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

Conversations over a cuppa with CMO: The Star's George Hughes

It's been an incredibly tough three months for the Star as it shut its doors and stood down staff in response to the COVID-19 lockdown. Yet innovation has shone through, and if the CMO, George Hughes, has anything to say about it, such lateral thinking will continue as we start to recover from the crisis.

More Videos

We would like to invite you to the Virtual Exhibition about IoT Trends in 2020, 7 - 9 July, organised by Must.We developed a new B2B matc...

hayfa

Want to master digital transformation? Stop thinking about your own problems

Read more

We have been trying to help our clients through this time. I think the important thing is clear communication! We also created some check...

Erin Payne

Is COVID-19 the right time for a positive marketing campaign?

Read more

Very good article Sagar. Congrats! It's exactly what we are doing at Dafiti and it's very important have you close to us into this journey.

Roosevelt Junior

Making Your Organisation Data-Driven [MYOD] - Data-driven marketing - CMO Australia

Read more

Corporates should be innovating to stay relevant and disrupt the market and collaborating with startups is easily the best way to go for ...

Diana

How your company can innovate its way through the COVID-19 crisis

Read more

Very welll written Sagar and gives an excellent overview for data strategy for an orgaanization!

Ritvik Dhupkar

Making Your Organisation Data-Driven [MYOD] - Data-driven marketing - CMO Australia

Read more

Blog Posts

Business quiet? Now is the time to review your owned assets

For businesses and advertiser categories currently experiencing a slowdown in consumer activity, now is the optimal time to get started on projects that have been of high importance, but low urgency.

Olia Krivtchoun

CX discipline leader, Spark Foundry

Bottoms up: Lockdown lessons for an inverted marketing world

The effects of the coronavirus slammed the brakes on retail sales in pubs, clubs and restaurants. Fever-Tree’s Australia GM Andy Gaunt explains what they have learnt from some tricky months of trading

Andy Gaunt

General manager, Fever-Tree Australia and New Zealand

Younger demos thought lost are now found: But what about the missing money?

There is much talk about what VOZ will bring to the media industry. New ways to slice and dice audiences and segments. A clearer understanding of screen consumption. Even new ways to plan and buy. The most interesting result could be finding something many thought we lost - younger viewers, specifically the valuable 18-39s.

Michael Stanford

Head of 10 Imagine and national creative director, Network 10

Sign in