As part of its efforts to interest customers in its mid-market e-business suite, Oracle Corp. has recently been putting greater emphasis on the indirect sales model and increasingly selling to its mid-market customers through the channel.
Oracle, in Redwood Shores, California, defines the mid-market as companies with between US$20 million and $1 billion in annual revenue, employing between 20 and 999 employees. Oracle has had particular success in Europe with its channel strategy for selling its E-Business Suite Special Edition, which is still on hold in the U.S.
Stein Surlien, vice president, alliances and channels, Oracle EMEA (Europe, Middle East and Africa), talked with IDG News Service about the growing importance of its channel strategy, especially in Europe, due to its fragmented markets, various languages and differing customs.
IDG News Service: What is the key issue for Oracle channels?
Stein Surlien: The industry is in consolidation and the only way for a company like Oracle to grow is in the partnering dimension. For Oracle EMEA, 40 percent to 45 percent of our revenue comes from what is sold through partners. We are seeing strong growth numbers of about 30 percent though partners. It's a huge number for us and it's increasing. Partnering is going to be a core competency in Oracle. You're seeing that we've been doing this for a couple of years full-time and we have a solid program.
Oracle is now a product strategy company. To accelerate the market, we need to be close to the customer, our partners help us with that. With that in mind, our biggest partners are IBM (Corp.), management consultancy Accenture (Ltd.), consultancy BearingPoint Inc. and IT services provider Capgemini (SA). And those are the tier-one system integrators. They need us and we need them.
IDGNS: How many partners does Oracle have in EMEA?
Surlien: There are 8,300 partners in EMEA in our partnering program and we are communicating with them on a daily basis. ISV (independent software vendor) partners are key, especially in the mid-market where the growth numbers are strong but where competition is also heaviest.
IDGNS: Does Oracle see Microsoft (Corp.) going after the same channels?
Surlien: Yes, very much so. Oracle is going after the same channels as Microsoft, in the enterprise and in government contracts as well.
But we believe we have a strong value proposition and our technology and applications are strong. Your partners need you to make money, that is the bottom line, of course. And we are better (than Microsoft) in two areas: we need to get the leads and opportunities to the partners and we need to have systematic programs for doing that.
We have 100 people (in EMEA) focusing 100 percent directly on helping partners to complete sales. Our Interaction Centers also help partners with analysis and courses, so we help in a variety of areas.
IDGNS: Would Oracle partner with Microsoft?
SS: If the situation was right for us, sure, I don't see why not. For example, just recently (May 20) Oracle agreed to take part in the VSIP (Microsoft Visual Studio Industry Partner) program, and as part of that, in the near future we'll offer a download for integration with Visual Studio .Net (2003).
IDGNS: How difficult is it when Oracle is partners with some of its biggest competitors?
Surlien: Some of our competitors in the middleware market include IBM and BEA (Systems Inc.) but they are also important partners. SAP (AG) is a big competitor, but SAP is also our biggest customer in EMEA. This is the game: it has layers to it and you need to take a pragmatic approach.
You partner where you can and you compete where you are strongest. But being open and honest with clean messages is important. You have to have product, a value proposition, that the customer can make money with, but it's also very much about inclusion, engagement, trust and predictability.
The buyers are really educated now and they know what they want. For example, ISVs don't want the Oracle brand all over the screen. So Oracle just comes in and does the job without making a lot of noise. We've really worked on making our packaging easier and it is now partner-friendly packaging.
IDGNS: What other areas has Oracle been working on improving?
Surlien: This market is about consolidation, integration and execution. (The Oracle enterprise resource planning suite) 10g is excellent for system integrators. The education for real application clusters is also an area that now offers a lot of value. In terms of application servers, we are catching up with BEA and IBM.
IDGNS: How has Oracle been handling the recent enlargement of the European Union (E.U.)?
Surlien: We've hired new people in those areas to help with this and are bridging opportunities that we have identified. We are sharing best practices and teaching how to sell across borders -- something these countries have not had to do in the past. This area is a source of growth for us. The more mature areas in Western Europe will remain as is because that is working well, and the new people will focus on Eastern Europe, and the Middle East portion of EMEA as well.
In the Middle East, partners channels are something like 80 percent to 90 percent of total licence revenue, as there are special business practices in that area that partners are best equipped to deal with.
As for the new E.U. countries, we are very strong on the government playground, and that is a strong source to grow our business. It is well worth the investment and the effort to maximize opportunities.