SuiteWorld 17 - Oracle CEO seeks to reassure NetSuite buyers - ‘More, better, forever’

SuiteWorld 2017 is undoubtedly a different kind of event compared to years gone by - for obvious reasons. Following the $9.3 billion acquisition by Oracle in November last year, it’s not only the location of the annual NetSuite customer event that is different (now in Las Vegas, rather than San Jose), but it is also no longer being headed up by NetSuite’s previous chief, Zach Nelson.

Instead, attendees were welcomed by Jim McGeever, EVP of Oracle + NetSuite (previously president at NetSuite), and were also treated to an appearance by co-CEO of Oracle, Mark Hurd.

However, despite the change in leadership, change in ownership and change in location, the message to customers and partners was very clear: don’t worry, things will only get better with Oracle.

Hurd in particular wanted to reassure NetSuite buyers that becoming part of Oracle didn’t mean that NetSuite would be absorbed into the beast. Instead, he outlined plans to ‘incubate’ the NetSuite business internally, allowing it to run independently, whilst also investing in it to ensure quicker growth over the coming years.

That being said, there is obviously a push to get NetSuite products more tightly integrated with Oracle products - but Hurd, again offering reassurances, said that nothing would be “dictated” to NetSuite.

Opening up the first day of the conference, McGeever was the first to address the change in ownership, citing “the elephant in the room”. He said:

This is obviously a big change. NetSuite is now inside of Oracle. We are now a global business unit inside of Oracle. What does that mean? That means all sales, all services, all support, all development, is still contained inside a single business unit that all reports up to Evan and me. And we report up to the CEO of Oracle, Mark Hurd. And so for most people at NetSuite and most of our customers, there is almost no change whatsoever.

You are not going to experience a difference in how you’re supported. You’re not going to feel a difference in who your sales rep or your account rep is, you’re not going to see a difference in who provides your services, it’s the same partner network, it’s the same professional services people. It’s really business as usual, there’s been very few changes.

All that’s really happened is that we have exchanged one set of public shareholders - who all they wanted from us was growth - for a set of shareholders, who also want growth. But they actually know what they’re doing and more importantly they have the resources to help us do it.

The same, but different

Following McGeever, Hurd took to the stage to tell attendees that Oracle didn’t spend $9.3 billion to disinvest in NetSuite - quite the opposite, he said. Oracle wants to make it clear to NetSuite stakeholders that it spent the money to “invest, to drive it harder, to drive it faster, as part of a grander strategy for Oracle to lead this transformation to the cloud”.

Oracle, according to Hurd, wants to give NetSuite all of the benefits of Oracle’s scale, without any of the incumbencies of Oracle’s bureaucracy. Hurd said that it’s ‘his job as leader’ to make sure that NetSuite has all of the scale benefits, without any of the problems.

When Hurd talks about scale, he is specifically talking about Oracle’s global data centre footprint, it’s global development teams and its cold hard cash.

Throughout the morning, both McGeever and Hurd commented on how NetSuite has done a good job of penetrating the US market, with some footprint also in Europe, but that it can now expand globally with Oracle’s resources at a much faster rate. Hurd said:

NetSuite has done a fantastic job, but we need to accelerate NetSuite’s expansion across the globe. We are going to invest in international expansion. I won’t get into all the details of phase 1 and phase 2, but as fast as Evan can go and do it right, that’s what we are going to do.

We need to move faster because we want to globalise and move NetSuite around the planet. That means leveraging our data centers, leveraging our distribution, leveraging everything we have got to accelerate our strategy.

On the product side of things, Hurd also wants to broaden the NetSuite portfolio. He said:

Secondly, broaden the suite. Give you as customers access to all of the SaaS products we have that will help you. This isn’t a mandate. This is trying to get more technology, more integration, to take advantage of things that maybe NetSuite couldn’t do organically. It doesn’t mean that NetSuite won’t have partnerships, it will still have partnerships.

I will not dictate to NetSuite what they have to do, but I will encourage them to leverage all of the technology that we have in our SaaS suite. We want to accelerate the verticalization, move into more micro-industries, to continue to tailor the product to specific industries. There’s a theme to all this - just more.

Oracle obviously already offers an ERP solution in the cloud, but Hurd said that most customers making use of this have 1,000 or more employees. Whilst NetSuite’s customer base is typically 1,000 employees or less. Hurd said it “really is a perfect complement”. He added:

There may be customers that may be bigger but still want to leverage NetSuite, that’s absolutely fine, I’m not going to dictate.

And if there was any doubt about the future viability of the NetSuite brand. Hurd said:

I view that we will maintain these two products forever. Forever. I’ve tried to come up with a term that is longer than forever, but I couldn’t come up with one. But I wanted to avoid any fear, uncertainty and doubt.

We don’t usually do what we are doing with NetSuite. We are keeping NetSuite together as a business. Our strategy is to leverage our balance sheet - we probably have $60 billion worth of cash - and we want to invest that into growing the business. It is so key to our strategy.

Growth

McGeever announced two product releases on the first day of the event, which will be covered in more detail in separate stories on diginomica. However, the key announcements were:

• SuitePeople - a new core HR offering natively built on NetSuite’s unified cloud suite. SuitePeople is being offered only as part of a bundle with the rest of NetSuite and can’t be purchased separately. McGeever described it as the “final piece of the pie”, and claims to offer core HR capabilities, as well as HR analytics, employee engagement, HR compliance, unified access and global reach.
• SuiteSuccess - descibed as a ‘unified cloud solution’, SuiteSuccess is essentially productised domain knowledge, leading practices, KPI’s and an agile approach to product adoption across a number of distinct industries. Within each industry offering, NetSuite is said to have build unique micro-vertical solutions to address specific market needs.

However, separate from the two product releases, McGeever also provided some more details about how Oracle’s resources are going to help NetSuite scale. He said:

We are going global, in a big way. This is going to benefit all of us. Half of NetSuite customers have multiple subsidiaries in multiple countries. We are going to go much, much deeper and much, much faster than we have ever gone before. We had field offices, sales and service, operations, in about 10 different countries around the world. Oracle, well, they have more. We are going to take advantage of that - immediately, that means 13 additional countries ASAP. The budget is approved, it’s go go go.

We also have the infrastructure. NetSuite was doing pretty well, we had five data centers - three in the US, two in Europe. We are going to double the size of our data centers globally, as soon as possible (Chicago, Germany and Asia).

We are also going to get to leverage the global Oracle development centers, they’ve got a lot. Immediately we are going to leverage four, in Asia and South America, to help us get to this global level of localisation, at a much deeper level than we could do ourselves.

We are hiring. In fact, we are going to hire more people in 2018 than we had total employees in 2012. So we are growing and we are growing fast. What this means is more, more, more - forever.

My take

There was certainly a sense this morning that instead of ignoring the elephant in the room that NetSuite+Oracle wanted to address it head on. The key message of using Oracle’s resources to scale the NetSuite opportunity, whilst protecting it as an independent business internally, should go some way to ease concerns amongst partners and customers. That being said, this is still early days. It’s hard to imagine NetSuite not becoming more like Oracle, and integrating more with Oracle, as the years go by. However, as Hurd said, judge him by his actions, not by his words. Time will tell.