Oracle Faces Uphill Climb with Channel Plans

It appears Oracle has finally discovered small and midsize businesses.

While just about every other company in the IT universe has been tripping over itself to capitalize on that lucrative market, the Redwood Shores, Calif., database giant has kept busy buying enterprise software companies.

But Oracle this week signaled some interest in the upper end of the SMB market when it disclosed it has signed Ingram Micro Inc., of Santa Ana, Calif., and Tech Data Corp. as distribution partners.

The stated goal of this move is to enlist hundreds of VARs during the next 12 months to boost sales of Oracle products to companies with sales of $25 million to $500 million.

Oracle also inked a deal with distributor Avnet Technology Solutions, of Tempe, Ariz., but for a more limited product set.

“We’re breaking the myth that Oracle is built for enterprise-space solutions only,” Judson Althoff, Oracle’s vice president of global platform and distribution alliances, told The Channel Insider.

But hardly had Althoff spoken before Oracle disclosed it was buying yet another enterprise software company, Global Logistics Technologies. G-Log, as it is known to friends, makes software that manages freight and warehouse systems.

Even when it’s not talking about one thing while doing another, it’s hard to keep up with Oracle’s acquisitions. This year alone the purchases have included PeopleSoft Inc., which already had acquired rival ERP vendor J.D. Edwards, as well as Retek Inc., Oblix, ProfitLogic Inc. and Siebel Systems Inc.

Are there any independent software companies left? If so, Oracle is sure to find them.

Integrating this many companies is at best a Herculean task that a lesser company might find impossible to even attempt. Oracle, however, seems capable of pulling it all together, though the task is sure to consume a significant amount of energy.

And that raises the question of how much energy will be left to build a successful channel infrastructure, especially since Oracle will have to work very hard to gain the trust of the VARs and integrators it needs to succeed in the SMB space.

Gaining that trust won’t be easy; the company’s direct sales force has a long history of conflict with channel companies.

Resellers have groused in the past about disputes with the vendor over who owns certain customers leads. Some of the disputes have resulted from price-comparison calls from customers to the vendor and the VARs.

Vendors serious about the channel would resolve such feuds in favor of the partner. But Oracle has maintained that the end-user customer ultimately makes the decision of who makes the sale.

Of course, channel partners have viewed this as a not-too-subtle hint that Oracle will seize any opportunity to take a sale direct.

Oracle made a good move by signing agreements with distributors. No one is better equipped than distributors to build a channel infrastructure for a vendor efficiently and cost-effectively. Ingram Micro, Tech Data and Avnet are battle-hardened companies run by smart people who have survived while so many other distributors were bought or failed.

But even with those impressive credentials, distributors can only do so much. Oracle will have to prove it is serious about the market it is targeting through partners and that it will take concrete steps to eliminate any vestiges of channel conflict that might remain.

VARs already aligned with Microsoft, SAP or both are unlikely to drop those vendors because Oracle has finally discovered the SMB market. And if there is any chance that those VARs and others might take on the Oracle brand, they will want reassurances that the vendor will not undercut them.