Oracle Faces Uphill Channel Climb

The expanding database company will have to work hard to gain the trust of SMBs.

It appears that 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 Corp. recently signaled some interest in the upper end of the SMB market when it disclosed that it has signed Ingram Micro and Tech Data 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, but for a more limited product set.

"Were breaking the myth that Oracle is built for enterprise-space solutions only," Judson Althoff, Oracles vice president of global platform and distribution alliances, told The Channel Insider.

/zimages/6/28571.gifClick here to read more about Oracles vertical push.

But no sooner had Althoff spoken than 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 its not talking about one thing while doing another, its hard to keep up with Oracles acquisitions. This year alone, the purchases included PeopleSoft, which already had acquired rival ERP vendor J.D. Edwards, as well as Retek, Oblix, ProfitLogic and Siebel Systems.

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 hard to gain the trust of the VARs and integrators it needs to succeed in the SMB space.

/zimages/6/28571.gifRead more here about Oracles channel challenges and what the company needs to do to convince resellers it means business.

Gaining that trust wont be easy; the companys 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 maintains certain customer leads. Some of the disputes resulted from price-comparison calls from customers to the vendor and the VARs.

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

Of course, channel partners have viewed this as a not-so-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 an efficient and cost-effective channel infrastructure for a vendor. 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 do only 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 Corp., SAP AG 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.

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