With a large chunk of the enterprise market already sewn-up, Oracle Corp. is turning its eyes down-market to address some of the inhibitors it feels have prevented it from gaining traction in the SMB space.
With its newly announced VAD Remarketer Program for SMB Technology Products, Oracle is turning to distributors like TechData and Ingram Micro to distribute SMB-oriented products to resellers and VARs without them having to join Oracle’s partner program.
It’s the first initiative out of Oracle’s Technology SMB Program Office, which was created earlier this year to address some of the systemic barriers the company feels are preventing it from achieving success in the SMB market.
Judson Althoff, who heads the office and is Oracle’s vice-president, global platform and distribution sales, said while Oracle leads in the large enterprise space, Microsoft is the leader with SMBs, and Oracle wants to change that. To do that, he said they need to work with the channel.
And he acknowledges Oracle’s partner program as it is just isn’t SMB friendly. To sell $5000 worth of Oracle products today, he notes, a VAR needs to join the partner program, pay fees, sign a contract, affiliate with a distributor, and then finally sell the solution and take the customer through an onerous order and fulfillment process.
“That process would take you 30 days before recognizing revenue, and most likely you’re realizing a loss because you had to pay the fees to join and spend so much time and effort on the process,” said Althoff. “Contrast that with Microsoft, where for these low-end deals you just need to remit payment for the equipment and move on.”
Oracle’s first move to address that situation is the VAD remarketer program. Without having to affiliate directly with Oracle VARs will be able to purchase Oracle products from a distributor. The vendor is investing in the distributors to help them provide training and support.
“The remarketer program does not equate to simply throwing products out there and not enabling partners, but rather it’s enabling the VADs to enable partners,” said Althoff, acknowledging they expect some current Oracle partners will leave the partner program to go the VAD route.
“That’s fine in our eyes,” said Althoff. “Why should you be required to make a big investment in Oracle if you only do a few small transactions each year?”
Sage Software specializes in selling to the SMB space and Taylor Macdonald, Sage’s chief channel and strategy officer, said going down-market isn’t as easy as some vendors often think it is.
“If you serve the large market like the Global 1000 you quickly realize there are only 1000 of them and there’s no place to go up, so larger companies always come down,” said Macdonald. “I would say good luck to them, but serving this marketplace takes the right products, the right people, and the right partners that understand small business.”
Small businesses are very different from their large enterprise counterparts, said Macdonald. They don’t have a lot of IT expertise and often don’t have dedicated IT staffers. To sell to SMBs you need to understand the requirements of the market and deliver cost-effective solutions that marry technology with training and support.
“The history of people moving down-market would suggest it’s not on (Oracle’s) side to be successful,” said Macdonald. “The playing-field has been littered in the past with companies that have said we’re going to move down-market and it’s going to be pretty easy. But it’s not.”
This won’t be the last initiative from Oracle on the SMB front, said Althoff. The vendor is working on some refinements to its partner program to make it more SMB friendly, and to create an interim level between the VAD program and enterprise-class partners.
In Europe Oracle is currently piloting a program called QuickStart, which for a $300 fee gives a partner more benefits than a remarketer, such as software downloads and technical support. If it proves successful, Althoff said the plan is to roll it out globally.
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