Oracle Purchased NetSuite

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Oracle has an admirable acquisition track record, but not every acquisition goes as smoothly as anticipated. Their takeover of PeopleSoft/JDEdwards was fraught with disagreement and conflict; there’s always the possibility that this deal may follow suit.

NetSuite CEO Zach Nelson will reunite with Oracle Chairman Larry Ellison through this deal; however, FORBES estimates it won’t increase Ellison’s net worth significantly.

Why did Oracle buy NetSuite?

Oracle saw NetSuite’s acquisition as an essential strategic move; with their traditional software licensing revenues declining and their cloud-computing business still behind, the company needed a boost in revenue growth – NetSuite’s expected annual revenues of approximately $1bn should provide just such a stimulus.

NetSuite stands out as a pure-play SaaS solution with tight integration to Oracle RDBMS and other Oracle products, and their solution set targets the SMB midmarket segment–an area Oracle is eager to dominate.

As such, NetSuite was an ideal fit with Oracle and will operate as its own global business unit, according to Hurd. Furthermore, its executive team (including CEO Evan Goldberg and EVP Jim McGeever ) remain intact, which ensures no negative consequences are felt from this transition of ownership for partners or customers of NetSuite. By accessing Oracle’s extensive partner network for sales and implementation purposes, more NetSuite partners can be relied upon thereby freeing internal resources up for further developing solutions.

How will the deal impact NetSuite’s customers?

Customers of Oracle and NetSuite should reap many advantages from this merger, which should accelerate innovation to address customer pain points more rapidly, thus helping maintain their edge against competing cloud vendors.

But in order for this acquisition to succeed, it’s essential that NetSuite keeps expanding its market share in the SMB sector (its traditional territory), while making modest advances into Oracle’s enterprise solutions territory – otherwise the acquisition could merely undermine Oracle’s current sales and reduce its current robust growth rate.

Concerns surrounding this deal centre on Ellison’s massive stake in NetSuite. Some shareholders, such as T. Rowe Price Associates (one of NetSuite’s largest shareholders with 12.2 million shares), have objected to its purchase. But Hurd maintains that Oracle’s offer of $109-per-share represents fair value; as a result, completion appears on schedule this fall; customers considering moving should lock in pricing benefits over an extended term contract period.

What will the acquisition mean for NetSuite’s employees?

Evan Goldberg founded NetSuite with the backing of Larry Ellison, founder of Oracle. On Thursday, the two shared an agreement when Oracle announced its plans to acquire NetSuite for $9.3 billion.

NetSuite is a cloud-based ERP software company that specializes in accounting and back office e-commerce solutions for small to midsized businesses. Oracle’s acquisition of NetSuite will expand their current cloud offerings for these types of business applications.

Oracle has invested heavily in adapting its engineering staff and sales force for cloud computing – accessing vast computational resources over the internet – since 2012. Acquiring NetSuite will accelerate this transition process, as Oracle boasts sales offices and data centers worldwide and local business contacts in most countries that were unavailable to NetSuite alone. Furthermore, NetSuite will leverage Oracle’s global infrastructure, product roadmaps, and localization capabilities in order to expand its market share globally.

What will the acquisition mean for NetSuite’s partners?

NetSuite provides cloud-based business management solutions that enable companies to automate and streamline their financial operations, eliminating infrastructure maintenance costs while giving customers access to new functionality regularly. Oracle will use NetSuite’s acquisition as an opportunity to strengthen its presence in the SaaS market while expanding its ERP offerings.

Netsuite has built its reputation on offering comprehensive suites of accounting, financials and customer relationship management (CRM) solutions for mid-market companies. Customers value its cloud architecture and product support as key advantages when making their buying decision.

Oracle Fusion, its cloud ERP solution, has seen strong investments over the last several years. Given their respective growth rates and SaaS solutions’ similarity, it seems unlikely that Oracle would make substantial investments into Netsuite in order to gain market share; rather, they may try and strengthen feature parity between their products and Netsuite’s in order to compete more directly against larger enterprise systems from competitors like SAP.

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