Play nicely with others, Oracle told amid SA data centre plans

Admire Moyo
By Admire Moyo
Johannesburg, 18 Sept 2019
The new Oracle building in Woodmead, Johannesburg.
The new Oracle building in Woodmead, Johannesburg.

Data residency issues are the main reason behind Oracle’s plans to establish data centres in South Africa.

So say market analysts after the US-based enterprise software giant yesterday announced plans to build new cloud regions in South Africa, US, Canada, Brazil, UK, European Union (Amsterdam), Japan, Australia, India, South Korea, Singapore, Israel, Chile, two in Saudi Arabia and two in the United Arab Emirates.

To support its customers around the world, Oracle announced it plans to launch 20 new Oracle Cloud regions by the end of 2020, for a total of 36 Oracle Cloud Infrastructure regions.

The announcement was made at the Oracle Open World event taking place in San Francisco.

“We are delighted to announce that during 2020, South Africa will be one of the regions where Oracle will launch its Gen 2 Cloud Infrastructure to support our customers’ innovation journey,” says the company in a statement.

“This infrastructure will bring high performance and high levels of service to meet the needs of companies in the country as their commercial data-intensive applications migrate to the Oracle Cloud.”

The move comes after Microsoft in March opened two data centre regions in SA, becoming the first global provider to deliver cloud services from data centres on the continent.

Rival Amazon Web Services (AWS) is also looking to open data centres in SA next year.

Local requirements

Derrick Chikanga, senior analyst of IT services at Africa Analysis, comments that Oracle’s move towards opening local data centres has been necessitated by the need to adhere to local data residency requirements, particularly in the financial services industry, as well as the requirement to reduce latency and improve on data transmission.

He notes that due to security concerns around having workloads on the public cloud platform, most organisations such as Microsoft have established a local presence to alleviate such worries.

Chikanga points out that currently, Microsoft operates two regional cloud data centres in Johannesburg and Cape Town. Furthermore, he adds, the company made Microsoft Office 365 available on its regional data centres.

According to Chikanga, this is expected to attract more customers, as it will allow them to comply with data residency requirements.

“As such, rather than trying to compete with and dislodge Microsoft, Oracle has established a partnership with them to provide for seamless connectivity between Microsoft Azure and Oracle Cloud Infrastructure. This will enable the seamless shift of workloads across both platforms,” he says.

Niral Patel, Oracle SA's MD and technology leader.
Niral Patel, Oracle SA's MD and technology leader.

Cloud migration

For Kieran Frost, research manager at IDC, there are a number of ways to look at this move by Oracle – all of which are driven by its desire to migrate customers to the cloud.

Firstly, Frost says, two of the oldest objections to moving critical applications to the cloud centre around latency and data residency.

“While both of these objections are debatable in terms of their validity (given that, for example, we see banks moving critical applications to offshore public clouds), this move effectively quashes those objections, especially for tightly regulated or risk-averse organisations.

“Secondly, there’s a number of announcements that Oracle has made recently that are centred around their cloud strategy. In an interview in June, Arun Khekar [senior VP for business applications at Oracle for MEA and India] stated they’re aiming to get all of their 4 000 MEA customers to the cloud in the next two years.”

Frost adds that Oracle SA's MD and technology leader Niral Patel made it clear that the Autonomous Database was its bet on winning market share – a solution that was, until Oracle Open World, a cloud-only solution.

“Thirdly, having a local data centre can ease migration to the cloud. Oracle’s customers typically have extraordinarily large amounts of data – and a local data centre makes the import of data into that environment that much easier.

“Finally, there is something to be said to the value of the overall proposition of Oracle’s Cloud by including a local data centre. Oracle has a base of customers that includes many of the world’s largest multinational organisations – many of whom have regional/African head offices in South Africa.

“By building out a local data centre, Oracle can show these customers that their value proposition doesn’t exclude any operational elements of their organisation – effectively enabling the delivery of a unified experience,” says Frost.

For Adrian Ho, Ovum’s principal analyst, the main reason for Oracle to open local data centres is that enterprises want to deal with a local provider in order to meet data residency issues, especially with regulated industries.

“Latency is another issue for some applications. This is critical,” says Ho.

Major players

Chikanga notes that AWS, Microsoft and Google Cloud are the top three cloud providers globally.

Furthermore, he says, AWS has already made headway in the local cloud market by signing up Standard Bank as a customer, as well as establishing a partnership with Vodacom, which will make Vodacom both a customer of AWS and a reseller of AWS services.

In addition, Microsoft partnered Standard Bank to assist the bank in migrating its workloads to the cloud.

“However, Oracle will probably look at improving its own service offering to the local market, through its data centres, rather than try compete with the major service providers,” Chikanga notes.

Frost points out that during Oracle Open World, presentations centred on the partnership between Microsoft Azure and Oracle, showcasing how customers can enable a hybrid cloud approach between Oracle Cloud Infrastructure and the Azure platform.

“We’re seeing similar strategies from SAP, AWS, Sage and others – all of whom are beginning to understand that customers are looking for providers that can support interoperability with other platforms.

“The future is hybrid and multi-cloud in nature. Will Oracle get the same sort of scale as an AWS or a Microsoft Azure? It’s unlikely – but to ensure relevance to their customers, Oracle needs to be able to play nicely with the major cloud players,” Frost says.