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Oracle Bids for Cloud First Company NetSuite

Merger

**Editor’s Note: Please click here for a recap of the biggest channel-impacting mergers in May-June 2016.**

Oracle, the vendor long known for its on-premises portfolio of products, took another step Thursday in reinventing itself as a cloud company with the $9.3 billion bid for cloud-first vendor NetSuite, a company that lists Larry Ellison, Oracle chairman, and his family, as its biggest investors, holding 40 percent of NetSuite’s shares.

The deal is subject to regulatory approval, expected to close before the end of the year.{ad}

NetSuite provides a suite of cloud-based financials, ERP software and omnichannel commerce software to more than 30,000 companies in more than 100 countries.

This acquisition bid by Oracle fits the company’s desire to be known as a cloud company, as relayed to partners recently during Oracle’s FY17 Partner Kickoff. With NetSuite in its fold, Oracle also has a better shot of broadening its customer base to include SMBs, which are not typical Oracle customers.

“Oracle and NetSuite cloud applications are complementary, and will coexist in the marketplace forever,” said Mark Hurd, Oracle CEO, in a prepared statement. “We intend to invest heavily in both products — engineering and distribution.”

“NetSuite has been working for 18 years to develop a single system for running a business in the cloud,” said Evan Goldberg, NetSuite founder, chief technology officer and chairman. “This combination is a winner for NetSuite’s customers, employees and partners.”

NetSuite is what former IDC analyst Darren Bibby called the new guard of cloud-first vendors that also includes Salesforce, Amazon Web Services and Google. That’s different from old-guard vendors like Microsoft, IBM and Oracle, to name a few. These two groups each think differently about partners, partner programs, enablement and incentives.

The old guard and the new guard also think differently about perception, purpose, key metrics, outlook and control.

On the partner front, the new-guard vendors are aligned with a recurring revenue business model and a partner program that’s a fit for a cloud-first business. Unfortunately, for many existing partner firms, they’re familiar dealing with vendors who have partnering in their DNA and programs aligned to traditional business models. Think emerging versus mature.

When it comes to partner incentives, think attractive from the old guard versus uncertain from the new guard, according to IDC.

The question for Oracle is how the vendor’s acquisition of NetSuite will impact the two vendors’ partner programs that reflect different eras.

As partners play in the new digital economy and work with the new wave of cloud vendors – even traditional ones like Microsoft today touting itself as a mobile-first and cloud-first vendor and making positive gains as it transitions to join the new guard, which also includes partner program transformation – partner firms are expected to do more for themselves, promote their own innovation and IP, and expect that continued change is the name of the game.


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