Oracle’s and IBM’s hybrid cloud defense may not hold

Why AWS, Microsoft, and even Google are targeting on-premises—with IT buy-in

Both Oracle and IBM have missed out on a $10 billion U.S. Department of Defense cloud contract. Amazon Web Services and Microsoft remain in the running. While $10 billion is a big prize, the bigger concern is that Oracle and IBM are increasingly out of the running for the much larger grand prize of $117 billion in cloud spending (across IaaS and PaaS) expected by 2021, according to IDC.

While their incumbency in traditional data center workloads makes them contenders for cloud contracts in a hybrid cloud world, this DoD indifference to their cloud future suggests something is fundamentally wrong with their product strategies.

That “something” may be as simple as “spending.”

It’s a hybrid world for IT and cloud vendors alike

The good news for IBM and Oracle is that both have sizeable legacy businesses. While this may seem a liability in an increasingly cloud-first, developer-driven world, the reality is more complicated. According to a recent Credit Suisse survey of IT executives, 80 percent of workloads are still run on-premises, with some workloads that were pushed to public cloud coming back to roost in private data centers. As much as enterprises may want to be sexy and cool in the public cloud, they simply can’t get there fast enough.

Nor do they always want to.

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