Oracle's Channel Reality

Oracle's share of indirect business has dropped to 40 percent from 45 percent in the last couple of years. Kennedy, however, told The Channel Insider that's OK. "We are fine with that 40 percent," he said.

It made me pause because it isn't often that someone tells you a decline in share is "fine" or "where we'd like to be," as he put it.

Kennedy's reasoning is that since Oracle's volume of channel business through partners actually has increased, the percentage decline when compared to the vendor's overall sales is no cause for worry.

Oracle's goal is to keep its channel business in the 40 percent-to-50 percent range, so 40 percent is "where we'd like to be," he said.

He makes a good point. The indirect share decline tells only part of the story.

But, just as focusing on the decline alone ignores some important nuances, saying it's fine also seems to gloss over equally important points.

For starters, being at the bottom of the 40 percent-to-50 percent goal doesn't strike me as a "fine." It strikes me as a reason to worry. Since the number is trending down, it stands to reason that extra effort is needed to reverse it.

And even if the vendor has perfectly justifiable reasons for the share decline, Kennedy seemed to miss an opportunity to affirm the vendor's commitment to the channel. He pointed out that as Oracle has made acquisitions over the years, some of the acquired companies have contributed more to the direct business than to channel sales.

This is a plausible explanation. But Kennedy's nonchalance in dismissing the negatives is troublesome.

One might reasonably expect Oracle to say that as it integrates its recent acquisitions, the vendor is reviewing what types of opportunities those acquisitions can bring to partners.

Solution providers worry that acquisitions narrow technology choices and the vendors with which they can partner. Some vendors do a good job of absorbing the channel programs of acquired companies, but others don't.

Oracle's relationship with the channel over the years has been anything but smooth. Though 40 percent is nothing to sneeze at, Oracle still comes across as a direct-first, partners-second vendor.

Rather than saying 40 percent is "where we should be," Oracle executives might instead point out that since 40 percent is the low end of the goal, the vendor has to work hard to find ways to funnel more business through the channel.

What happens if the share falls below 40 percent? Are we then going to hear company executives say that's OK because the vendor's channel sales goal is 30 percent to 40 percent? In other words, is the 40 percent-to-50 percent goal a real target or a convenient one that helps explain away the current situation?

Oracle needs to do a better job of affirming its commitment to partners. And the vendor should reassure them that as it acquires some of their other vendor partners, Oracle will work to figure out how those acquisitions can further its relationship with the channel.

Pedro Pereira is editor of eWEEK Strategic Partner and a contributing editor for The Channel Insider. He can be reached at pedro.pereira@ziffdavisenteprise.com.

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