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Why the Oracle NetSuite deal makes sense?

Originally published on the Cloud ERP Advisor blog.

News broke that Oracle entered into a definitive agreement to acquire NetSuite for approximately $9.3 billion. Coming from a background in both the Oracle and NetSuite ecosystems I’d like to offer my insights into why this is a good move for both companies and how it will help customers. Since there are a number of questions out there, I thought a Q&A format would be appropriate.

Oracle has traditionally been for large customers, what’s going to happen to middle market companies?

No fear. Whether you’ve noticed or not, Oracle has had a strong reach into the middle market for some time now. Oracle’s JD Edwards product has been under transformation for several years now to bring it down market. They’ve come from the old green screen to a modern system that is more attractive to the SMB space and can stretch across the revenue spectrum of companies. With that transition they’ve become more attractive for middle market customers and they’ve secured a strong base of customers. Similarly with their Siebel acquisition for CRM, they used it to start to build a CRM application that started to rival Salesforce and Microsoft. Part of their success was catering to the middle market. In my opinion, over the past 10-15 years, Oracle has made a number of moves to make itself stronger in the middle market. The NetSuite acquisition is the biggest to date and solidifies Oracle as one of the strongest cloud software providers for middle market companies.

Will Oracle discontinue NetSuite?

No. There’s too much value in NetSuite. With over 10,000 customers running on NetSuite, it doesn’t make sense for Oracle to stop selling and supporting NetSuite. I’ll address roadmap concerns later, but some people have seen a smooth transition into Oracle only to find diminished support or a fading out of the product years down the road. I don’t anticipate this with NetSuite. I see it as a complimentary product to Oracle’s existing business and one that NetSuite will thrive in. Oracle has said that it will continue to invest in R&D with NetSuite, so continue to look for increased support and functionality of the product. Oracle founder, Larry Ellison already owned 40% of NetSuite. Oracle has been somewhat rooted in NetSuite from day one. NetSuite is built on an Oracle database. When it comes to databases, Oracle the best in the business. That’s why NetSuite founder and CTO, Evan Goldberg knew if he was going to build a cloud company he had to do it on a solid foundation and that was on an Oracle database.

Is this a play to transition NetSuite customers to Fusion?

I don’t think so. Evan and the team at NetSuite built one integrated business system on a single code base in the cloud 18 years ago. Companies ever since have been trying to copy what NetSuite has done and have been fairly unsuccessful at it.  This really is a boost to Oracle’s claims to the largest cloud company in the world. If there were doubts before, those should be erased with this acquisition as this puts Oracle in the driver’s seat for being the largest and best cloud software company in the world. This will give customers across all industries the ability to leverage best of breed ERP & CRM solutions in a cloud, on-premise or hybrid model.

Can you and should you still purchase NetSuite?

Yes, you can still buy NetSuite from either NetSuite or one of its partners. In fact, during the transition period might be the best time to get in with the lowest cost. You could potentially see deeper discounts on software which would make it an ideal time to get your foot in the door.

If you’re currently evaluating NetSuite as an ERP solution, should you wait until the dust settles before you pull the trigger?

While I can understand some hesitancy here, I wouldn’t delay the purchase of a system that you’ve already budgeted for and evaluated. Since there’s no reason to believe that Oracle will discontinue the product, you can move forward with confidence that NetSuite is still the #1 cloud ERP system in market today. If you look at Oracle’s track record with these types of products, it leads you to believe that NetSuite will continue to be positioned as the leader in cloud ERP solutions for decades to come.

Will Oracle keep the NetSuite partner community?

Yes, according to information released from the acquisition, it fully intends to keep the existing NetSuite partner community. This aligns well with the existing Oracle partner network and adding more partners into this network will only increase the ability to serve Oracle’s customers with the best levels of service from partners who not only understand the software, but have a solid foundation of understanding how business works. No matter what the product is, RSM has made a healthy business on helping companies understand both the business and the technology. That’s why Accounting Today again has recognized RSM as the #1 VAR in their VAR 100 list. Now more than ever, it’s important to find a great partner to work with. Traditionally, software providers haven’t been great at implementations of their products because they lack the business knowledge to tie everything together. Sure, they know the software, but without the extensive knowledge of how the business runs, they’re missing a key part of the equation. That’s where the partner ecosystems provide the most value. They know how the business runs and can tie the technology to align with the business.

How should current NetSuite customers handle support issues?

Business as usual. You can continue to reach out to and contact your existing support contacts. For RSM’s NetSuite clients, you can reach out to your local representatives for assistance.

What is the plan with the NetSuite product road map?

I’m interested to see what happens here. Oracle will provide a platform to be able to expand NetSuite faster on a global scale as well as get into industries where it typically hasn’t been as strong. For years, NetSuite has been trying to move up market to serve more enterprise level customers. This is a solid fit to be able to leverage Oracle to accelerate this. NetSuite has had a track record of two releases per year adding additional functionality to its customers. I hope this continues as it has proven to be a significant value add to NetSuite customers in taking advantage of new features and functionality to help them compete in the marketplace. On a global scale, for companies to be able to leverage the entire breadth of Oracle’s technology stack will help create a better environment and give more opportunities to expand quicker and deploy solutions that will allow customers to gain more market share.

By: Brent Knowles – National NetSuite Solution Provider

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