Industry weighs up impact of NetSuite acquisition on Oracle's marketing and customer suite

Marketing technology commentators analyse purchase and how it can help Oracle address the customer management needs of SMB and mid-market

Oracle’s acquisition of NetSuite will give the enterprise software giant the ability to scale down to SMB marketing teams, but the deal is ultimately an attempt to own the end-to-end customer management workflow, one industry commentator claims.

Oracle announced its purchase of CRM and ERP player, NetSuite, for US$9.3 billion last week. The deal sees Oracle obtain the largest installed base of pure-cloud ERP customers, expands its marketing share and brings with it almost $800 million in revenue.

IDC research manager for CMO Advisory, Gerry Murray, saw the deal as filling the SMB and lower-end mid-market segment for Oracle and helping the vendor better compete against all-rounder, Salesforce.

NetSuite’s core product portfolio is based around clustering business management tools including ERP, CRM, ecommerce and resource management, but the vendor also offers marketing automation and campaign management capabilities.

“The NetSuite platform enables Oracle Marketing to serve the whole spectrum of needs. However, the SMB business of course requires very different go-to-market and economics for customer acquisition, support and retention,” he told CMO. “So I would be surprised if NetSuite doesn’t operate very independently.

“While some level of integration may be in order, the fact is the needs of SMB and enterprise marketers are very different. Even if the volume levels are similar, the complexity of operations is much higher in enterprise. There are multiple products and business units, globalisation issues, myriad agency and third-party relationships, as well as many different buyers. SMB is served well by NetSuite, even up to mid-market and some enterprise customers. But the level of complexity supported by its email marketing will not match requirements as well as Oracle’s B2C and B2B Marketing Clouds.”

However, Murray said the deal is more about how organisations manage their approach to customers. Ultimately, he believed NetSuite’s end-to-end ‘ERP’ type of solution is the future of customer management software.

“Companies are struggling to manage customer experience holistically across all customer-facing functions from marketing, sales, ecommerce, finance, fulfilment, service and support,” Murray said. “Delivering a platform that provides consistent enterprise services for data, processes, events, workflows, collaboration, analytics, compliance and so on across customer-facing applications is where the next big battle will be fought.”

Raab and Associates principal, David Raab, said the deal is typical for Oracle and expected the impact on Oracle’s Marketing Cloud would be minimal.

“The NetSuite CRM product is not considered very strong and its market presence is minor,” he claimed. “Competitively versus other marketing clouds, this might give Oracle a broader scope than Adobe, Salesforce and so on.

“But I see this as more about ERP and commerce. I certainly expect that NetSuite and Oracle Marketing Cloud will remain separate.”

For Raab, the acquisition is really about Oracle staying ahead of the curve in terms of technology capability.

“I see this as Oracle being Oracle; that is, buying good technology to get a more modern version of what it already has. That’s pretty much its way of keeping abreast of the industry,” he said.

Constellation Research founder and principal analyst, Ray Wang, agreed the purchase was a way for Oracle to keep NetSuite in the family but also pointed out it filled gaps in Oracle’s cloud offering. Enderle Group principal analyst, Rob Enderle, was of the same opinion.

“It should result in Oracle being considered a far stronger cloud player,” he said.

Forrester Research analyst, Rusty Warner, agreed the acquisition bolstered Oracle’s ability to compete with Microsoft, Salesforce and SAP for mid-market ERP, CRM and ecommerce but wouldn’t have a lot of impact on the marketing cloud competitive landscape.

  • With addition reporting by Katherine Noyes.

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