What is Happening?  As we put together the final plans for Saugatuck’s 2012 Cloud Business Summit (to be held on Nov 14 in New York City), a pair of critically influential IT Master Brands is helping to spotlight some important differences in how Cloud is being built, adopted, used and sold, and how this affects customers and partner ecosystems.

Within the past week, traditional IT Master Brands IBM and Oracle each made significant strategy, offering and business announcements regarding Cloud IT. Oracle’s Cloud pronouncements in particular marked noteworthy steps forward on multiple technology and business fronts for the enterprise application and DBMS leader.

While both IBM and Oracle are huge, established IT master Brands with dominant large enterprise IT and business presences, very traditional customer bases, and massive ecosystems, Saugatuck felt that Oracle’s Cloud positioning and efforts run the risk of being perceived as “me, too” while IBM has been able to build and push forward a Cloud position that appears much more forward-thinking and in tune with the pace and directions of Cloud IT adoption.

Were both companies competing only in traditional IT and business markets, we would not be concerned with such differences for long, as their substantial development and engineering resources (internally and within the ecosystems) would, over time, tend to equal one another and balance competitive advantages.

But this is the era of innovation and business at “Cloud speed” (read “ Defining “Cloud Speed” and its Impact on IT and Business”). Driven and enabled by Boundary-free Enterprises assembled around loosely-coupled architectures of Cloud, Mobility, Social IT and Analytics, the shape and pace of business is quickly stretching beyond traditional IT and provider approaches (read “ Saugatuck Survey Insights for the Evolving Boundary-free Enterprise™, Part 2”).

So we see IBM moving ahead and growing solidly with the market leaders, while Oracle also moves ahead – but much more slowly, and in long-term danger of losing enterprise IT relevance even as it improves its profitability.

Why is it Happening? The market perception of Oracle as a “me, too” Cloud provider is entrenched despite major and continuing developments by the company in all aspects of Cloud IT. Oracle offers a deep and broad range of Cloud-delivered and Cloud-enabled services, which contribute significantly to the company’s revenue stream and to improving/increasing its customer and partner base (1079RA, Announcing the Oracle Cloud – Position, Strategy and Impact, 07June2012).

But Oracle suffers from a long-standing market and media perception driven by company leadership that has, in the very recent past, not only played down the importance and utility of Cloud IT, but at times has been seen to actively disparage it. And while competitive, its Cloud-critical offerings have tended to be slow to reach the market, relatively limited in scope when compared to leading-edge offerings, and appeal mostly to late-adopting midsize and large enterprises.

Therein lays the nub of Oracle’s challenge and growth, especially when viewed in its competitive position against IBM. Oracle is profitable and will remain so by selling to its best (and huge) audience: late-adopting, traditionally-structured enterprises, which tend to move very slowly and extremely carefully when it comes to IT and business change. And which also make up the vast majority of almost all business in any IT marketplace.

So while we see IBM aggressively pursuing, acquiring, building and integrating Cloud-based and Cloud-driven business and IT offerings and capabilities (while also playing well to its large, established, traditional enterprise customers and partners) we see Oracle following slowly behind, leading the massive march of late adopters incrementally toward Cloud IT and business.

In both cases, the Cloud strategies and approaches are about keeping the vendors’ established bases happy. In Saugatuck’s experience, IBM tends to sell to and have larger numbers of leading-edge IT adopters, driven by its substantial shift in business strategy and enabled in equal parts by its services emphasis, growing portfolio of software and solution assets and its large systems / server technologies, which have been integrated with each other and with Cloud initiatives for years. While Oracle has no shortage of servers/hardware platforms, and a substantial services business, its acquisition-based strategy behind both has limited the time, exposure, and mutual strategic involvement between these business units that IBM has enjoyed for decades – something which has been an advantageous part of IBM’s culture since its first computer offerings.

For an extended version of this Research Alert, visit Saugatuck Technology.

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