Oracle’s acquisition of NetSuite marks an important step forward in their transition into becoming more of a cloud-first company, expanding their application and cloud service offerings for small business.
Though financially, the transaction makes sense, questions still exist regarding whether Oracle CEO Larry Ellison will personally benefit.
It’s a big deal
Oracle recently made headlines when they announced their purchase of NetSuite, one of the pioneers of cloud ERP software. Oracle’s move represents an important moment both for their company and for NetSuite customers.
NetSuite has long been considered the leader of cloud-based ERP solutions, and remains one of the most widely-used solutions worldwide. Offering business management software through the cloud, NetSuite currently services over 21,000 companies in 200 countries and territories around the globe.
Oracle and NetSuite make an ideal pair, both offering cloud-first solutions for small and midsize businesses. In addition to expanding Oracle’s product lines, this acquisition will help both companies serve more customers across more markets.
Oracle’s acquisition is also strategic as it helps them maintain a financially sound platform for their fastest growing business line – cloud. Oracle has experienced exponential growth within this division over recent years.
It’s a smart move
NetSuite was among the early pioneers of Software-as-a-Service (SaaS). Established by Oracle alum Evan Goldberg, NetSuite took root in the cloud from day one and only continued its growth there.
Company growth numbers have reached 20% and they are transitioning their SaaS business onto Oracle Cloud Infrastructure (OCI).
Oracle appears to have made an excellent move by investing in NetSuite; this move will allow them to focus their resources on serving growing enterprise markets while offering more powerful cloud solutions for smaller businesses. In addition, NetSuite’s growth rates will allow Oracle to continue investing in cloud applications.
Oracle, known for its acquisitions, must make the appropriate moves in order to survive and reinvent itself in order to remain on its long-term path as a top global technology company. Recently, the company made several strategic acquisitions like AddThis Media Web-Tracking Technology Company and Crosswise Advanced Analytics company.
It’s a risky move
Oracle is known for their appetite and abundance of cash when it comes to acquisitions, acquiring numerous smaller firms over time such as AddThis, Crosswise, Maxymizer and more.
NetSuite, established by former Oracle employees, offers cloud-first business management software designed specifically to serve small and midsize businesses (SMBs). Their ERP systems help these SMBs run their operations more effectively.
Oracle’s acquisition of NetSuite could be an ambitious and risky venture; although its growth rate has been impressive thus far, its expansion may slow over time.
Oracle boasts a vast global sales and delivery network with offices all around the globe and plenty of local business contacts, which NetSuite will utilize as it expands into new markets. Indeed, China offices were opened under Oracle and penetration continued into additional nations.
It’s a win-win
Oracle’s acquisition of NetSuite as a cloud ERP provider will benefit both sides in many ways. NetSuite will benefit from Oracle’s financial strength, which will allow it to continue providing high-quality software solutions for its customers.
NetSuite brings Oracle expertise in supporting its cloud software, an area in which it has struggled for many years; through this deal, the company now has access to resources necessary for dealing with this challenge.
Oracle will also benefit from being able to hone in on its growing enterprise cloud offerings, which have outshone traditional business software in terms of growth. This should reduce risk from losing existing customers.
Oracle will gain access to mid-tier businesses – an area with rapid expansion compared to their traditional customer base – giving it an additional competitive edge over Salesforce, its primary competitor.
Deepak Wadhwani has over 20 years experience in software/wireless technologies. He has worked with Fortune 500 companies including Intuit, ESRI, Qualcomm, Sprint, Verizon, Vodafone, Nortel, Microsoft and Oracle in over 60 countries. Deepak has worked on Internet marketing projects in San Diego, Los Angeles, Orange Country, Denver, Nashville, Kansas City, New York, San Francisco and Huntsville. Deepak has been a founder of technology Startups for one of the first Cityguides, yellow pages online and web based enterprise solutions. He is an internet marketing and technology expert & co-founder for a San Diego Internet marketing company.