Cloud Computing Challenges for Traditional Software Companies

Hello Everyone,

Today Oracle announced their earnings for the first quarter of 2017. Although the company posted earnings and revenue below analyst’s expectations, the company did point to continued growth in its cloud based businesses. Oracle like many other software companies is seeing a drop in its traditional software business while seeing strong growth in its cloud based offerings. According to the WallStreet Journal, Oracle’s total cloud revenue rose 59% to $969 million for the last quarter.

Traditional software companies are facing a difficult transition from selling traditional software licenses to its existing customers to now selling cloud based service offerings. Due to the competitive landscape in the cloud, profit margins are often much lower on cloud based systems and services. This poses problems for companies like Oracle while they transition to the cloud and away from traditional on premise software systems.

Oracle must also figure out how to make massive capital investments to keep up with the cloud service offerings from Amazon, Microsoft and Google. The good news for consumers of these services is the intense competition between these companies is lowering the cost of these services and these companies continue to innovate.

The continued growth in cloud computing is creating significant opportunities for software developers and operations personnel. If you would like to read further, check out our free white paper, Cloud Computing 2016 andBeyond.