Rewards program provider taps Oracle IaaS for app migration
Oracle struggles in IaaS against AWS and Azure, but one Oracle cloud customer said its move there is a success, albeit within an overall multi-cloud strategy.
Oracle lags AWS, Azure and Google Cloud in IaaS market share, but it could gain a stronger foothold with wins from customers as part of a multi-cloud strategy.
Alliance Data Systems provides loyalty program data for retailers, with revenue of $7.7 billion and about 20,000 employees. Alliance moved to Oracle Cloud Infrastructure (OCI) a couple years ago as part of a broad-based cloud migration strategy. It operated back-office applications such as PeopleSoft and Hyperion from a data center managed by a services partner, but when that relationship soured Alliance chose not to renew the expiring agreement, according to Darren Linden, senior director of IT services at Alliance.
Instead, the Plano, Texas-based company moved the applications to OCI, which is the second generation of Oracle's IaaS. OCI, initially rolled out in 2016, improved upon Oracle's first attempt on many fronts, such as networking, storage options, high-performance computing support, compute performance (including bare-metal instance options) and cost.
For its back-office apps, Alliance already uses Oracle's Exadata database appliances, which combine transaction processing and analytic workloads in the same machine. With OCI, Alliance could move those application workloads to a private Exadata-based database cloud, with all management handled by Oracle, Linden said. Middle-tier and client-side application components use a public compute environment on OCI.
Alliance also upgraded its Hyperion and Oracle Business Intelligence Enterprise Edition implementations as part of the move to OCI.
Darren Linden
"We took advantage of the move and said, 'Let's also erase as much technical debt as possible,'" Linden said. "If we're going to move it, let's upgrade what we can."
Alliance completed the five-month migration effort last year, and so far, so good, Linden said.
The move also saves Alliance a significant amount of money. It's on track to save $1 million per year compared to what it spent on the previous environment, Linden said.
OCI was the best target for Alliance's Oracle-centric applications, but about 50% of the company's IT assets are aligned with AWS, Linden said. OCI makes up about 45%, and the other 5% is on Microsoft Azure.
The mix is both a strategic hedge and a nod to reality. AWS was more mature from a partner ecosystem standpoint for Alliance's security platforms and content management software, Linden said.
As a prominent early customer of OCI, Alliance may experience something of a honeymoon, as Oracle invests deeply to ensure their success. But Linden is confident it will continue long term, and cited recent conversations with Oracle executives who indicate that the company is aggressively recruiting talent from AWS and others.
"I think they're bringing in very good [mind share] to continue this momentum," he said.
Oracle's IaaS story is far from fully written
OCI has a small market share, but the technology that it underpins is solid, said Deepak Mohan, an analyst at IDC. The challenge for Oracle is to expand OCI's capabilities, rate of innovation and geographic footprint. "It's not just EC2 and S3 that drive people to AWS," he said.
While most end users don't tap every new feature immediately, they tend to choose a cloud with the intent to try more advanced features later, Mohan said.
We took advantage of the move [to Oracle IaaS] and said, 'Let's also erase as much technical debt as possible'.
Darren Lindensenior director of IT services, Alliance Data
It should not be hard for Oracle to grow OCI's partner ecosystem, given its long history of partnerships on other fronts, Mohan said. Still, for now Oracle's main goal for OCI is to upsell and cross-sell into its installed base versus try to find brand new opportunities. For that it should have a captive audience for the next couple of years, Mohan said.
And while Oracle has made much of OCI's price-competitiveness compared to AWS, it's important to put those statements in context.
"They keep highlighting cost [but] it's for specific types of workloads," Mohan said. "They aren't anywhere close to the entry-level price point in the market. They specifically mean that for the workloads they target, they offer the best price point."
Oracle isn't interested in the low end of the market where AWS, Azure and GCP have found success among startups and developers who want to ramp projects quickly and cheaply, Mohan said.
Much of cloud innovation occurs at the grassroots. It will be interesting to see if and how Oracle adjusts its approach to that segment of the market for OCI over time.
Darren Linden
