No Partner Too Small

Seeking new markets, Oracle invites SMBs to take a fresh look at its offerings.

Like so many large vendors these days, Oracle Corp. is tying its plans for future growth to small and midsize business (SMB) customers in North America and other regions where the market for enterprise customers is relatively mature. But one of the biggest obstacles to Oracle's success in smaller shops has been its reputation as a gold-standard product with a sky-high price tag.

Over the summer, the database giant revamped its partner program to make it more cost-effective -- and realistic -- for smaller partners to get on board. Oracle's hope is that the entrance of such partners will cause SMB customers to see the products as feasible solutions for their businesses.

For any enterprise IT vendor seeking to reach small customers, partners in the Microsoft Partner Program are an obvious source of help. That makes it a buyers' market right now for partners doing database work, and Oracle's solutions are worth a hard look in light of the new programs.

Seeking the 'S' in SMB
This summer, Redwood Shores, Calif.-based Oracle went public with a massive campaign to reach what it calls the "S" in SMB. Oracle says it already has more than 190,000 SMB customers, defined as businesses with fewer than 500 people. The company is now focusing on the smallest of those companies, those with fewer than 100 employees.

In analyzing the database market with researchers at IDC and Gartner Inc., Oracle documented a lower limit for its deals at about $6,000. Above that number, Oracle gets the majority of deals. Below that figure, Microsoft dominates, Oracle executives admit.

On the Record

RCP asked Judson Althoff, an Oracle vice president and head of the Oracle Technology SMB Program Office, how important Microsoft partners are to Oracle's latest SMB push. His response:

"The Microsoft partner base is important to us not only because we want them to offer Oracle as a choice. As important as Linux is to Oracle as a company, the 'S' in the SMB is dominated by Windows. Reaching out to a partner base that is educated on the Windows environment and educating them about how applicable Oracle's products are and how good Oracle's products are is important to us."

While Oracle has been one of the primary proponents of Linux as an operating system platform in the enterprise, the company has continued to emphasize Windows and its leaders recognize that Windows is the preferred platform of SMB customers.

Many of those sub-$6,000 sales go through the channel, and Oracle found that it had natural inhibitors to sales -- primarily a four-figure fee for a partner to join the Oracle Partner Network in order to complete even a single transaction. To remove those barriers, Oracle created its SMB Program Office, which is just swinging into action.

Under the old model, a channel partner unaffiliated with Oracle but interested in selling an Oracle database solution worth about $5,000 would have to join the partner program with its fee, sign a legal agreement with Oracle and sign a legal agreement with a distributor -- in total, a 30-day process, according to Oracle. The same partner looking to sell a Microsoft SQL Server or .NET solution could simply remit payment to Microsoft and move on, Oracle acknowledges.

With the belief that the "small" in SMB represents a $1 billion opportunity worldwide for Oracle, the company is eager to make Oracle as easy for partners to sell as Microsoft is. To get there, Oracle launched what it calls the Remarketer partner level -- a special category that allows new resellers to offer Oracle-based solutions to new customers without joining the Oracle Partner Network or paying Oracle any partner fees. The company hopes to see the ranks of its North American partners, currently numbering in the hundreds, increase to the thousands via the Remarketer category.

Oracle 11g: Back to the Enterprise

Oracle is at heart an enterprise player, and the company's enterprise partners have a new version to offer.

In July, Oracle launched Oracle Database 11g, which boasts new technology to accelerate the adoption of database grids, improve storage and simplify access to data in OLAP cubes in the first major release in two years. The previous version of the company's flagship database, Oracle 10g R2, came out in 2005, two years after the original version of Oracle 10g.

The "g" in 10g and 11g stands for "grid," as in grid computing. With 10g, Oracle introduced what it calls Real Application Clusters (RACs), a way to bind servers running Oracle's database together to work on database queries in parallel. According to Oracle, about half of its customers have upgraded to 10g, with some smaller fraction of that using RAC grids.

Among 11g features that Oracle hopes will attract more users to its grid systems are Oracle Real Application Testing and Oracle Data Guard. The features allow the splitting of grids to allow upgrades or system changes to be tested before moving into production and to facilitate backup and disaster recovery.

Storage improvements in the latest release include automated data partitioning, better data compression, a feature for backing out of errant transactions and Oracle Total Recall, which allows administrators to run queries against the data as it stood at a specified point in the past.

Not least among features of Oracle 11g for Microsoft partners is native integration with the Microsoft Visual Studio 2005 development toolset.

The Enterprise Edition is priced at $800 per named user with a $176 per user yearly maintenance fee, or $40,000 per processor with an $8,800 yearly maintenance fee. Additional costs for options include $20,000 per processor with a $4,400 annual fee for RAC or for OLAP, and $10,000 per processor with a $2,200 annual fee for partitioning. -- S.B.

A Tale of Three Products
The program is administered through the VAD Remarketer Program for SMB Technology Products (VAD is shorthand for "value-added distributors"). Participating distributors include the distribution giants Tech Data Corp. of Clearwater, Fla., and Ingram Micro Inc. of Santa Clara, Calif. The new Remarketer group of VARs will now only need to work with a participating distributor to complete a deal -- no signing up with Oracle, paying a fee to Oracle or entering a legal agreement with Oracle. Initially, there are several editions of three Oracle products that may be sold under the VAD Remarketer Program, although Oracle plans to add more eventually.

The current product lineup includes Oracle Database Standard Edition and Standard Edition One; Oracle Application Server Standard Edition, Standard Edition One and Java Edition; and Oracle Business Intelligence Standard Edition and Standard Edition One.

The Oracle Database is the company's flagship product and the main element of the initiatives. The Application Server is middleware for hosting a company's Web site, providing a portal or creating an extranet. The BI product provides users with access to BI dashboards, formats and distributes reports and enables ad-hoc analysis of data integrated from disparate sources.

Competitive Landscape
When it comes to small and midsize businesses, Oracle's competitive landscape consists almost entirely of Microsoft. SQL Server is the dominant database in SMB customer sites, and the Windows Server/Microsoft .NET stack, combined with Microsoft Office, offers much of the same functionality as Oracle Application Server and Oracle Business Intelligence. When using either Microsoft or Oracle, partners have significant opportunities to customize solutions to meet customers' specific business needs. There aren't many customers with fewer than 100 employees that are likely to have the expertise to create business intelligence solutions on their own using an out-of-the-box database and application platform.

Post-sale costs remain an issue at all levels for Oracle when compared with Microsoft.

Oracle charges customers 22 percent of the original sale price in its annual maintenance fee called Software Update License and Support. Unlike Microsoft's Software Assurance volume licensing program, which is optional, Oracle customers must pay each year to get patches and other basic support. (See the end of this article for access links to the Oracle Technology Global Price List and other resources online.)

Spotlight Highlights
Oracle's Key Features

Oracle Database, Application Server and Business Intelligence Server have a solid reputation for scalability, availability and security

There are radically fewer hoops for partners to jump through to sell Oracle productsunder the new VAD Remarketer Program

Competition

Microsoft SQL Server

Microsoft .NET and Office platforms

Opportunities

A chance to broaden sales portfolios

Upsell opportunities into Oracle's higher-end offerings

 

Oracle Version
Named-user pricing
Per-processor pricing
Database Standard

$300, plus $66 annual maintenance

$15,000, plus $3,300 annual maintenance
Database Standard Edition One
$149, plus $32.78 annual maintenance
$4,995, plus $1,098.90 annual maintenance
Application Server Standard Edition
$200, plus $44 annual maintenance
$10,000, plus $2,200 annual maintenance
Application Server Standard Edition One
$149, plus $32.78 annual maintenance
$4,995, plus $1,098.90 annual maintenance
Application Server Java Edition
$100, plus $22 annual maintenance
$5,000, plus $1,100 annual maintenance
Business Intelligence Standard Edition
$400, plus $88 annual maintenance
$20,000, plus $8,800 annual maintenance
Business Intelligence Standard Edition One
$1,000, plus $220 annual maintenance
N/A

Marketing and Sales
Oracle's Web site offers a wealth of SMB resources for partners.

The Resources for Small and Medium Business page on the Oracle Technology Network includes basic information including an explanation of why a small business might need a relational database, a link to Oracle's Windows Technology Center and various demos and tutorials.

Another tool is Oracle Financing Solutions for Small and Medium Businesses. Steering customers toward vendor-backed financing can lead to much larger engagements for partners.

Those value-added distributors who are participating in Oracle's VAD Remarketer Program, such as Ingram Micro and Tech Data, often offer their own help to partners in sales and marketing as well.

The Final Word
If you've been interested in Oracle products, and haven't wanted to make the financial commitment to its partner program, now is the time to take another look. Meanwhile, keep your eye on this program. Oracle executives promise that more changes are coming, including more products and additional promotions and incentives.

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