Oracle Must Work Harder to Win Over Resellers

Oracle has been working hard to win over J.D. Edwards and PeopleSoft resellers, and it is serious about providing long-term support for the enterprise resource applications that it acquired at great expense in December. But it appears that it still has more evangelizing to do.

Oracle President Charles Phillips gave J.D. Edwards resellers a pep talk Thursday trying to reassure them that Oracle needed them to help sell the software, particularly to small- and midsize businesses.

“We don’t have the reach into these customers on our own,” Phillips said. Oracle’s direct sales force is “busy with very large enterprise customers.” Together with the resellers, “we can be a winning team. We can’t do what you can do.”

He also reiterated Oracle’s commitment to the J.D. Edwards brand name, noting customers had demonstrated strong brand loyalty. “Customers were thrilled when we brought the name back,” he noted.

In response, Oracle has committed to continue upgrading and supporting the product at least through 2013.

“We think we have given people a longer support life on these products than they could have expected from anyone else,” Phillips said.

“We told them the things that they wanted to hear – that’s part of our strategy,” which includes making sure the channel is getting the same information that customers are hearing, Phillips said.

Furthermore, Oracle was going to “add more industry specific functionality” and “ease of implementation” features, which are particularly important for the SMB sector, Phillips said.

Resellers will be important to this process because they have vertical industry expertise and they will have an important role in providing after sale service and support.

However, while resellers welcomed the message that the J.D. Edwards products have a long-term future, they had concerns about competing with Oracle’s direct sales force.

Resellers who attended the summit Thursday expressed concern about whether they would have a free hand to market their services to SMBs, despite assurances to the contrary.

Click here to read the details about Oracle’s Global J.D. Edwards Channel Summit.

In particular they want some assurances that they will get at least the same level of sales opportunities that they had before the PeopleSoft buyout.

Oracle officials have pointed out that to show they are in earnest about working with resellers, the company has actually raised the customer revenue ceiling to $500 million as of July 1. Customers said they had been working with a ceiling of $100 million before the merger.

A good reason why J.D. Edwards resellers have been edgy is they also know that all the major software vendors, including Oracle, SAP, Microsoft, PeopleSoft, Lawson Software, Siebel and many others, have been trying to expand sales of enterprise application software of all types and scales to the SMB market.

All the market research indicates that this is where the strongest growth is going to come from, since larger enterprises invested heavily in ERP applications in the late ’90s and are mainly focused on incremental additions to their software installations or on upgrades and modernizations.

It’s not surprising that erstwhile partners, resellers, ISVs and systems integrators have a feeling that there will be a lot of jostling in the market as everybody rushes to grab a generous slice of the SMB pie.

Click here to read the details about Oracle’s Fusion middleware platform.

Oracle clearly recognizes that local resellers have a major interest in selling applications and providing deployment and maintenance services to SMB customers.

Frank Prestipino, Oracle’s vice president of global enterprise applications marketing, noted that 69 percent of SMB customers buy applications through “local trusted advisers,” including resellers, integrators and ISVs.

If Oracle is wise, Oracle will be as good as its words about working with the channel because the service providers in this community frequently have the vertical industry knowledge and local market knowledge to do an effective job. They are also more likely to works at rates and profit margins that cost-conscious SMBs are comfortable with.

Better yet, Oracle, with its lofty earnings and profit margins, is in a better position than nearly all its competitors to grant its channel partners a bigger slice of the pie, which will help achieve its goal of increasing its market share and revenue generated from application sales.

John Pallatto is a veteran journalist in the field of enterprise software and Internet technology. He can be reached at john_pallatto@ziffdavis.com.

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