In grid we trust

28 Oct 2003

Known for his brusque, confident statements, Oracle CEO Larry Ellison (pictured) said in recent weeks: “Grid computing gives you 10 times more capacity than you had before at one-tenth the price.” The statement might sound like music to the ears of most IT managers, but it is one that might one day pit the world’s largest enterprise software maker against the very hardware manufacturers on which its systems run.

Grid or utility computing is the latest trend sweeping the global technology industry. The idea is that very soon computing resources could be accessed on tap from any PC or mobile device through a grid of data servers in the same way that we access electricity or gas today. The concept is being championed by all the major hardware manufacturers like IBM, Hewlett-Packard and Dell and being driven by hardware breakthroughs such as the arrival of 64-bit processors made by manufacturers like Intel and AMD. It also adds a fresh front to the ongoing battle between Oracle and its arch-enemy Microsoft who both realise that operating systems for large clusters of computers is the way that businesses and the industry want to go.

However, while all the companies seem to be championing much the same idea, there are already indications that they are driving vastly different philosophies. Speaking from his headquarters in California, Ellison was not afraid to broach the subject early in the game. “It is about creating the illusion that all the machines in an enterprise are all one machine. A global business might have 200 servers. We aim to make it easy to manage these servers as it might be to manage only five of them. With the 10g family of software we are trying to make it possible to clone the software across the grid and manage the entire network as one resource. Grid control is critical to making grid computing work. Everything is automated for central control. However, other vendors are not taking this approach. We are taking a radically different approach.” As Ellison’s right-hand man and strategic enforcer Chuck Phillips puts it: “The grid is the co-ordinated use of many small servers to act as one large computer.”

Ellison continued: “IBM talks about On Demand computing and running applications like SAP across a multiple database server, but the approach they’ve adopted is to build bigger and more powerful servers. It is a form of financial engineering. It may mean using less processors, but at US$46,000 a processor. What we mean is you can add in cheaper processors to your grid as you like and have almost unlimited capacity. Grid computing as we see it is the first new approach to enterprise computing in 40 years.” To prove his point, Ellison pointed to Californian neighbour Electronic Arts whose popular online game The Sims is being accessed by more than 120,000 concurrent users across the globe at any one time. The system is being run on a cluster of 18 Intel/Linux database servers. “Electronic Arts is saving a fortune by using low-cost servers and as games subscriptions grow they can just plug in new servers as they need them,” Ellison said.

The 10g strategy represents in some ways a departure for Oracle away from the traditionally expensive nature of its enterprise towards an emphasis on cheaper but more powerful computing power. At last week’s Oracle World conference in Paris, the company’s executive vice president for EMEA Sergio Giacoletto, compounded the new low-cost strategy by revealing that the database maker was to release its Standard Edition core code to companies for less than €167 per user. “If you are a computer department, for less than €800 you can use an Oracle database and as the company grows it can develop into a grid enterprise.”

At a special round-table discussion in Paris last week, three of Oracle’s most senior vice presidents, including Safra Catz as well as Phillips and Giacoletto, outlined the company’s new direction. Giacoletto highlighted Europe as the perfect launch position for the new shape the enterprise market is taking. “The economic driving force behind Europe is the SME [small to medium enterprise]. There are some 28 million businesses in Europe, but only 300,000 of these employ more than 100 workers. The advent of Linux and its subsequent popularity show us that all of these companies want an application that has a low entry price and would allow them to grow their businesses.”

This will bring Oracle head to head with Microsoft in a domain traditionally dominated by the latter’s SQL Server database as well as the growing sensibility that managing clusters of computers is the way forward. Catz explained that the gauntlet has been thrown. “Microsoft have indicated that they will rise to the challenge. The challenge for us is to make sure that we are ahead of them in scalability, functionality and security, and the advent of Linux for the database has opened up possibility to run Oracle across major clusters for three quarters of the price. The only question is can Microsoft keep up?”

To establish a beachhead in Europe and roll out its 10g grid computing vision to the rest of the global enterprise market, Oracle revealed this week that it has entered into major joint R&D and marketing agreements. The company signed agreements with Fujitsu Siemens to speed up the integration of traditional legacy systems into grid computing and with Vodafone to launch mobile grid computing to vertical sectors like healthcare, government and utilities.

While all of this is happening, major changes in computing management are also spelling major changes in new geographic spheres of influence in the computer industry. While Ireland currently enjoys the knowledge that it is the largest exporter of software in the world, other regions such as India and Eastern Europe are hungrily eyeing a share of the business. So far, thousands of jobs have been shifted eastwards from the US and Europe as part of a global trend in outsourcing. Observers believe this is just the beginning. While Oracle employs 1,000 people in Ireland, the company last month revealed plans to axe 1,000 jobs. At the same time the company has doubled its workforce in India to 6,000 workers. Safra Catz also revealed in Paris this week that the company has begun opening software developments centres in Poland, the Czech Republic and Hungary. She said: “There is another project that is currently being battled out between India and Romania. We are moving east all the time.” The question for Irish readers is where is the IDA in all of this?

While the current impasse over Oracle’s attempt to acquire enterprise software rival PeopleSoft was meant to be taboo at the Paris event, questions were asked and answered. A frenzied bidding battle for PeopleSoft began last May when the company agreed to acquire ERP rival JD Edwards. Oracle stepped in with a bid to acquire PeopleSoft for US$5.1bn, which edged up to US$7bn as the bidding continued. However, in July PeopleSoft said it completed its acquisition of JD Edwards for US$6bn having acquired 88pc of shareholders’ stock. Oracle vice president and strategic thinker Chuck Phillips said that the company has not backed down from its intention to acquire PeopleSoft and is awaiting regulatory approval from the US Department of Justice and the European Union. Philips said: “We are optimistic. We have a good case and believe that our acquisition of PeopleSoft will improve conditions in the business.

“The hardest thing we face in the entire thing is regulatory approval. The transaction is not dead.”

By John Kennedy