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On June 22, 2015, Oracle Corp. announced that it is expanding its IaaS and PaaS cloud services, just weeks after reporting that its cloud-based revenues are growing strongly – often in the double-digits. In effect, the company has given cloud services “the green light” as it looks to grow hybrid-cloud revenue based on linking on-prem/off-prem datacenters via Oracle cloud services.

Significantly, Oracle announced a new service within the Oracle Database Cloud , based upon Oracle’s Exadata engineered system, as a ready-to-go IaaS cloud service.

Engineered systems combine hardware and software in specific configurations that are optimized for certain types of applications, databases, analytics and performance envelopes. Neuralytix notes that most Exadata systems run Oracle Linux on Oracle-designed x86 servers to support explicitly optimized database and transactional application workloads.

This IaaS announcement was made amid a group of cloud announcements that filled out Oracle’s PaaS offerings, providing middleware and database services to end-users that would otherwise be provided by in-house IT systems. Newly available Oracle Cloud services include Oracle Database Cloud – Exadata Service, Oracle Archive Storage Cloud, Oracle Big Data Cloud, Oracle Integration Cloud, Oracle Mobile Cloud, and the Oracle Process Cloud.

Each of these is useful, expanding Oracle’s cloud portfolio – but Neuralytix believes they should be viewed as evolving aspects of Oracle’s overarching cloud strategy, which has been expanded over the last two years to support hybrid clouds for on-premises/off-premises computing.

The company recognizes the opportunity associated with hybrid cloud computing, although it once worried that cloud services would detract from its traditional software-license business for the enterprise data center. Today, Oracle has 19 data centers worldwide, to provide localized cloud services across geographic regions. On June 17, 2005, it reported that it had quarterly IaaS revenue of $160 million, an increase of 31% year-over-year – and a part of its $579 million in quarterly cloud services revenue (inclusive of IaaS, PaaS and SaaS) in Oracle’s Q415 quarter.

Multiple Tiers of Cloud Services

Oracle is adding Engineered Systems IaaS services to two existing tiers of cloud services. Currently, Oracle offers as a first tier a typical multi-tenant IaaS product that competes directly with Amazon Web Services, Microsoft Azure, IBM/SoftLayer, and Google Cloud Platform — and is designed for departmental and other low performance applications.

The second tier is tuned for enterprise applications and more demanding workloads. The new addition to Oracle’s cloud services offerings creates a third tier of dedicated compute and storage resources based on Oracle Big Data Appliance and Oracle Exadata Engineered Systems, both of which are optimized for Big Data Management and mission critical databases. In effect, Oracle is extending its IaaS offerings with Engineered Systems-level cloud services, in a direct challenge to its IaaS competitors that leverages Oracle’s high-end data management technology, optimized to run on Oracle hardware.

This time around, Oracle is also leveraging its intellectual property (IP) in Oracle Linux, Java and Solaris to reduce the system cost, improving the total cost of acquisition for competitive hardware/software systems from other vendors. This means that Oracle is optimizing the Oracle Cloud Solutions that are competing with those of IBM and Cisco for converged infrastructure solutions, because the software component of the engineered systems is owned and controlled by Oracle – and no license costs are owed to third-party suppliers.


By adding the Oracle Exadata tier to its cloud product line, Oracle is positioned to address the needs of the most demanding computing environments – including mission-critical environments.

Many IT organizations have been hesitant to place their high performance, mission-critical workloads (applications and databases) into cloud platform environments. Part of the reason for this is that cloud platforms, especially IaaS, are built around generic server/storage platform resources that require fine-tuning to be appropriate for high demand computing environments.

This does not mean that current platforms can’t, or won’t, be tweaked to fit these demands. But Oracle portfolio of cloud services will allow customers to expand resources supporting Oracle applications, databases and middleware quickly – and to link them back to enterprise datacenter systems. Oracle is using VPN links that tie on-prem and off-prem systems together in a secure and seamless manner, a critical part of end-to-end hybrid cloud support.

Why are both styles of computing being supported? Neuralytix expects many customers to retain their on-prem systems, often for reasons of policy associated with governmental compliance and data governance rules. Oracle’s cloud services will provide scalability and IT flexibility – but will fit with existing on-prem systems for end-to-end connectivity. For example, mobile applications running in the cloud will link with back-end on-prem database systems in enterprise data centers.

Speed to Deployment

By building on the high performance Oracle Exadata platform, Oracle provides customers with a ready-to-deploy cloud systems option that is already optimized for specific high-demand workloads.

Rather than acquiring the engineered systems for installation on-premise, customers for the new cloud service will have Oracle build, deploy, and maintain the IaaS service – allowing them to scale more easily than if they have to expand into an on-premises multi-rack Exadata system.

When acquired as a service, these scaled-up system resources will be paid for on an as-needed basis. It’s interesting to note that Oracle is deriving an increasing amount of its software revenue from subscription cloud services, year by year, per its published online quarterly financial reports.

The new Engineered Systems IaaS product also places customers on dedicated hardware systems. This alleviates some of the concerns of customers in regulated industries or those who are running applications requiring high degrees of privacy, when deploying on cloud platforms, especially multi-tenant cloud platforms. This will avoid the resource contention, and security concerns, that might otherwise exist in multi-tenant cloud hosting. Neuralytix also notes that Oracle will leverage the multi-tenant cloud hosting features of the Oracle 12c flagship database in these IaaS offerings, which support workload isolation.


With this new addition to its cloud platform product line, Oracle is making cloud services more attractive to customers who often can’t deploy mission-critical applications to the cloud for reasons of performance, management or security – but who want to leverage ready-to-go IaaS or PaaS services. This is especially important to large global enterprises and to governmental agencies worldwide – many of which already have key data stored in Oracle databases, or use Oracle enterprise applications.

With a cloud service based on the Oracle Exadata Engineered Systems, Oracle now combines the advantages of quickly scaling up highly optimized, high performance, systems necessary for many mission critical and demanding workloads. It provides a cloud model that delivers cost flexibility and reduces the need for organizations to build and manage similar systems in their own data centers. This will allow Oracle to help existing customers – or prospective ones – to deploy applications and scale up services in a secure and performant environment, allowing them to gain the benefits of end-to-end cloud computing without having to custom-configure hybrid cloud links.


Jean S. Bozman, Director of Infrastructure Research at Neuralytix, contributed to this research note.


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