NetSuite deal adds to Oracle purchases, broadens cloud apps line
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News of Oracle's $9.3 billion acquisition of cloud application provider NetSuite sent a pulse through the industry....
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But with little information about how the two well-established tech companies will integrate, customers and analysts are left hypothesizing on the purchase.
Analysts and industry professionals see the Oracle-NetSuite acquisition as a strategic play by Oracle to beef up its cloud-based ERP offering and increase its customer base by adding NetSuite's 30,000 SMB customers.
"I think, for Oracle, it will make a dent in the CRM market," said Kelsey Mason, an analyst at Technology Business Research Inc., an analysis company in Hampton, N.H. "For them, it was really an ERP play, and [it] brings together the front- and back-office capabilities for Oracle and makes them a larger force to go against Salesforce, SAP and other market leaders."
Oracle is currently third in CRM market share, according to Gartner, with 7.8% of the market share in 2015, behind SAP (10.2%) and Salesforce (19.7%).
Whither the fate of NetSuite?
For one of NetSuite's 30,000 customers, the Oracle-NetSuite acquisition news was met with optimism. Houston-based Forthea Interactive Marketing hopes the agreement allows customers to more easily expand their applications to include Oracle applications.
"The two platforms have been coexisting for years; our NetSuite platform is built on Oracle's database software," said Christopher Pappas, president of Forthea. "We'd be excited to see what complementary programs come out from this combo."
That's if Oracle decides to keep NetSuite an independent product, rather than consolidate it into Oracle's existing Sales Cloud platform -- a move that wouldn't surprise industry observers who have seen acquisitions play out this way in the past.
Chris Pappaspresident, Forthea Interactive Marketing
"Time will tell. Oracle has done both; they've killed products and they've led with them," according to Clint Oram, co-founder of SugarCRM Inc., based in Cupertino, Calif., and a CRM professional for nearly 30 years. "I think they're buying NetSuite for the ERP and financial components, and I think they'll kill the CRM component and force NetSuite customers to migrate to Oracle's Sales Cloud."
Of course, uncertainty around the future of NetSuite's CRM is a boon to competitors like SugarCRM. Oracle, meanwhile, stated in its press release it plans to have both Oracle and NetSuite's cloud applications continue as independent products.
"Oracle and NetSuite cloud applications are complementary, and will coexist in the marketplace forever," said Evan Goldberg, founder of NetSuite, in a press release. "We intend to invest heavily in both products -- engineering and distribution."
Pappas said it would be a cause for concern for Forthea if Oracle folded NetSuite's cloud application platform and into Oracle's existing technology.
"We hope not; we don't want them killing the platform," Pappas said. "We hope NetSuite can run as an autonomous subsidiary and customers can gain access to the rest of the Oracle ecosystem. I think this is encouraging."
Mason added that customers should be wary at the onset of large purchases like the Oracle-NetSuite acquisition, but if Oracle is true to its word, it could benefit the existing NetSuite customers.
"Any huge acquisition like this, there's always some hesitation on the customer side," Mason said. "I think there will be some concern, but NetSuite will benefit from Oracle's sale distribution and global reach."
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