Last week at Oracle's Cloud Summit, Mark Hurd, c0-CEO Oracle gave updates on a variety of topics. No surprise then when one analyst asked about what comes next for Oracle and NetSuite, following last year's acquisition. Here is Hurd's response:
NetSuite really started as a migration up from QuickBooks. When you look at the NetSuite base, the NetSuite base is primarily customers from zero to seven to eight hundred employees. That is 95% of their customer. It differs a little but but NetSuite is very micro-vertical focused. They've done a really good job at growing the micro-verticals.
They resemble, many scaled cloud companies. Remember there's really only a handful of pure cloud status players left. There's Salesforce, Workday, ServiceNow, NetSuite and we just took one of the four. What NetSuite had attempted to do was to move north, move higher. They would go to customers that were 1,000 employees or try to get into the visions of big companies. Had some success with it. Didn't create more than a bunch of partnerships, were sort of peripheral application companies. They did some light integrations but didn't really move internationally.
My view of this is sort of completely different. I think NetSuite is tremendous but Oracle Fusion, is almost the exact antithesis. 95% of our business is the 1,000 employees plus group. Upper-mid and mid-mid market etc.
We will move NetSuite as aggressively as we can globally. We will move them into the UK, into Mexico, into the Netherlands. We're upgrading our R&D, upgrading, spending more. We're going to spend more in two areas: first, there's the continued globalization of their product for companies in countries, not just US companies operating in other countries. The second is the push in micro-verticals.
Let me use an example. NetSuite has gone micro-vertical on campus bookstores. They do campus bookstore and they do the one at Kansas even though we (as Oracle) do all the financials. They've done a really nice job and they just need to accelerate that. We're going to have NetSuite do what they do and do more of it and do more of it globally. They have partnerships with other companies but my guess is their best partner will be Oracle. In HR they have a partner, my guess is pretty soon their best partner will be Oracle.
That's our strategy. Global, more micro-verticals, do what you do and do it really well and then partner across the Oracle ecosystem.
None of this should be a surprise but should be welcome to those NetSuite customers who wondered whether they will see ongoing improvements to the product.
Prior to the acquisition by Oracle, analysts among my peer group were saying that Oracle's already successful Fusion HR solution would make a very good fit for NetSuite which has been light weight on this functionality.
On the international front, we at diginomica were aware of NetSuite's aspirations. While it had made some progress in Europe, the company had a brand recognition problem that was always going to be difficult to overcome given its relatively small size coupled to existing marketing commitments in its home market. Oracle's international marketing muscle solves that at a stroke.
Hurd is absolutely right to focus on micro-verticals for the mid-market. This is essential because mid-market companies have as many complications to overcome as their larger brethren but rarely have the resources to customize. In the past, NetSuite has endeavored to help through its scripting capability that sits atop its platform but customers report a high degree of variability in outcomes. Oracle and NetSuite engineers will have to make some important decision in that regard.
Even with this agenda, we suspect that NetSuite/Oracle will find a formidable opponent in the shape of Infor, which has rolled out more than 70 micro-verticals in the last few years and has garnered a good reputation for advanced functionality at reasonable cost.
Where we are less clear is on the apparently natural integrations that could help NetSuite and its customers get more value. While Fusion and NetSuite share the same technical heritage, they were developed independent of one another so some re-architecting is inevitable. In speaking with other Oracle executives it is clear that it is very much early days although those I spoke with are positive and happy with what they see.
We need to give the teams time to settle down but this is a topic we will watch with interest because it makes a difference to the buyer market. Check back in a few months time.