Oracle and NetSuite: Longtime 'sweethearts' united at last

'What took Oracle so long?' one analyst wonders as software giant announces acquisition

Oracle's US$9.3 billion purchase of NetSuite may be the most anticipated acquisition in the history of enterprise software.

"It’s like the high school sweethearts you always knew would get married but they had to get through four years of college first," said analyst Frank Scavo, president of Strativa.

There's no denying the two companies share a long history. Not only was Oracle chairman and chief technology officer Larry Ellison an early backer of NetSuite, but both NetSuite founder Evan Goldberg and CEO Zach Nelson spent time at Oracle.

"There's a lot of Oracle DNA in the company," Nelson admitted in an interview late last year.

"The only question in my mind is what took Oracle so long?" Scavo said.

Oracle might have gotten a cheaper price than the $9.3 billion it's paying if it had made its bid back in February, when NetSuite's shares were trading below $60, Scavo said.

But there's little doubt the investment could pay off handsomely. In terms of sheer numbers, Oracle will now have the largest installed base of pure-cloud ERP customers, Scavo said, and "many of these are smaller businesses, where Oracle has not had a strong presence."

NetSuite brings Oracle almost $800 million in revenue as well as an expanded market share, agreed Ray Wang, founder and principal analyst with Constellation Research. The purchase also keeps NetSuite "in the family" and prevents competitors from encroaching on Oracle's market.

Perhaps even more important, the acquisition will help fill in gaps in Oracle's cloud offerings -- an area where it's been struggling to catch up after a late start.

"NetSuite's core has been strong in manufacturing, retail, commerce, and professional services," Wang said. "While Oracle addresses these products in an on-premises model, NetSuite's cloud approach fills holes in Oracle’s cloud strategy in key verticals."

Oracle's cloud reputation is still weak, so by buying NetSuite, it gets not just cloud assets and skills, but "a firm with a reputation of being very good at 'things cloud,'” said Rob Enderle, principal analyst with Enderle Group. "It should result in Oracle being considered a far stronger cloud player."

In general, existing NetSuite customers needn't worry, Wang said.

"Oracle has had a good history with post-merger integration," he said. "NetSuite will be able to take advantage of many of Oracle’s technical assets and customers can expect to benefit from the synergies."

One thing customers should try to do soon is renew contracts with more favorable terms before Oracle takes over, he suggested.

"Companies making acquisitions often raise prices to pay for them," he explained. "We always tell companies to renegotiate their contract if they like their current terms -- you want to lock in what you have."

Partners, meanwhile, can expect some changes. NetSuite's partner program is "friendlier" than Oracle's is, Wang said, so it would be in NetSuite partners' interest to lobby Oracle to keep those programs separate.

Oracle declined to comment for this story. NetSuite did not respond to a request for comment.

NetSuite on Thursday also announced financial results for its second quarter, including revenue of $230.8 million, up 30 percent over the same period last year. The California-based company has offices in Australia, Canada, the Czech Republic, Hong Kong, Japan, the Netherlands, Singapore, Spain, Thailand, the Philippines, Uruguay and the U.K.

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.
Show Comments
cmo-xs-promo

Latest Videos

More Videos

Thanks for your feedback, Rabi. While we introduced the ROO concept using a marketing example, I also believe that it is pertinent to man...

Iggy Pintado

Introducing Return on Outcome (ROO) - Brand science - CMO Australia

Read more

Thanks for your insight, Philip. Return On Outcome (ROO) requires balanced thinking with the focus on outcomes as opposed to returns.

Iggy Pintado

Introducing Return on Outcome (ROO) - Brand science - CMO Australia

Read more

Beautiful article.

Hodlbaba

15 brands jumping into NFTs

Read more

"Blue" is really gorgeous and perfectly imitates a human customer support operator. Personally, I won't order a chatbot development for m...

Nate Ginsburg

Why the newest member of BT’s contact centre is a chatbot

Read more

As today’s market changes rapidly, the tools we use change, and it is important to adapt to those changes to continue to succeed in busin...

Anna Duda

Report: 10 digital commerce trends here to stay

Read more

Blog Posts

How the pandemic revealed the antidote to marketing’s image problem

What does marketing truly ‘own’ in most organisations? Brand and campaigns, definitely. Customer experience? That remains contested ground.

Murray Howe

Founder, The Markitects

Still pursuing a 360-degree view of the customer?

On the Internet, nobody knows you’re a dog.” It may have been true in 1993 when this caption to a Peter Steiner cartoon appeared in the New Yorker. But after 30 years online, it’s no longer the case.

Agility in 2022

Only the agile will survive and thrive in this environment and that’s why in 2022, agility will need to be a whole-business priority.

Sam McConnell

Melbourne bureau chief, Alpha Digital

Sign in