Disclaimer: I don’t focus on Oracle, Healthcare or Cloud markets. I focus on data and analytics. Oracle, like many other vendors, healthcare and man other industries, and cloud all touch data and analytics. I was Oracle Vendor Lead for just over two years, some 4 years ago.
Today’s news reported that Oracle has acquired medical records software company Cerner for $28.3 billion. It is Oracles largest acquisition to date, so said the WSJ article: Oracle buys Cerner for $28 billion. The deal still needs regulatory approval. This is a smart move in my view, shrewd in fact. But the WSJ and most press reports totally miss the point in my view.
Where most reports get it right, they report that Oracle has deepened its penetration into a big and growing market: healthcare. As the US population continues to age, we all have a vested interest in how this market develops. According to the WSJ article, that part of healthcare that addresses health records data and analysis is reported to be about $29 billion this year overall. But from here the reports go array.
The WSJ article suggests that this deal helps Oracle strengthen is weak cloud strategy. Apparently, Amazon dominates the cloud industry “with 46.5% global market share in 2020, followed by Microsoft at 14% and Google at 4.8%, according to International Data Corp”. The article continues, “The Oracle cloud platform consisted of only half a percent globally in 2020, said the research firm.” This is all confusing and totally misses the point, in my view.
First the data reported. This is cloud-sleight-of-hand. The bulk of cloud revenue reported and referenced here cover infrastructure, or IaaS in the tech-industry lingo. This includes pipes and wires and CPUs. This covers all the hardware needed to grab data, move it, store it, crunch it and share it. It is mostly hardware and what software there is helps manage the hardware. From a CIO perspective this is really important. The CEO does not really care. At its best IaaS helps realize the goal of elastic compute, which was the original sales pitch for cloud computing. But the industry has moved in even as most reporting has not.
The real battle is not how big one’s compute muscle is, once that becomes widely available. The real battle is what you do with it. Business processes and business decisions are what differentiates a firm. Again, using the IT-lingo, this means software such as platform as a service (PaaS) and software as a service (SaaS). For cloud this includes platforms to build applications that model processes and data and analytics to improve decision making. This includes things like ERP, CRM, industry specific apps as well as customized apps. But if you apply the same logic to this as we just did with elastic compute, and if the applications and data and analytics are widely consumable, the ultimate battle shifts to the data, or data as a service (DaaS).
DaaS is a much-maligned term. Cloud purists argue, with technical merit, that this is just a variant of SaaS or PaaS. Data, and analytics, are served up as software services just like business application services. While true that is not helpful. From a CEO perspective and non-tech specialists, data is easily discernible from software and hardware. Oracle has made a move that ultimately creates a hard-to-duplicate data beachhead in healthcare. It includes software, sure, but that will be in the cloud and at the end of the day, a buyer of such services or capabilities does not really care to know too much about the hardware or software running in a cloud. But we all deal in and use data.
As Oracle secures this data asset several things might happen. The acquisition might:
- Help with reducing the threat to the Oracle data base business as it takes a big database need off the market.
- Help drive a little more Oracle IaaS and quite a bit more Oracle SaaS and even PaaS revenue.
- Create more opportunities for the legitimization of DaaS.
- Provide a healthcare data platform for Oracle to build out an integrated suite from top to bottom (competing with Epic) of apps, data and analytics.
- Provide a template for Oracle and others to follow as they seek a similar ‘data-first’ strategy.
- Help more folks realize that the cloud battle for infrastructure is not the same as cloud battle for data. The real battle is going unreported, for the most part.
Given the destination will be cloud, Cerner clients might not be concerned with the database or the software itself, assuming Oracle can offer over time similar capability with its own tools and capabilities. This assumes Oracle will transition Cerner over to the Oracle stack (and is not even that important anyway). As such this is a very shrewd move. I struggle to find a gap in this deal. I am just surprised it has taken so long for vendors to wake up to where the real battle for the cloud is taking shape.
Previous blog’s on this topic:
- The Battle for Cloud Shifts to Applications and Analytics from Infrastructure (Mar 2021)
- The Cloud Wars – Finally? (May 2020)
- How to Talk Cloud to Business Leaders, part 2 (Feb 2018)
- How to Talk Cloud to Business Leaders (Dec 2017)
- The Battle for the Cloud Has Not Even Started Yet (Sept 2017)