP?

This is an interesting contention because ERP environments have zero advantage over non-ERP environments concerning data management or integration or security. ERP systems that I evaluated within companies often have the lowest data quality of any software category, particularly for the tier 1 ERP vendors as the applications have such dated data management tools. As for integration, ERP systems may be integrated to themselves, but the tier 1 ERP vendors are some of the most difficult systems to integrate other applications. As for the security argument, ERP systems are not more secure than different software categories.

The above Accenture statement also confuses the topic of ERP systems versus SaaS systems. SaaS is a delivery method for software; ERP is a category of enterprise software. SaaS can deliver as an on-premises solution or any application, including ERP. If ERP systems are on premises, they are more secure than cloud or SaaS applications, but that is a different issue.

Overall, the evidence is severely lacking to support the statement made in the Accenture paper, and it should qualify as FUD (fear, uncertainty, and doubt). Accenture’s main financial incentive is to slow the movement towards SaaS solutions and away from tier 1 ERP because its how they make a lot of money, and they have far less control once the application is delivered via SaaS. Instead, the software vendor tends to take over consulting and support. Interestingly, nowhere in the paper does Accenture mention how it makes money (which is with on-premises consulting and support) and how this may influence its “recommendations.”

Accenture Says….

Accenture goes on to say that the best approach is a hybrid (that is some on-premises and some SaaS) and then proceeds to make another self-serving proposal, that this IT ecology must be managed by using a trusted “broker.”

So, who’s in charge of managing this complex hybrid system? The answer lies in the rising trend of using an integrator or trusted broker. This brokerage can act as either a consultant or as a managed services provider. This holistic or managed services approach enables companies to treat their IT resources as just that and also provides a new level of flexibility for companies and CIOs.

And who would this trusted broker be?

That is right, Accenture!

After spending decades overcharging and misdirecting their clients to all the wrong software in the on-premises environment, Accenture would like to be handed to keys to managing their client’s IT solution architecture in the new on-premises/SaaS “hybrid” environment.

How to Understand Thomas Kurian’s Move to Google Cloud

Thomas Kurian recently left Oracle and joined Google Cloud. In this article, we will review the implication for Google Cloud.

Implications of the Move by Kurian

The Register described it as follows:

“Kurian was the database giant’s cloud supremo, and oversaw much of its product development. He seems to be a natural fit for Google Cloud: as an experienced enterprise IT vendor executive, he follows in the footsteps of industry veteran Greene in trying to smarten up Google Cloud so it can compete against Azure and AWS for business.”

This is a significant happening, and it is for several reasons. One is that both AWS and Google Cloud are gunning for Oracle’s business. So far, AWS has been in the lead in going after Oracle, but this move is signal that now Google Cloud will have the ability to make going after Oracle even more of a priority.

The Experience of Migrating Workloads to Google Cloud

Mark Dalton of AutoDeploy explained this in the following quotation.

“One thing that is dramatically different from Google Cloud and everyone else is their 100 percent concern for open source software. They take this very seriously. Migrating our workloads to GCP requires the most robust OSS documentation I’ve ever seen. Google has dedicated resources who review the content and will reject your product if it is not documented with 100 percent accuracy. Thomas Kurian is going to have to adjust to that modality. But aside from that this make GCP a serious competitor to AWS. Thomas Kurian is brilliant, awesome to work with, and laser focused and dedicated to his engineers. This is going to work very well.”

Thomas’ Motivation is Sky High

Another question is around Thomas Kurian’s motivation. Kurian, it is rumored, left Oracle because he clashed with Ellison over the direction of Oracle Cloud, with Kurian preferring the strategy of leveraging the IaaS of both AWS and Google Cloud. At the same time, Ellison favored competing directly with AWS and Google Cloud.

“Think of all the Oracle customers Kurian knows. All of the customers that have told him Oracle Cloud is”customers who have struggled with Oracle Cloud Infrastructure, it’s stability, and offerings.”. He’s going to open that Roledex and start offering beta trials, incentive discount pricing, and bundled offerings.”

Kurian’s First and Second Steps at Google Cloud

Now Kurian is going to have a real cloud to offer rather than Oracle Cloud. Mark Dalton lays out the likely outcome in this quotation.

“So Kurian will go after the ERP workloads first, which is the obvious place to start. This is especially true of PeopleSoft. The PeopleSoft model is so spread out he can offer a very compelling case to move to GCP. Now, bundle that with BigQuery. Would you rather have a team of specialists on OBIEE, which is a difficult to install and maintain, or would rather have one or two dedicated resources that can get BQ up and running and making that data in your ERP accessible? The answer is obvious.”

Mark lays out the following strategy as stage two for going after Oracle’s business.

“He’ll use Kubernetes to orchestrate containerized solution sets for Oracle products. Want to run Hyperion in GCP, click a button, done. Lower cost for GCP, lower cost for the customer.

IBM’s acquisition of RedHat shows that there is a market demand for rapid deployment models for enterprise customers. Google does not need to invest 8 billion dollars. Google Cloud has the software to facilitate these new operating models, built, deployed, and operating at scale.”

Will Thomas Kurian’s Sales Approach be Successful at Google?

The following quote is from Ahmed Azmi, which describes how he thinks Thomas Kurian, the new head of Google Cloud as of November 2018, will approach making changes as Google Cloud.

“I think Kurian will focus exclusively on Oracle accounts, the ones with the most pain first. Those low-hanging fruits are first candidates to migrate systems and apps to GCP. He only needs a few big references in the next months to get the ball rolling. It’s a BIG open question if Oracle sales reps will be successful at Google. Selling services is fundamentally different than selling products, getting paid in advance, and moving on to the next customer. Outside of G-Suite, Google sells tech NOT business apps. Their approach has always been developer-centric just like AWS and Microsoft. Oracle’s sales approach is top-down selling to execs and budget owners NOT developers. There’s a significant skill mismatch involved.

You know, an Oracle sales rep I used to be friendly with told me she had no interest in selling services. The reason being, as you said, she wanted to

“get in, get out and get paid.”

She said that software sales were great because there was no question of the customer service aspects of consulting, and the standard client issues. With software, the customer bought it, and it was cut and dried. On the “top-down” approach you describe, this reminds me of a quote from Dan Woods.

“Oracle understood very early that enterprise software is sold, not bought. To make a sale, you need an effective salesforce that is well equipped and highly motivated. You need a wide, deep, and highly motivated supporting ecosystem. Oracle has these elements and they have been the foundation of the company’s success. But the world of IaaS and PaaS is different. It is a developer-driven world. In an IaaS and PaaS cloud, software is bought, mostly by developers, not sold. All the salespeople in the world will not convince a developer to buy an inferior product. Oracle’s mighty sales machine cannot dominate this market; only better products matter. Right now, Oracle may fall further behind in market share in its IaaS and PaaS clouds.”

Thomas Kurian Lies to Geekwire

We took the most interesting and notable quotes from this interview and analyzed Thomas Kurian’s answers.

The Quotes

Kurian is Now a Fan of Open Source?

GeekWire: I was talking to Redis Labs CEO Ofer Bengal last week and he mentioned that in his view the new database services announced Tuesday was an initiative you pushed the company to do. How did this all come together?

Thomas Kurian: The background is fairly simple. We see a lot of customers wanting to develop applications using open source. Historically they wanted three things: They wanted a fully-managed infrastructure for the open source technology; second, they wanted enterprise support from the cloud provider; and third, they wanted the cloud provider to allow them to use their credits to consume the open-source offerings in addition to the cloud platform provider’s old products.

Well, Kurian’s position on open source will have to change, but at Oracle, they do whatever they can to undermine open source. This should be brought up by the interviewee.

Working in a Friendly Manner with Open Source?

We felt that many cloud providers were not working in a friendly manner to open source, and we felt that open source companies needed to have a cloud partner that would share the success of the platform with them. And so what we’ve done is a very simple thing. We’ve put together the leading open source companies, (and) they’re offering their services on Google Cloud as fully managed services. These products will be taken to market by Google’s cloud sales team and we will support it as a first class service in Google Cloud.

So we’re giving customers and developers choice by giving them ease of use, because they get a single console from which they can access all these technologies. We’re giving them the ability to get integrated billing, metering and consumption of procurement. And we are sharing our success with the partners.

How is that different from what Google Cloud had before. Our Google Console already had all of this. One has to be careful not to allow Kurian to take credit for things that existed at Google Cloud before he arrived there.

Open Source Companies Should Be Compensated for Their Hard Work?

“GeekWire: With respect to open source in general and some of the changes that have been contemplated by these companies, such as how cloud providers can use those open source projects, where have you come down on that?

Kurian: We generally feel that if an open source company has done the hard work of creating the open source technology and providing a solution that developers and customers like, they should be fairly rewarded for that hard work. And if their livelihood, if you will, is threatened by alternative forms of monetization, which is taking away their ability to monetize the technology that they invented, we don’t think that’s necessarily the right thing for the industry.”

Well, this was the exact opposite view that Thomas Kurian held when he worked at Oracle. Oracle’s view is that open source projects should get nothing. We quote from Larry Ellison.

“It is not enough for one to win, all others must lose.”

Google and Oracle Are Similar?

“GeekWire: This is the first time we’ve had a chance to talk since you’ve taken this new role and I wanted to check in on a couple of things. One thing that strikes me is that it would appear from the outside that Oracle and Google are two very different corporations. I was wondering if you could give me a sense, now that you’ve been around a few months, of how they are alike and how they are different.

Kurian: They’re alike and different in some ways. Every company that you work at is different from every other company that you work at, right?

I’ll give you an example. Engineers in all companies are roughly the same. They are very focused and disciplined on how they deliver software. They’re very keen on understanding customer needs. They’re very keen on delivering technical solutions to needs that customers have.

The way that Google brings its technology to market and the way that the relationship it has with customers are different than other companies. Partly because Google is such a technological powerhouse, but many companies in the industry look at it for solutions to their digital problems.”

Oracle is the worst and least ethical company in the enterprise software space, beating out SAP, which holds the number two spot. Google has been one of the better corporate citizens. Secondly, Oracle engineers and developers are frequently disheartened as they can’t mesh with the overpromising sales teams. It is challenging to see any similarities between these companies except that they both work in software.

Kurian Suddenly Found Ethics?

GeekWire: How do you feel about working with military customers when it comes to cloud and AI services?

“Kurian: We’ve made a public statement about it. We made a statement around our AI principles that’s publicly documented. We stand by them. We do work with a number of agencies around the world, but they’re always in compliance with our AI practices and principles that we publicly made a statement about.”

It is challenging to believe any statement regarding ethics made by Kurian, given his history with Oracle.

Google Loyalty

“GeekWire: With respect to the core cloud business, what do you think Google has to do to gain share in cloud computing? And what do you think is a realistic target for where Google might be in two to three years?

Kurian: We have the lowest customer churn of any cloud provider in the industry. We have amazing customer loyalty. If you look at the top 10 companies in virtually every industry: nine of the top 10 media companies, seven of the top 10 retailers, six of the top 10 utility companies, five of the top 10 financial services companies, five of the top 10 manufacturing companies, five of the top 10 healthcare companies around the world — not just in the United States –use Google Cloud for their business transformation.”

And Oracle Cloud, which is what Kurian was responsible for, had the highest churn. Kurian leads an approach where reps were told to get signups and where those customers would churn because that is what the Oracle Cloud leads customers to do. Oracle Cloud is a barely functional cloud, that is hosting, not the cloud. That is what Kurian is responsible. Everything Kurian is saying was the accomplishments of Google Cloud before Kurian got there.

Training More Sleazy Oracle Type Sales Resources?

So for us to grow, the primary thing is to scale our go-to-market organization. And we’re very committed to doing that. We just need to hire and train and enable a world class sales team at scale.

Today we have a great sales team, but we are far fewer in number than the other players. We just need to expand that. And as I talked to customers, they asked us to, one: expand our sales organization and our go-to-market teams. Second: specialize (that sales team) with deep expertise in technology and in industry. And third: make it easy to contract and do business with us. We are extremely committed to doing all three of them.”

We cover this topic in detail in the article Will Thomas Kurian Bring Oracle’s Sales Sleaze to Google Cloud? 

Thomas Kurian told a lot of lies in this interview. He minimized the differences between the Oracle Cloud and Google Cloud. Thomas made pro-open source statements without a hint of the implied hypocrisy. He may have taken credit for something Google Cloud already had, he made statements that pretended he was ethical, he took credit for things that were the exact opposite of what he was able to accomplish at Oracle Cloud. And the interviewer sat there as a passive punching bag for whatever Thomas Kurian said.

Advice on Enjoying the SAP and Oracle Cloud Quiz

To see the full screen just select the lower right-hand corner and expand. Trust us, expanding makes the experience a whole lot more fun.



The future of SaaS or Cloud looks increasingly murky. What was once an exciting application of a new software delivery method along with a series of open, transparent, and flexible contractual terms has been co-opted and diluted by on-premises entities. Entities like SAP and Deloitte are intent not to change how they do business, which means ruining SaaS or Cloud, all while promoting the idea that they are in favor of SaaS or Cloud. However, SaaS or Cloud has a specific definition, and it can not be attained by merely slapping a sticker on a private hosted solution that is not multitenant. Because of the sway that the on-premises vendors and on-premises consulting companies have with IT media, it is rare for these vendors and consulting to be questioned when they create marketing literature that proposes that they are SaaS or Cloud. While there is some talk of Cloud Washing, consulting companies are seldom asked when they use the same on-premises consulting model while talking about being SaaS or Cloud-friendly.

SAP and Oracle customers must be wary of this time and the tidal wave to terrible cloud advice that is currently emanating from SAP and Oracle and their consulting partners and the SAP and Oracle user groups. The cloud is the best hope that companies have to reduce the account control of SAP and Oracle and to bring innovation as well as open-source into the fold. However, SAP and Oracle and the “coalition of the billing” sit on the other side of this issue. The last thing SAP and Oracle want is for their customers to become educated as to the cloud.

The same applies to major consulting companies. The major consulting companies have a business model around fleecing their customers and increasing costs. This is why it concerns when AWS has partnered with so many major consulting companies.

Overall the promise of the cloud is declining, as the cloud service providers are aligning themselves with on-premises consulting firms and bringing in executives from the least ethical on-premises vendors.

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.

What We Do and Research Access

Using the Diagram

Hover over each bullet or plus sign to see more explanation. To move to a different bullet point, just “hover off” and then hover over the new bullet.


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The Public Cloud Revolution Book

The Public Cloud Revolution: How Open Source is Displacing IT Mega Vendors

Interested in how to open source is powering public cloud providers like AWS and Google Cloud and what this means for the different modalities of computer hardware (cloud, on-premises proprietary server, mainframe, and appliances?). This book covers many topics that are greatly underrepresented in the common IT media coverage of these topics.

How Large Consulting Firms Exaggerate The Costs of AWS Services

Executive Summary

  • AWS has added to its partnership stable with larger consulting companies for SAP.
  • These large consulting companies have had a habit of high-cost implementations.


A primary benefit of using cloud services is that the costs are transparent, and it gives more control over to the customer. However, companies like AWS and GCP do not offer the type of support that is common in the on-premises vendors. This has caused these providers to partner with firms to provide this consulting. However, what does this mean for costs?

Who Are AWS Partners?

We performed the following search for partners on AWS’s partner search website.

Here is a sample.

Notice many companies on this list. Accenture, Capgemini, Deloitte, Tata Consulting Services, Wipro, and others. These are companies that have been ripping off their clients for years. All of these companies are SAP partners and distribute false information to their customers as part of the SAP partnership agreement. 

Bringing Corruption to the Cloud?

The original idea of leveraging cloud services was in part of getaway from these corrupt overcharging consulting firms. Some of these firms like Monacle or Linke, we do not have experience with, so we will not comment on them for good or ill, but we would not trust many of the companies on this list, and we routinely find them misleading clients on SAP.

The Markup of Consulting Services

Consulting services represent a high cost versus license costs, and this is true even when license costs are high, such as is the case with SAP and Oracle. However, the reason that the major consulting companies focus on SAP and Oracle is that it allows them to bill the maximum number of hours to their clients. However, in the case of AWS or GCP, the costs are meager compared to SAP or Oracle.

If these same consulting companies are used, much of the cost savings of the cloud will be diluted. Secondly, the poor quality of the information provided by these consulting companies will lead to enormous cloud waste, as they produce extraordinary wast in the on-premises environments presently.

An IT department with extreme waste? This means that a major IT consulting firm is typically in the house, which is extracting as much as they possibly can from the client.

Bringing Horrible Advice to the Cloud

We analyze the advice given by large consulting companies on SAP for clients. And in general, we consider the information offered by the large consulting firms to be of poor quality. The advice is inherently backward engineered from the conclusion, and the outcome is determined from on high by people with significant financial bias due to their compensation.

The major consulting firms are filled with content-free salespeople (called partners) who will repeat anything the large vendors say. They will also take the major vendors’ views on how to leverage the cloud, which will mean recommending paying the maximum markup to SAP or Oracle and maximizing the waste on the account. 

Advice on Enjoying the SAP and Oracle Cloud Quiz

To see the full screen just select the lower right-hand corner and expand. Trust us, expanding makes the experience a whole lot more fun.



The large SAP consulting firms have shown themselves to maximize the costs of SAP and Oracle projects. If they are brought in to do AWS or GCP or Azure work, they will do the same to those projects. AWS and GCP are inherently less corrupt in their model than SAP or Oracle. However, AWS at least is playing with fire by bringing these partners into the fold, and it will no doubt be negative for customers.

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.

What We Do and Research Access

Using the Diagram

Hover over each bullet or plus sign to see more explanation. To move to a different bullet point, just “hover off” and then hover over the new bullet.


Research Access

  • Do You Need to Access Research in this Area?

    Put our independent analysis to work for you to improve your spend.


The Public Cloud Revolution Book

The Public Cloud Revolution: How Open Source is Displacing IT Mega Vendors

Interested in how to open source is powering public cloud providers like AWS and Google Cloud and what this means for the different modalities of computer hardware (cloud, on-premises proprietary server, mainframe, and appliances?). This book covers many topics that are greatly underrepresented in the common IT media coverage of these topics.

How SAP Plans to Markup Cloud Service Providers to High Profitability

Executive Summary

  • AWS created a presentation to show the relationship with SAP.
  • How much of the information provided around the co-interests of SAP and AWS are true?


One of the most interesting developments in the public cloud is how the public cloud service providers like AWS or GCP or Azure will work with the on-premises vendors. Often things are presented by companies for political reasons rather than what is true. We found the following slides from a presentation by AWS.

This slide from a presentation by AWS shows a very complementary relationship between AWS, SAP, and several partners. However, the reality is quite a bit different. Not only SAP but many of the partners on this slide intent to significantly intermediate between AWS and the final customer.

This slide (by AWS) shows what is feasible, but not necessarily what is desirable for customers. Under the scenario where the SAP Cloud is the origination, the prices are dramatically higher. The table to the right shows that AWS claims a far more complete offering than GCP or Azure.

How SAP Plans on Maintaining its Margins

All of SAP’s recommendations for cloud come with a markup over the cloud provider, which SAP does not discuss and pretends does not exist. Cloud service providers that seek to gain SAP business must tread very carefully around the topic of SAP’s markup on their services, as we covered in the article How to Understand SAP’s Upcharge as a Service Cloud. Repeatedly circumvented SAP to sell directly to SAP customers rather than giving them a markup, SAP will immediately disappear from SAP’s recommended providers listing. SAP will try to direct customers to cloud service providers that allow SAP to obtain their margin. This may be the primary strategy that SAP will use to increase their margins.

See this comment from the SAP Q3 2018 analyst call.

As customers choose to switch to cloud, vendors have to deal with shifting from the upfront cash earned in on-premises deals to the ongoing subscription costs associated with cloud services.

On the earnings calls, execs argued that, as cloud has more lifetime value and more predictable future revenues, the firm was going in the right direction in the long term.

Insisting that the core business was stable anyway, CEO Bill McDermott said they should be “celebrating with champagne… that the cloud is soaring”, adding that if cloud was flat with a “rock solid core”, analysts would be “worried about the future”.

CFO Luca Mucic said the firm would always trade a software dollar for a cloud dollar, and “will not artificially slow cloud growth to optimise our P&L in the short-term”.(emphasis added)

Under what scenario where the vendor cannot markup the cloud services of other companies, this explanation is not true?

How can we say this?

Well, the most profitable vendors in the software are the on-premises vendors. Vendors like Salesforce, the most prominent SaaS vendor, has historically had low profitability. AWS is probably the most profitable cloud entity. And they are the exception.

Where Do SAP’s Margins Come From?

SAP has around an 85% margin on support. This is by far their largest margin item and the only real part of SAP’s revenues that are growing. SAP’s margin on applications and database licenses is considerably lower. The quotation above leaves out the fact that for SAP’s internally developed products, SAP’s cloud is just a passthrough. The actual infrastructure and real work are performed in either a public cloud or private cloud service provider. SAP spends extremely little on its cloud infrastructure. The cloud can become a very profitable item for SAP — if SAP can trick companies into using SAP Cloud as an intermediary rather than going direct to the cloud service provider.  The way to do this is to hide the margin from the customer. However, with the public cloud, this is tricky as the pricing is public.

See this pricing estimate. SAP wants to mark this cost up by a factor of between 3 to 10 times. SAP wants to be paid for this solely for “originating the deal.” This is the only way that SAP can grow its revenues from the cloud. The SaaS applications that SAP purchases have a low margin, and several years after being acquired, the applications begin to decline in the marketplace. Cloud markup is where SAP’s financial future is. 

SAP has a long history of marking things up that they do not put work into developing. Databases are an excellent example of this. For decades SAP has been marking up the Oracle database and IBM DB2. Customers could have received a lower price by going through those vendors directly. Still, both vendors allowed SAP to serve as a reseller of their databases, which resulted in significant profits for SAP, and higher costs for SAP customers.

Advice on Enjoying the SAP and Oracle Cloud Quiz

To see the full screen just select the lower right-hand corner and expand. Trust us, expanding makes the experience a whole lot more fun.



SAP can worry less about the margin on its applications and databases if they can merely markup the cost of other cloud service providers. This will be easier with “private cloud” providers because the pricing is hidden. However, for this strategy to work, the private cloud providers must cooperate with SAP, and refer customers back to SAP rather than provide a direct bid. As soon as the customer finds out the real cost, SAP will lose its position as intermediaries. To do this, SAP will have to enforce stringent rules for how private cloud providers communicate costs.

At the time of publication, this is still a “story.” That is in the IT media and on calls with Wall Street analysts, the question is not asked for SAP where these margins are coming from. That is, it is not very much discussed that SAP’s’s strategy outside of its SaaS acquisitions is to markup the offering of other cloud service providers. In the quotation from Luca Mucic above,

always trade a software dollar for a cloud dollar,”

..the fact that the software dollar that is being traded will in many cases not be for an SAP SaaS/cloud application, but a dollar of revenue that SAP plans to markup by 3 to 10 times over AWS/GCP/Azure/HPE/IBM/etc. Under that scenario, SAP could have the highest cloud margins in enterprise software, while doing the least actual cloud “work.”

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.

What We Do and Research Access

Using the Diagram

Hover over each bullet or plus sign to see more explanation. To move to a different bullet point, just “hover off” and then hover over the new bullet.


Research Access

  • Do You Need to Access Research in this Area?

    Put our independent analysis to work for you to improve your spend.




The Public Cloud Revolution Book

The Public Cloud Revolution: How Open Source is Displacing IT Mega Vendors

Interested in how to open source is powering public cloud providers like AWS and Google Cloud and what this means for the different modalities of computer hardware (cloud, on-premises proprietary server, mainframe, and appliances?). This book covers many topics that are greatly underrepresented in the common IT media coverage of these topics.