At $US9.3 billion, this may well look like a bargain because in a single stroke, Oracle has gained critical mid-market mass.
As reported by ARN, the tech giant’s recent acquisition of NetSuite brings with it 30,000 customers, and a platform for Oracle CX Cloud to shine.
“The biggest issue will be cultural, and Oracle must move quickly to dispel concerns some of those customers may have about becoming smaller fish in a much larger sea,” Ovum research analyst, Jeremy Cox, cautioned.
“But this is a win all round, particularly for mid-market enterprises.”
Cox believes that NetSuite, under the visionary leadership of Zach Nelson, has always aimed to provide a “complete and integrated platform” to support mid-market organisations and far-flung subsidiaries of large companies in running the entire business.
“Covering ERP, CRM, and omnichannel commerce with a single database at the core makes it easier for those businesses to act as coherent and joined-up enterprises, better able to serve their customers and grow,” Cox explained.
“A coherent and connected enterprise is an essential foundation for delivering omnichannel customer engagement and a positive customer experience.”
From an end-user perspective, Cox said customers also stand to gain, with the acquisition allowing the vendor to address two key weaknesses in NetSuite’s CRM portfolio; a cluttered user experience and shortfalls in predictive analytics.
“Oracle has the wherewithal to fix both weaknesses,” Cox said. “Oracle’s Alta UI provides a modern consumer-grade user interface that will appeal to NetSuite’s existing customers. It also has a powerful set of predictive and prescriptive analytics that will help NetSuite customers derive even greater value from their existing investments.”
NetSuite’s ERP helps Oracle pave the way to Cloud dominance
When Oracle founder, executive chairman and CTO Larry Ellison claimed during the vendor’s June 2016 earnings call that Oracle would beat Salesforce to $US10 billion in annual SaaS and PaaS revenue, acquisition alarms went off across the industry.
As Technology Business Research wrote at the time; “With Salesforce on track to draw $US10.5 billion in that segment by CY18, TBR believes Oracle can only reach this milestone first with additional, large acquisitions, on top of its 3Q16‐closed Textura and Opower purchases, rather than finding an organic 113 percent CAGR over the coming two fiscal years.”
While Oracle’s proposed acquisition of NetSuite would add only $US673 million in trailing 12‐month subscription revenue to Oracle’s $US2.2 billion in trailing 12‐month SaaS and PaaS revenue, the larger revenue growth potential comes in the cross‐selling opportunities of Oracle’s broader portfolio.
As explained by Technology Business Research analyst, Meaghan McGrath, this comes through cross-selling the vendor’s Cloud software into NetSuite’s large SMB customer base, coupled with the ability to accelerate NetSuite adoption through Oracle’s large enterprise appeal distribution channel resources and other natural synergies across the businesses.
Sign up for CIO Asia eNewsletters.