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

Latest Videos

Launch marketing council Episode 5: Retailer and supplier

In our fifth and final episode, we delve into the relationship between retailer and supplier and how it drives and influences launch marketing strategies and success. To do that, we’re joined by Campbell Davies, group general manager of Associated Retailers Limited, and Kristin Viccars, marketing director A/NZ, Apex Tool Group. Also featured are Five by Five Global managing director, Matt Lawton, and CMO’s Nadia Cameron.

More Videos

Great read. I agree that it should be a perfect balance between interacting with your customers and knowing your brand. As a business, yo...

Caroline Scott

7 ways CMOs can improve their customer engagement game

Read more

Very true. Team development helps improve collaboration among the team members. I was able to improve my team's collaboration skills by t...

Quent Sinder

Why empowering others can help make you a great leader

Read more

CRM is a very good software that can help you succeed in your business. In my company, this system has allowed me to improve customer rel...

Anna Janicka

Sensis rebrands to Thryv and brings business software to Australian SMBs

Read more

AI Leasing Assistants have finally arrived for the multifamily industry. With so many to choose from it can be hard to figure out which i...

Alice Labs Pte. Ltd.

CMO's top 8 martech stories for the week - 6 May 2021

Read more

Nowadays, when everything is being done online, it is good to know that someone is trying to make an improvement. As a company, you are o...

Marcus

10 lessons Telstra has learnt through its T22 transformation

Read more

Blog Posts

Why if marketing is all you do, you’ll never be very good at it

OK, so you’re probably thinking: “Here comes another article to badger me about living in my bubble.” And also, “I bet this bubble-bashing piece will go on to explain how I can achieve better results through some heady dose of new life experiences, new routines and annoyingly different opinions on social media.”

Dane Smith

Behavioural science lead and regional consulting partner, Ogilvy

A leader’s role in rebuilding a culture of confidence

Every day, there are new predictions and studies on the future of work, the state of the economy and the unfolding global pandemic. All of which creates uncertainty and heightens the imperative of effective leadership.

Michelle Gibbings

Workplace expert, author

Confused About Your Customers?​

​I've worked in brand and marketing for more than 20 years. But there’s one area where I’ve found myself going around in circles and I must admit I'm becoming increasingly confused.

Rich Curtis

CEO, FutureBrand A/NZ

Sign in