Stack Wars: Episode IV - A new hope (for Red on Red)

Flash back to yesteryear - an old CIO client called me recently for no reason other than a LinkedIn prompt. It had been over 15 years since we had last met, so I popped in to see him for a chat and was amazed to find his manufacturing business...

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Flash back to yesteryear - an old CIO client called me recently for no reason other than a LinkedIn prompt. It had been over 15 years since we had last met, so I popped in to see him for a chat and was amazed to find his manufacturing business was still running on the same software and kit that I had helped him select about 18 years previously.

An IBM AS400 with JBA Financials, Supply Chain and manufacturing ERP software and other than the odd disk replacement, it hadn’t failed once in all that time. Meanwhile, the business had grown into a global leader. It felt strangely satisfying to know this but got me thinking about engineered stack vs best of breed.

The following day I found myself with a different client looking for solutions to a problem. His decision to go HP at the core of his datacentre operations some months earlier had, through no fault of his own, produced a significant TCO issue.

The Oracle re-pricing and subsequent uncertainty about the future path for Itanium had left his business case underwater and the Oracle response was (perhaps unsurprisingly) that he should refresh to Sun/ Exadata.

Starting to realise the difficult situation he faced, he decided to make a stand. And so, after proposing the move to his board, he has started the move away from a Red on Red stack.

“You must unlearn what you have learned”

A long time ago, in a galaxy far, far away (The Empire Strikes Back, to be precise) Yoda famously advises Luke Skywalker that to succeed, “you must unlearn what you have learned.” With our own brutal “Stack Wars” going on in the present, now seemed like as good a time as ever to consider this advice.

One old learning is that, despite being somewhat inflexible and proprietary, the AS400 stack really did just work. While not quite up to the integrated standards that Apple shows off today, it at least followed the mantra with some success.

The open systems movement and its associated evangelism also worked - for vendors such as Oracle, but also for the whole vendor ecosystem. And now we are witnessing a return to the “Stack” proposition through the launch of Exadata, Exalogic and whatever Exa**** that is announced next.

Integrated vs open

However, the biggest risk is not the renewed ‘integrated versus open’ debate. It is the battle for the “Cloud Stack”, with both a philosophical and practical debate about whether the Cloud Stack needs to be tightly integrated or whether a loosely coupled open stack will prevail.

Make no mistake; the “engineered as one” mantra of the Red on Red Exadata will be viewed by many as from the same proprietary camp as the AS400 was before. Some will buy into the thinking of the Exa* machines but others will fear the increased potential for lock-in.

Happy to Cross-sell

With Sun Microsystems under its belt, there is a risk that database software becomes commoditised and Oracle appears to be responding to that risk. The complexities and restrictions around licensing and the difficulties around support cancellation are providing to be highly effective in retaining clients, even when they are unhappy with the Oracle relationship.

It becomes even more difficult for a client to move away from Oracle when they are Red on Red. Those clients are and will continue to be the most valuable for Oracle and they will continue to push Exa* appliances to create even more Red on Red clients. Furthermore, Red on Red clients are easier to cross-sell to, and cross-selling has a much lower cost-of-sale than selling to net new clients.

Effective cross-selling is simply a highly effective way to increase share of wallet while still growing corporate margin. The Oracle full-year results fell short of expectation in hardware sales illustrating that Oracle are meeting some resistance to their strategy however the overall results show that some clients are certainly buying in. Expect to see them do everything they can to increase this trend.

In Stack Wars: Episode V - The Enterprise Strikes Back, we’ll be taking a look at how the war is heating up as vendors start to understand what’s at stake.

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