very interesting perspective on Bi-modal operational model

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Path to the Oracle Cloud
Win-Win Solutioning using Engineered Systems and Cloud Machines
(and a little help from Gartner..)
Internal Only

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The Net-Net
Engineered Systems and Cloud Machines
are complementary innovations
They should be used that way, and sold
that way

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Agenda
• Paths to Cloud
• (Don’t) Go Fast and Break Things
• Pace Layers and Bimodal IT
• Solutioning with Engineered Systems and Cloud Machines
• Competing With Azure and OpenShift
• Looking at TCO, ROI, and BYOL
3

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Create New with
PaaS and IaaS
Move
Workloads
SixOracle Journeys to Cloud
4
Optimize
On-Premises1
Public
Cloud
2
3
5
4
Oracle Public
Cloud
Modernize
with SaaS
Oracle Public
Cloud
Cloud at
Customer
Your
Data Center
Your
Data Center
Your
Data Center
Your
Data Center
Your
Data Center
Born in
the Cloud6 New
Company

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Two Of The Journeys Start ‘On-Premises’
Optimize
On-Premises1
Public
Cloud
2 Oracle Public
Cloud
Oracle Public
Cloud
Cloud at
Customer
Your
Data Center
Your
Data Center
Led by Hardware, built on Engineered Systems and Appliances
Led by Tech, delivered by Cloud Machines

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But often it’s just One Journey....
6
Engineered
Systems
1
Oracle
Public
Cloud
Cloud
Machines
Your
Data
Center
Hardware and Tech Working Together,
Implementing Engineered Systems and Cloud Machines,
In the Customer’s Data Center

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Why View This From Garter’s Perspective?
• Worlds dominant ‘IT Advisory’ firm with clients in more than 11,000
Enterprises, 71% of the Fortune 1000, and 74% of the Global 50
• Gartner Research is developed from the responses of almost 3,000 CIOs
representing $250 billion in IT budgets
• Gartner Magic Quadrant methodology is a de facto standard for market
analysis in 140 technology segments
• Your customer is likely to listen to them
• They’re delivering the ‘Path to Cloud’ message for us (!)
7

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Facebook, 2012

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Facebook, 2014

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Gartner talks about this as ‘How to Be
Digitally Agile Without Making a Mess’
They use two complementary principles to
frame it : Bi-Modal IT and Pace Layers

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‘Pace Layers’ are just another way of
viewing Enterprise Architectures
Popularized by Gartner, Pace Layers view
IT systems as a set of layers organized by
function, longevity, and importance

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Pace Layers : Systems of Record
• Established packaged applications
or legacy homegrown systems that
support core transaction processing
and manage the organization's
critical master data.
• The rate of change is low, because
the processes are well-established
and common to most of the
organization, and often are subject
to regulatory requirements.
Oracle Confidential – Internal/Restricted/Highly Restricted 12
Systems of Record
PaceofChange

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Pace Layers : Systems of Differentiation
• Applications that enable unique
company processes or industry-
specific capabilities.
• They have a medium life cycle
(1 – 3 years), but need to be
reconfigured frequently to
accommodate changing business
practices or customer requirements.
Oracle Confidential – Internal/Restricted/Highly Restricted 13
Systems of Differentiation
Systems of Record
PaceofChange

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Pace Layers : Systems of Innovation
• New apps that are built on an ad
hoc basis to address new business
requirements or opportunities.
• Typically short life cycle projects
(0 - 12 months) using departmental
or outside resources and consumer-
grade technologies.
Oracle Confidential – Internal/Restricted/Highly Restricted 14
Systems of Innovation
Systems of Differentiation
Systems of Record
PaceofChange

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Pace Layers Allow You To Think About Spending
• Gartner believes that Systems of
Record and Differentiation currently
consume about 95% of IT spend
• Much of this spending is captured
as a Tangible Capital Asset and
depreciated over decades
• This spending is typically controlled
by the big Systems Integrators and
locked into long term contracts
• Almost always involves Oracle
Provided to the OCIO by Oracle for Internal Use Only 15
$
$$
$$$
Spending

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Systems of Record Usually Have Big Budgets
Agency Project Anticipated CAPEX
BC Lottery Gaming Management System $93 Million
Health Authorities Clinical and Systems Transformation $480 Million
BC Ministries Integrated Case Management $182 Million
ICBC Business Transformation Program $318 Million
Ministry of Health e-Health $216 Million
BC Hydro Smart Metering and Infrastructure Program $780 Million
NRS Ministries Natural Resource Permitting Project $57 Million
VIHA iHealth $100 Million
Provided to the OCIO by Oracle for Internal Use Only 16
GETTING IT RIGHT: ACHIEVING VALUE FROM GOVERNMENT INFORMATION TECHNOLOGY INVESTMENTS
Exhibit 3: Recent IT-enabled projects in B.C. with $50 million or more in capital

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$
$$$
$$
$$$$
$$$$$
$$$$$$$
$
$$$
‘Renovating the Digital Core’
• Reduce ‘Total Program Costs’ and
improve SLO’s by optimizing
existing Systems of Record with
Engineered Systems & Appliances
• Frees up ongoing spending to fund
innovation and differentiation
with Cloud Machines
–E.g. Dev/Ops, Mobile, Analytics,
Big Data, Machine Learning
17

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Bimodal is the practice of simultaneously
managing two separate but coherent
styles of work: one focused on situations
of greater predictability, the other where
exploration is required.

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Mode 1 vs. Mode 2 Cultures
Mode 1
• Ops Focused
• SLAs & SLOs
• Systems of Record
• Core DC Services
Mode 2
• Developer Focus
• Dev/Ops & CI/CD
• Infrastructure as
Code
• Systems of
Innovation

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Pace Layers and Bimodal Operation are Complementary

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https://blogs.sap.com/
Many Other Vendors Leverage These Models

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Not Everyone Likes Them, But They’re Sticking With It…
• Bimodal IT is controversial and some Gartner competitors poke fun at it
• Many developers and cloud vendors claim that everything should be
Mode 2, and that Mode 1 is for losers.
• In response, Gartner is doubling down and the latest Magic Quadrants
even describe vendors in terms of Mode 1 and Mode 2 usage
< Oracle Cloud Infrastructure Compute> will appeal to both Mode 1 and Mode 2
customers, especially those with performance needs that are well-suited to bare-metal
servers... The < Oracle Cloud Infrastructure Compute Classic > service will appeal to
Mode 1 customers.
Magic Quadrant For Cloud IaaS, June 2017
22

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Pulling It All Together..
Low ChangeHigh Change Medium ChangeChange Rate
Mode 1Mode 2Mode
Optimization & MaintenanceNew Capabilities & ApplicationsActivity
Cloud Machines Engineered SystemsInfrastructure
Third Party Developers Internal DevelopersDevelopers Contractors & SIs
External Facing Internal FacingAccess
Systems of
Record
Systems of
Innovation
Systems of
Differentiation
WaterfallDevOps AgileDev Style

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So How Can You Use This At an
Actual Customer..?
E.g. The Province of British Columbia

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Step 1 : Understand The Benefits of Two Operating Modes
Existing Engineered Systems
Mode 1Mode 2
Oracle SPARC and x86 Servers
HPOperated

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OracleOperated
Step 2 : Implement a Bimodal Environment
OCM Compute
and Storage
Exadata CM BDA ZDLRA
ICM HIED ED PRNRPP
Existing Engineered Systems
ACS GW
Platinum Ops (and RTU)
Mode 1 : Systems of Record & Common Services
EM
OCM
Control
Plane
Cloud Ops & Support
Mode 2 : Dev/Ops, Systems of Innovation & Differentiation
Oracle SPARC and x86 Servers
HPOperated
PLIS PLIS

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OracleOperated Step 2 : Extend Mode 2 to Systems of Record
ICM ED EDNRPP
OCM
Legacy Environments (SPARC & x86)
HPOperated
HI PR PLIS PLIS
ACS Gateways
EM 13c
Platinum Ops (and RTU)
Mode 1 – Systems of Record, Common Services
Cloud Ops & Support
Mode 2 – Dev/Ops, SoI, SoD, SoR
CAS
PLIS
PR
HI
ED
NRPP
BYOL ?

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The Alternative : Innovation Happens Elsewhere
ICM HIED ED PRNRPP
HPOperated
Azure Stack on HPE
Business as Usual
Red Hat OpenShift on HPE
• Oracle Does Business
as Usual
• Microsoft and Red
Hat drive Innovation
• New apps are built on
Azure and OpenShift
• Oracle apps and
infrastructure are
slowly retired

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Oracle Innovates
ICM HIED ED PRNRPP
HPOperated
Azure Stack on HPE
Platinum (and RTU)
Red Hat OpenShift on HPE
.. on stable, consistent
infrastructure
Oracle helps the
customer go fast…
Cloud @ Customer
OracleOperated
M8 Refresh

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Pace Layers and Bimodal thinking
can even impact how we think
about Engineered Systems and
Cloud Machine TCO, ROI, and BYOL
30

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Exadata PM team provides a spreadsheet to model out the customer’s options

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TCO : Customer Purchases Licenses
• Exadata : Province purchases Exadata ¼ Rack HW and SW at negotiated discounts, licensing the minimum 28
OCPUs for DBEE, RAC, Partitioning, Diagnostic and Tuning Packs. Pays DXC $2,500 per month in hosting fees.
• ExaCM : Province subscribes to ExaCM at 50% discount. Minimum 22 OCPUs, plus 6 OCPUs bursting 25%
TCO : Customer Uses BYOL for Exadata

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Customer Purchases Licenses : Year 1 - 5
• Exadata : Province refreshes Exadata ¼ Rack hardware at negotiated discounts and pays maintenance on 28
OCPUs of DBEE, RAC, Partitioning, Diagnostic and Tuning Packs. Pays DXC $2,500 per month in hosting fees.
• ExaCM : Province subscribes to ExaCM at 50% discount. Minimum 22 OCPUs, plus 6 OCPUs bursting 25%
Customer Owns Licenses : Year 6 - 10

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Provided to the OCIO by Oracle for Internal Use Only 34
@ Customer
The CIO