Five reasons Oracle loves NetSuite - and vice versa

Oracle’s acquisition of NetSuite was still freshly minted at last year’s SuiteWorld conference. Attendees back then weren’t sure whether to believe all the assurances they heard about the cloud ERP vendor’s future under new ownership. At this year's show in Las Vegas, the assurances are being repeated with the validation of a year's execution since they were last heard.

"And some of you thought Oracle was going to change us," said NetSuite Executive Vice President Jim McGeever as he emerged on stage yesterday for the opening keynote after a high-energy street dance display. In an open audience Q&A session later with Oracle CEO Mark Hurd, one attendee asked if Oracle was planning to ditch the NetSuite brand. Hurd’s response was unequivocal:

We have no intention of ditching the NetSuite brand. We've kept the NetSuite brand, we're actually promoting it, supporting it, we think it has tremendous brand value, and we're actually bringing it globally, moving it around the world in addition to where it was prior to the merger.

In the course of the day, five themes emerged that explain the enduring attraction on both sides of the partnership.

International growth

Oracle has brought global scale to NetSuite that is accelerating its international growth, with localized product capabilities and customer support announced yesterday for Germany, France, China, Japan, Brazil and Mexico. This means in-country sales and support teams and deep product localization that adapts to local business culture as well as regulatory requirements. The ambition, as McGeever put it, is to be "more German than SAP" in Germany.

The progress made in China is a testament to what can be done, with the country already NetSuite's fourth largest market, and growing at a rate that could propel it to become the second largest market next year. That's been achieved by using Oracle's existing localization team based in Beijing as well as have its local sales team set up a dedicated NetSuite sales team.

NetSuite will also be moving into Oracle's global network of datacenters, with the first to go live being in Germany.

SMB market reach

NetSuite adds SMB market reach that Oracle didn't previously have, a point highlighted by Hurd in his comments:

With the advent of the cloud, you now have opportunities for the smallest businesses in the world to get access to the exact same capabilities that previously they didn't have access to. That's changed who are our customers. Our customers are now becoming virtually everybody, as opposed to just the biggest customers in the world.

That's valuable to Oracle at a time when renewed growth in the US economy is opening up investment spending by businesses in new technology. And with Oracle's backing, NetSuite can continue to invest in developing packaged implementations such as the new version of its SuiteCommerce platform, which it says allows businesses to launch a sophisticated online B2B or B2C store within 30 days. It has also expanded its packaged SuiteSuccess solutions to include offerings designed for small and rapidly growing companies. Says McGeever:

With SuiteSuccess we've got a price, packaging and ability to deliver that allows us to get those smaller companies.

Micro vertical acceleration

Oracle investment in NetSuite is also accelerating the speed at which it can expand its offerings into highly segmented vertical markets. The vendor announced a range of new industry-specific capabilities as well as new packaged SuiteSuccess solutions for technology and consulting services organizations, manufacturers, food and beverage makers, and advertising, media and publishing.

It's also supporting partners to encourage the creation of additional microvertical solutions built on the platform.

Oracle Cloud Infrastructure

A big move is on the cards as NetSuite begins a move off its homegrown multi-tenant architecture to migrate to the IaaS platform of Oracle Cloud Infrastructure. Initially, NetSuite will be moving to Oracle 12c so that it can take advantage of the pluggable multi-tenancy built into the database platform. At the same time, it's going to begin adopting Oracle Cloud Infrastructure as it opens new datacenters, with Germany being the first geography to go live.

Given that NetSuite runs on Oracle, it's a "no-brainer" to move to Oracle's IaaS platform, says company founder and EVP of Development Evan Goldberg. It will also make it far easier to comply with increasingly stringent customer demands for local data residency:

We would love to get out of the datacenter business. We are moving as rapidly as possible to deliver NetSuite on top of Oracle Cloud Infrastructure, the IaaS offering. It's one of the highest priorities of my organization and we're really excited about it ...

There is going to be this data localization requirement in a lot of countries. And no way are we going to be doing that. This replicable infrastructure we can sit on top of is great.

The future is cloud

Hurd reiterated remarks that he's previously made about the inevitability of IT moving to the cloud, and why it's desirable because of the standardization and simplification that it enables:

Part of the reason this whole moving to the cloud is so attractive is the opportunity to get to standardization. Our objective across Oracle in our entire application suite is the same as NetSuite — to keep things modular, to allow you to mix and match, but to do it in a way that is as consistent an approach as possible. I do not believe that the marketplace is going to trade all this incredible complexity that's been created on-premise over the past 25 years and replace it with that same complexity in the cloud.

Oracle has also been learning from NetSuite, says McGeever, adopting aspects of NetSuite's sales and support processes. Compensation has also been adjusted to ensure that sales people earn exactly the same whether they sell an Oracle or a NetSuite solution. That's leading to frequent cross-referrals and some joint sales pitches, he says.

Overall, Hurd gave the impression he couldn't be more pleased with how the acquisition has gone:

The acquisition which is now more than a year old. If you were to describe how we would want to do it, it has gone exactly as we would want to do it ...

It's such a credit to all the people at NetSuite, the strength of the plan, the strength of the product, the response of the marketplace — I'd say from an Oracle perspective, we're ecstatic about the performance.