Oracle’s Database Future Could Be Dimming

On Jan. 2, technology news outlet The Information published a report suggesting that hyperscale cloud vendors Amazon (AMZN) and Salesforce (CRM) are aggressively moving down the path of migrating operations off Oracle’s (ORCL) database technology and onto open-source and/or internally developed solutions. The Information’s report cites sources with knowledge of the projects underway at Amazon and Salesforce to overhaul their technology stacks, though neither company had directly commented on the story as of this writing.

While the news of Salesforce’s efforts to move off Oracle are not necessarily new (the rumored Project Sayonara has been a relatively open secret for some time), the news of Amazon potentially shifting its internal operations would lend credence to our belief that Oracle’s database business faces a murkier future than consensus believes.

While we are maintaining our wide economic moat rating for Oracle at this time, we remind investors that our negative moat trend rating, which also remains intact, revolves around our view that customer switching costs are in fact decreasing for Oracle database customers. The shares have retreated roughly 2% on The Information’s report and have fallen roughly 13% from their September highs; they now trade near our unchanged $46 fair value estimate.

Oracle has routinely denied rumors of this ilk (including The Information’s report) for some time, and while we do believe database migrations are much more challenging than some may let on, we think the company has been too nonchalant about the improvements made in the open-source database community and by rivals over the past several years. Our moat trend rating does not suggest customers will migrate away from Oracle across the board, but we do think enterprises will increasingly look to downsize their reliance on Oracle’s database technology, particularly for workloads migrating to the cloud and for net new workloads.

We believe certain workloads will always be best served by high-performing databases such as Oracle’s, though we note that the company is no longer alone at the top of the database performance food chain. Microsoft’s (MSFT) SQL Server has made substantial strides in recent years, aided in large part by that company’s need to scale up its database technology for Azure. In fact, Microsoft landed ahead of Oracle in Gartner’s November 2017 Magic Quadrant for Operational Database Management Systems on both ability to execute and completeness of vision. Meanwhile, Amazon has been active in developing its own databases (such as Redshift), and Gartner estimates it amassed 5% share in the $34 billion database management market in 2016, up from essentially 0% share just a few years ago. Oracle’s share retreated from the mid-40s to just over 40% during that time.

Further, Oracle’s lack of positioning in the markets for public cloud infrastructure as a service and platform as a service creates challenges for customers that want to reap the benefits of the environments offered by Amazon, Google (GOOG)/(GOOGL), Microsoft, and others. Coupled with the rise of increasingly popular open-source solutions such as PostgreSQL for mission-critical applications, these factors contribute to our belief that Oracle’s customers are facing decreasing switching costs.

Despite Oracle’s marked progress in software as a service and other portions of the cloud value chain, the company’s top and bottom lines are still driven in large part by databases. Gartner estimates Oracle’s total revenue from databases approached $14 billion in 2016, more than 35% of annual revenue in fiscal 2016 and fiscal 2017. If we assume a 45% GAAP operating margin for the database business, this business would have been worth nearly 50% of the company’s operating profit in fiscal 2016 and fiscal 2017. Oracle needs to quickly (and profitably) scale up its cloud businesses in the event that customers do begin to seriously migrate away from its database offerings. To Oracle’s credit, the SaaS business continues to see a strong upward lift on its gross margins, though the broader IaaS/PaaS business continues to operate at heavily dilutive levels of profitability compared with the broader business. IaaS/PaaS GAAP gross margins have fallen from a peak of 58% in the first quarter of fiscal 2017 to just 39% in the first quarter of fiscal 2018, while revenue grew only 27% over that period despite redoubled efforts in the company’s IaaS business.

While we would be surprised if either Amazon or Salesforce outright confirmed The Information’s report, this smoke could mean a fire. In the case of Salesforce, reports of the company’s potential migration away from Oracle date back to 2013, when Salesforce and Oracle announced a nine-year partnership centered on Salesforce continuing to consume Oracle database licenses, Oracle-branded Linux OS licenses and support, and Java middleware, while Oracle worked to integrate its enterprise resource planning solutions with Salesforce’s best-in-breed customer relationship management platform. There were rumblings before and after the deal’s signing that Salesforce had been growing weary of its relationship with and reliance on Oracle and the latter company’s technology. Project Sayonara gained traction in a May 2016 Forbes report suggesting that Salesforce planned to be completely migrated from Oracle technology by 2023, which would coincide with the end of the nine-year stated partnership. We view this outcome as more likely (though still not an absolute certainty by any stretch) following The Information’s report, which cited a source close to the situation as stating that Salesforce continues to develop alternative solutions for its Sales Cloud and Marketing Cloud offerings, which represent 37% and 10% of our fiscal 2018 subscription revenue forecast, respectively, excluding Commerce Cloud.

Turning to Amazon, The Information’s report suggested that a migration away from Oracle has its roots in the early 2000s, referencing Amazon’s high-profile outage in 2004 as a turning point in Amazon’s perception of its reliance on Oracle as a technology provider. The report suggests Amazon’s retail unit has switched to internal solutions running open-source NoSQL databases that handle both customer and order information. Amazon has not confirmed this report, and we would caution investors that a database migration of this size would be a massive undertaking, as many databases have multiple dependencies across a boatload of applications in large enterprises, creating a significant degree of execution risk when undertaking a migration. However, large companies with substantial IT resources such as Amazon may in fact be in a position to provide a blueprint for leaving these environments, particularly when examining the financial implications of consuming open-source database technology. An April 2015 Gartner report, “The State of Open-Source RDBMSs,” postulated that an enterprise running a single Oracle 12c database license across two cores would spend $473,100 over three years; a comparable deployment of Postgres Plus would cost just $41,400 over the same period. Even if we assume discounting on Oracle’s part, this still represents a massive potential cost savings, should enterprises more aggressively pursue database migration projects.

http://news.morningstar.com/articlenet/article.aspx?id=842665

Windows Server HyperV with Deduplication 400 to 1 ratio

I’ve been playing with the Linux world for the past few months. I’ve learned some new stuff.. seen some intersting scripts.

I’ve been having fun.

But the punchline. We ALL know that Linux just STILL AIN’T CLOSE to as cool as Windows Server.

Check out these storage ratios that I am getting

I am gettinga 400 to 1 ratio ofdeduplication / compression.

 

buy one or two Red Hat Enterprise licenses and use CentOS everywhere else.

I ran across this quote on Stack Overflow today.. I just HAD to share.

“most of my customers do is have only one or two genuine RedHat systems, and run most of their computers on CentOS, which is a free rebuild of RedHat. If a problem is found, it is reproduced on the RedHat systems, and the vendor will happily support the issue from there.”  http://unix.stackexchange.com/questions/6945/what-makes-centos-enterprisey-compared-to-generic-distributions-like-ubuntu

This seems like a TERRIFIC strategy for maximizing your ROI.. and a good way to spend a LITTLE bit of money.. and make it stretch.

HOW HAVE I *NOT* HEARD OF THIS STRATEGY? Although I STARTED playing with Linux about 12 years ago.. I never really have been happy with it.. It seems like there was ALWAYS one or two things that just killed my attention for Linux.  For example.. I didn’t REALIZE that apt-get would upgrade mySQL.. for the LONGEST time.  That is like.. the most fascinating thing in the world to me.  Upgrading mySQL.. is one thing.. that has ALWAYS made me terrified. I just do NOT want to have to troubleshoot a ‘mysql backup’ by hand.. Just AMAZED with how flaky mySQL is with some things.

I’ve ALWAYS had a chip on my shoulder.. about mySQL performance. It has always seemed like WordPress runs WWWWAAAAAAYYYYYYYY too slow when it gets about 100k records.. and I’m a TOTAL snob about performance.  I just insist.. that the indexing options in mySQL are COMPLETLY inferior to MS SQL Server.   but it’s just NOT WORTH FIFTY GRAND PER PROCESSOR for Microsoft.

Performance is always a bit of a touchy subject for my clients.  Not BAD performance.. it’s just that they’re SCARED TO ASK FOR GOOD PERFORMANCE.

I swear.. MOST clients I’ve had over the past 15 years… for some reason claim that they ‘don’t care about performance’.  I really don’t get it. of COURSE everyone wants better performance..   Why are people TERRIFIED to care about performance. Is it the PRICE TAG?

Looking back.. I have recommended Linux / BSD / Debian / Ubuntu systems.. at my last couple of jobs.. and I’m just NOT HAPPY working in a bigoted shop.   I’m not sure I can EVER work in a ‘Microsoft-Only’ shop ever again.  It’s like RACISM to me… when people won’t consider Linux.. ‘just because they don’t know it’.  That can’t be an excuse.. not for another day.   I *USED* to be the ‘most mindless Microsoft drone ever invented’.  My backyard.. growing up.. was about 100 yards from Redmond city limits.   But YEAR after YEAR. when Microsoft keeps on changing things ‘just for the hell of it’.. I’m sick of it.  I’m TOO CONSERVATIVE to be on the Microsoft stack anymore.  Fully 80% of the time that I’ve invested.. in training, and practicing MIcrosoft skillset.. has been flushed down the drain… because Microsoft *ALWAYS* has to come out with the ‘latest and greatest’.

I’m just SICK and tired of being tied to a single vendor.

I’ve been TRYING to push Linux.. for a FEW years now… And now that I’m emotionally involved with WordPress.. I’ve really set out to expand my horizons.. and learn a LOT more.

I just LOVE the challenge. I guess that Windows has BORED me.  I really feel like I haven’t had a challenge in the Microsoft world.. in what FEELS like a long time.

I *NEVER* saw the excitement.. in trying to work my butt off for a decade.. focusing on learning TEN LANGUAGES to replace VB6.  I think that Microsoft lost the war.. when they alienated their best constituency in 2002.

 

 

App Integration vs Data Integration – Who Will Win?

I was at Starbucks the other day (surprise, surprise) with my friend Matt whose company was getting ready to invest significant time and money to integrate the ERP systems of a company that they had just acquired. I asked him why bother integrating operational systems (except to ensure that the different operational systems are using the same customer, product, store, and other master files), unless there is significantcost savings.

rocky bill pic 1

Instead of trying to integrate the operational systems, why not invest in integrating the data that comes out of those operational systems? As long as you can enter orders and pay people in a timely manner, who cares if you can capture an order a sub-second faster or pay someone seconds faster than before? Is integrating your transactional data capture really the best place for IT to invest their precious resources in today’s competitive world?

ERP is so old school. I wish I had known back in the 1990’s and early 2000’s what I know now:  that trying to create competitive differentiation within or across packaged, monolithic ERP, MRP, CRM, SFA, and other operational systems only benefits the ERP vendors and the systems integrators whose business models are built on the endless customizations to those ERP systems.

If you’re an organization considering an ERP system upgrade or integration, you seriously need to consider how much you want to invest in customizing that ERP system that, at best, just delivers business parity. Or should you invest your time, money, and human resources in building customer-facing apps that provide unique customer value, business differentiation, and competitive advantage?

Integrate the Data, Not the Applications

The graphic below nicely summarizes the value creation transformation occurring within IT organizations (see Figure 1). Organizations are realizing that the business value of their operational systems doesn’t lie in their ability to capture an order faster than their competitors, but instead lies in the depth and breadth of data that can be integrated and mined to capture new insight into customers, products, and operations.

bill blog pic 2 6.23.14

Figure 1: Value transition from app-centric to data-centric

It’s a transformation from application-centric mentality (trying to create value in the deployment and customization of monolithic operational application) to a data-centric mentality (mining value out of the wealth of data held captive in those systems).

Figure 2 below shows a typical IT operational environment. Multiple operational systems manage the transaction processing for various business functions like manufacturing, distribution, inventory, payroll, human resources, finance, call centers, sales force automation, etc.

bill blog pic 3 6.23.14

Figure 2: Traditional monolithic operational apps

You can buy these applications from a mega-vendor (who has probably acquired numerous other vendors in order to create a “ransom note” of loosely connected applications), or you can select a best-of-breed approach where a systems integrator tries to tie these applications together. Either approach leads to a brittle, hard-to-scale, expensive-to-maintain architecture and a significant investment in systems integration and consulting resources to keep these “Franken-architectures” running. And what do you get in the end? Nothing more than business parity.

This quote from a Business Week article titled “Plex Systems: Detroit’s New Dashboard” summarizes the ERP value challenge quite well:

Inteva Chief Information Officer Dennis Hodges explains that because each [of their] offices had its own ERP system running on a local server, managers in Michigan had no way of knowing what was happening in Alabama, Mexico, or Poland. The company was spending more than half a million dollars a month on an ERP product that didn’t allow management to look at revenue and margins across the company.

See my blog “Developing Competitive Differentiation” for more thoughts about where best to invest your precious IT resources to deliver competitive differentiation.

The Role of the Data Lake

Don’t invest (waste?) time and money to integrate your disparate operational applications. Instead, invest in a data architecture (see Figure 3) that allows you to integrate all of the data across those disparate operational applications and is able to capture the other 90%+ of the corporate and external data needed to achieve business differentiation.

That investment in data architecture will enable you to differentiate with superior customer service, successful new product introductions, campaign marketing excellence, fraud elimination, predictive maintenance, revenue loss minimization, increasing market basket margins, reducing the number of hospital-acquired infections, lowering hospital readmissions, etc.

Bill blog pic 4 6.23.14

Figure 3:  Integrate all of your internal and external data in the data lake

See my blog “How I’ve Learned To Stop Worrying And Love The Data Lake” for advice about how to leverage Hadoop to create a data lake. The data lake not only supports the integration of data across your operational applications, but also enables the integration of other internal data sources (consumer comments, email conversations, clinical studies, technician notes, prescriptions, web logs, etc.) with external data sources (social media, mobile, blogs, newsfeeds, third-party data, data.gov, etc.).

Embracing an Analytics (Data Science) Culture

But collecting the data isn’t enough. You also need a corporate culture that seeks to deploy data science within your key business functions; analytics integrated into your key business processes to uncover new insight into the “strategic nouns” of your business—your customers, products, partners, campaigns, stores, wind turbines, jet engines, ATMs, trucks, etc.

You need a modern architecture that supports your traditional data warehouse and business intelligence environment, while expanding your data and analytic assets to include advanced analytics and data science capabilities.

Bill blog 5 6.23.14

See my blog “Modernizing Your Data Warehouse Part 2” for more details about how to leverage Hadoop to modernize your data warehouse environment while adding a complementary, advanced analytics sandbox architecture.

Monetizing Customer, Product, and Operational Insights

In the end, the best way to achieve competitive differentiation and uncover new monetization opportunities lies in how you are delivering the insights that you gain from your data lake and advanced analytics environment (see Figure 4).

Bill blog 6 6.23.14

Figure 4: Analytics powering the Third Platform and the Internet of Things

The rise of the “Third Platform,” those pervasive smartphones and mobile tablets, are enabling organizations to deliver actionable insight to customers, partners and front-line employees alike. It’s enabling organizations to optimize key business processes and capitalize on new monetization opportunities. And for many leading organizations, it’s the culmination of IT becoming a strategic partner to the business. Instead of replicating existing business processes within your transactional systems, it enables IT to transform those key business processes and empower new business models.

For an example, see my blog “The Actionable Retail Manager Dashboard:  Next Generation BI,” which talks about how to integrate the insight gleaned from your advanced analytics system to create the next-generation dashboard—a dashboard that not only delivers business insight, but transforms the dashboard from a passive monitoring tool to a prescriptive recommendation engine to help empower front-line employees and management.

Summary of Best Practices

  1. Leave your operational systems in their silos. Don’t waste time and effort trying to integrate your disparate monolithic operational applications, except to ensure that they are using the same product, customer, store, and other master files.
  2. Integrate the data from your operational applications into a data lake that simplifies the integration problem (it’s easier to integrate data than applications). Focus your IT resources (people, time, and money) on those areas of data integration that create business differentiation, not just business parity.
  3. Augment the value of your operational data by adding new structured and unstructured data (both internal and external) to your data lake. And in the process, develop a corporate hunger for grabbing and integrating data into the data lake, even if you’re not yet sure how you might leverage that data.
  4. Finally, focus on:  building differentiated products; optimizing key business processes; monetizing key customer, product, and operational insights; delivering a more compelling, more engaging customer experience; and empowering front-line employees to make decisions that drive business value.

https://infocus.emc.com/william_schmarzo/app-integration-vs-data-integration-who-will-win/

Duckie.me – Rubber ducking as a service

Rubber ducking is a nickname given to the process of brainstorming.. I can’t describe how may times.. I have tried giving technical explanations to nontechnical users.. And throughout that verbal process.. I always learned things I couldn’t have imagined.

The concept of ‘rubber ducking’ means.. That instead of WASTING THE TIME of your best customers.. It is more efficient to NOT waste the time of another person.. They didn’t really contribute anyways.

We are taught to describe our problems to an inanimate object.. In the hopes that we can still produce the valuable insights.. Merely by talking to an inanimate object.

I have used this thought process to help me understand many problems that SEEM insurmountable. Rubber ducking is what keeps me SANE.

NICE TO SEE THAT OTHER PEOPLE ARE PAYING THE SAME RESPECT TO THIS CONCEPT.

http://duckie.me/

http://reddit.com/r/programming/comments/2ba5q6/duckieme_rubber_ducking_as_a_service/

Why can't I *SEARCH* for a particular Virtual Machine across all HOSTS??

I have hundreds of virtual machines.. Literally.. Hundreds.  I was looking to kick off a project today.. and I couldn’t for the LIFE of me.. find the VM that I’m looking for.  That is just SAD.

I honestly.. currently.. only have FIVE host machines..  I think that I found the right next almost-free machine for virtualization.

Being able to get up to 32gb RAM for just another $160.. that’s what I’ve bene waiting for ALL my life.  Getting it up to a couple of TB ALL SSD.. This sweet cheap server has NINE Sata Ports. And PLENTY of room for expansion.

I really need to get into an E5 sometime. BAD.

The last couple of PCs I bought.. out of Portland.. 5 HP Proliant ML150 G5 for 300 total.

Looking forward to spending more time on Docker. and Routing.. Proxies.

 

Docker 1.0 – The Biggest Disruption in Tech for 2014

I think that Docker is clearly the most important piece of software to come out in the past 20 years. I look forward to using Docker for automation, deployments, continuous integration.. Docker is a fascinating tool.. Really look forward to using it everywhere I go.

https://opsbot.com/hello-docker/

http://reddit.com/r/docker/comments/2av66p/docker_10_the_biggest_disruption_in_tech_for_2014/

Remembering Reed Jacobson

Yes. I remember going to  sales meeting in Bellevue in July 2001… When I was in the restroom, I said something to him about how impressed I was with Analysis Services.

He ended up getting me a waiver for my first class at SqlSoft.com and I met with him once or twice after that.

He loved the Roast Beef and Chipotle from Briazz. Cheers Reed. Thanks for everything.

Aaron Kempf

http://sqlserverbiblog.wordpress.com/2014/07/16/remembering-reed-jacobson/

France to force programming teaching starting at age 10

Looks to me like France.. Of ALL COUNTRIES.. Is forcing kids to learn how to program.  This is fascinating. I was about 10 when I started programming.  I just wish that my programming education continued through to today.

I learned on BASIC. I love BASIC.  Realistically.. I am sure these kids will be learning Python.. Not BASIC.

I wish that there were more programming offerings everywhere. Not even Tacoma Community College has any REAL options for me to expand my programming knowledge.

I firmly believe that EVERY SINGLE PERSON IN THE WORLD should know how to program.  Maybe I am egocentric in this belief. I don’t care.

Most people look down on programming as something nerds do. Maybe through mandatory conscription of everyone.. Will help to get MOST PEOPLE better in tune with the needs of their employers.

http://www.lemonde.fr/societe/article/2014/07/13/l-apprentissage-du-code-informatique-sera-propose-au-primaire-en-septembre_4456197_3224.html

http://reddit.com/r/programming/comments/2alkgq/france_to_enforce_basic_programming_teaching/