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January 6, 2015

Oracle “may struggle” in the cloud computing space

The Campaign for Clear Licensing urges Oracle to “improve trust and communication” with their customers.

By Amy-Jo Crowley

Concerns over vendor-lock in and customer trust could make it difficult for Oracle to maintain its share in the cloud computing market.

That is according to an open letter from the Campaign for Clear Licensing (CCL) to Oracle’s CEO Larry Elliot and the board of directors, urging them to "improve trust and communication" with their cloud customers.

"We fear that if Oracle does not address these concerns then the company’s ability to meet its stated $1bn cloud sales target next year, together with the longer term outlook for its cloud computing business, will remain in doubt," the letter states.

"We strongly believe that failing to address these concerns will hamper Oracle’s ability to persuade its customers to adopt its cloud computing services, as most are concerned that cloud computing services will lock them into Oracle even more than they already are."

The warning follows a CCL survey published in November 2014, which claimed that those surveyed view their relationship with Oracle as "hostile" and filled with deep-rooted mistrust.

It found that 92% blamed the database giant for failing to communicate license changes, while just 8% described their relationship with the company as ‘acceptable’.

The letter also addressed Oracle’s cloud business, which grew by 45% to $516m in the last quarter ending in November 2014.

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"You must be commended for growing your cloud business by 45% in the last quarter, and clearly Wall Street is impressed with this progress," the letter said.

"However, with just 5% of your revenue deriving from cloud services you have a long way to go before cloud becomes a major part of your business, and we believe there are significant challenges to overcome along the way."

The letter added that Oracle’s own License Management Services organisation (LMS) is "largely unhelpful to customers during an audit", and that licensing changes are "often poorly communicated".

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