I began the partnership for my consulting firm with NetSuite in 2006 and with Oracle since 2011. Today’s announcement is exciting and a long time coming. Today, Lima Consulting Group is one of only about 12 partners that were brought through the Maxymizer and Responsys acquisitions into the Oracle Marketing Cloud’s partner network on a global basis. We’re very excited to see another of our key partners, NetSuite be acquired into the Oracle family..
Oracle announced this morning of their intent to acquire NetSuite for $9.3 billion. NetSuite is indeed a large purchase, even in lights of Oracle’s voracious appetite for acquisitions and deep pockets. To put it in perspective, Oracle paid $10.3 billion in 2004 for PeopleSoft Inc., $8.5 billion for BEA Systems Inc. in 2008 and $7.4 billion in 2009 for Sun Microsystems, Inc. Other smaller firms they recently acquired include AddThis, a media web-tracking company, Crosswise, a firm specializing in cross-device identification mapping and last year’s acquisition of Maxymizer, a leading conversion optimization solution.
Within their Oracle Marketing Cloud they already have a leading DMP, email marketing solution, marketing automation solution, and lists of data available for rent. The marketing cloud consists of Bluekai, which has a Data Management Platform, Responsys (acquired for $1.5 billion by Oracle) – a leading email marketing platform, Eloqua, a leading marketing automation to manage sales and marketing efforts, and Datalogix, a data broker widely used by digital marketers.
More than likely, NetSuite will fall in line with the Enterprise Resource Planning business unit, which historically has served larger organizations. NetSuite’s sweet spot has been the mid-market and in the past three years they’ve made a tremendous push towards serving larger businesses to directly compete with some of the SAP solutions such as Business One.
NetSuite has about 30,000 organizations under license. In 1998, Larry Ellison invested $125 million in Zach Goldberg’s idea of creating a cloud based, ERP solution and to this day, Larry still owns about 40% of NetSuite. But the company has maintained an operating loss since it began. Zach Nelson, NetSuite CEO, frequently says at conferences that there are losers and winners in technology and has a very competitive focus. NetSuite focus on sales, innovation and product development is relentless.
Did Oracle overpay?
Yes and no. Yes; It’s an expensive price. Oracle is paying $326,666.67 per organization. NetSuite starts at about $15,000 per year and is charged on a per user basis. So the upper 20% of NetSuite customers is where the money is. If they can cross-sell in that market, they will realize a positive return. But Netsuite is also going to require a lot of development now to keep the product development roadmap consistent with plans that were announced at Suite World in May, the annual NetSuite conference. Oracle is going to increase the speed of development and augment the software engineering teams to accelerate development and more importantly, integrations within the other Oracle product lines. NetSuite has come a long way from their initial pricing of $4.95 per month per user when they first launched.
What is NetSuite’s business model and what are they good at?
NetSuite is three pieces and they are most commonly sold as one solution.
ERP – this is the heritage of NetSuite, and in your contract, current users can look and find reference to the Oracle license that they are sub-licensing from NetSuite which, of course, NetSuite is hosting for them.
CRM – Salesforce owns this marketplace with regards to CRM, even Salesforce’s stock ticker symbol is “CRM”. But the reason I didn’t purchase Salesforce for our organization is that I can’t move marketing and sales activities into the financial system without having to do an integration. In NetSuite, the entire process from prospecting a lead through collecting on the invoice is all managed seamlessly through an integrated process. They call it the “Quote to Cash” process and it really is quite simple to setup
E-Commerce – NetSuite themselves has been on an acquisition spree. NetSuite acquired Bronto, a mid-market email marketing provider and e-commerce providers Retail Anywhere and Venda, which they renamed Suite Commerce Advanced (SCA), which is a pretty solid, enterprise-grade e-commerce solution that puts the NetSuite brand in the same league as AGS and Hybris.
A large ecosystem of 3rd party solutions developed for industry verticals or functional requirements called the SuiteApp ecosystem. Lima Consulting is a partner in the system.
Was there any duplicity in capabilities in this acquisition?
Oracle already has an email marketing solution in Responsys, which is an enterprise-grade solution. Bronto is a mid-market solution and it wouldn’t make sense for them to integrate both solutions within the Oracle Marketing Cloud; I expect to see a winner here. The integration cycle is going to take a few years, but I do hope that they sunset the Bronto solution and integrate the best features in Bronto within the Responsys platform. But this would mean that Oracle will need to come up with mid-market pricing; which has not been the plan that Dan Springer and team had when they founded Responsys.
What does the NetSuite acquisition by Oracle mean for Digital Marketers?
The Oracle Marketing Cloud is right there at the top of the Marketing Clouds along with Adobe’s Marketing Cloud. While IBM and Salesforce also have marketing clouds, they are really a set of acquisitions that are not inter-operable and aren’t platforms in my opinion, we need to give them some more time. As a partner of all of these companies, Lima Consulting Group is well positioned to assess the winners in this space. And even the leaders are still missing critical components.
What is Oracle Marketing Cloud Missing?
Oracle doesn’t have a web analytics solution, which is like an ERP system that doesn’t have the financial module. That’s the core that all of the other modules hang from. So Lima Consulting Group has developed an API to enable NetSuite Suite Commerce Advanced to Adobe Analytics, the leading web analytics solution in the marketplace. What Oracle has done well is acquire the leading enterprise-grade solutions in each marketplace. I think that future acquisitions are forthcoming in the web analytics space.
They don’t have an analytics solution, and the best independent solution in the marketplace is AT Internet, another partner of Lima Consulting Group’s. AT Internet has a huge presence in Europe and is based in France.
Lastly, Oracle doesn’t have a programmatic search solution to manage ad budgets on search, social and display. Ignition One, Marin and Kenshoo are the independents. Adobe acquired Efficient Frontier about 3 years ago, so Oracle is still in need of a response in that category. Salesforce and IBM still don’t have that category either.
LCG is part of a very few specialized partners of Adobe’s with these products.
What does Oracle bring to NetSuite?
An amazing global sales organization
A partner network that will integrate with the existing Oracle Cloud across several of the Oracle Business Units. Oracle has a lot of software, some of it sold to CIO’s, and some sold to CMO’s. This acquisition will be interesting to professional services firms that are looking to expand into the other’s territory.
Oracle has a much more mature partner organization than Netsuite, from training, to payments to sub-contracting.
Deep pockets for accelerated development in the current NetSuite product development roadmap.
Integration with the following enterprise grade solutions for NetSuite customers.
Email Marketing Software – Responsys
Marketing Automation Software – Eloqua
Data Management Platform – Bluekai
Data list broker – Datalogix and Bluekai
Personalization and Segmentation Platform – Maxymizer
What do you think Oracle will buy next?
Oracle has not gotten into the web analytics space and the notion of governing web analytics data is critical to being able to take digital marketing actions. Given their model of buying firms that generally have fewer but bigger customers relative to their competitors, I think that a tag management solution would be a smart acquisition. The three big players are Ensighten, Tealium and Signal, and my assessment is that Ensighten, which is based in Cupertino, CA, would be an appropriate fit given that they don’t have as many customers as Tealium, but the use cases for their customer base are generally complex. We saw this pattern in the showdown to acquire the email marketing solution, Responsys vs ExactTarget. ExactTarget had more customers, a super easy to understand UI and was easy to setup for standard use cases, which is similar to what Tealium has been able to do. Responsys went the other way and had fewer customers, but they took on the use cases that involved complexity. Same is true of Eloqua vs Marketo. And Maxymizer vs Monetate. And Bluekai vs Krux. The list goes on…
How will the acquisition affect current NetSuite customers?
NetSuite was eager to get into the digital marketing space given their strength of their ecommerce customer base, with the likes of Groupon, GoPro, and thousands of mid-market brands, the future of digital marketing looks bright for current NetSuite customers. Integration with the Oracle Marketing Cloud for this group of customers is going to be exciting.
Customers will be able to benefit from what should be integrations with Bluekai, the Data Marketing Platform (DMP) that would allow an ecommerce provider interested in renting any of about 65,000 lists. For example, GoPro could rent the list of “those with purchasing intent to travel to adventure vacation destinations”. Being able to use a DMP with the email marketing application and NetSuite’s ERP and e-commerce engine would make the dream of an integrated ERP and Marketing Cloud a reality. Give Oracle time to integrate these solutions.
Lima Consulting Group is very excited about our partnership with both Netsuite and Oracle and we fully expect to be one of the leading partners in integrating Eloqua, Responsys, Maxymizer and Bluekai with NetSuite. And believe it or not, the beginning of that integration starts with the integration of Adobe Analytics and Adobe Media Optimizer to bring in the best of all point solutions in one seamless marketing cloud. Unless of course, Oracle purchases Marin, AT Internet and Ensighten.