Continuing the spree of expected announcements, it was the unveiling of the Oracle and NetSuite partnership today. True to the leak from the Q4 earnings call last week Thursday, this week we saw Oracle partnering with Microsoft on Monday, Salesforce.com on Tuesday and now NetSuite on Wednesday. What will Thursday bring?
We have shared our takeaways from the Microsoft and salesforce.com partnership announcement already so let's dissect this one:
Takeaways from News Facts
Oracle and NetSuite announced a strategic alliance focused on plans to deliver integrated HCM and ERP Cloud Services for mid-size customers.
My POV
Surprisingly this partnership is all about HCM - and no mention of any Oracle technology products. Something that was more or less expected after the earlier announcements of the week. But then using Oracle technology at NetSuite does not come at a surprise, as the company has been closely held by Larry Ellison and has been using the Oracle tech stack extensively in the past. Instead the focus on HCM is an exclusive enterprise application focus.
But ultimately the HCM topic is also not surprising since HCM took a lot of space at the last NetSuite user conference, only that back then NetSuite planned to partner with a number of different HCM vendors, tribeHR being the most prominently featured one. And this may still be the direction going forward - only that now there are Oracle HCM products in play.
Traditionally NetSuite has focused on small and medium businesses (SMB) - not the focus for Oracle HCM indeed Oracle partners with NetSuite for SMB business. We will have to see how the Oracle HCM offering can scale down both process and cost of ownership wise.
Deloitte plans to work with Oracle and NetSuite to develop a practice with highly skilled practitioners specializing in tools and implementation services to help customers adopt the soon to be integrated SaaS technologies faster and more seamlessly.
MyPOV
And then there is the touche by Deloitte - pun intended - which has one of the largest HCM practitioner and consultant teams - providing the necessary implementation services for the combined offering. This puts Deloitte in the driver seat as in regards of getting a piece of the implementation business for the new combined offering. I would expect Deloitte to provide also a significant number of hands to build the integration. This will aide Deloitte's credibility and help NetSuite on the resource side, where I see their product development team stretched quite thin (see findings from SuiteWorld here).
Additionally, Oracle plans to develop a product integration and go-to-market strategy with NetSuite for Oracle HCM Cloud and NetSuite Cloud ERP to deliver a single, integrated solution that seamlessly connects HR and finance systems for mid-size customers.
MyPOV
And finally true to yesterdays announcement with salesforce.com, which pleaded for the pre-integration of SaaS solutions, created and maintained by the vendors - the same is provided in the NetSuite and Oracle HCM case.
Takeaways from Alliance Section
Mid-size customers can gain a competitive advantage by quickly implementing SaaS solutions at a lower cost.
Oracle HCM Cloud including Global HR and Talent Management, combines advanced technology, tight integration, best HR practices, and social capabilities. From recruiting and managing talent, to accurately forecasting future workforce needs, Oracle HCM Cloud enables companies to proactively manage HR operations while focused on strategic business initiatives.
NetSuite Cloud ERP offers an integrated solution that connects a business across financials, sales, service, and fulfillment.
MyPOV
No surprises here. Just expected NetSuite to also mention manufacturing, which was a big push back at SuiteWorld
For large organizations where Oracle HCM is already deployed, two-tier deployments of NetSuite in smaller subsidiaries will easily connect with its Corporate HR system.
MyPOV
This is to be interpreted that the two tier ERP pitch with NetSuite being used for smaller subsidiaries of larger corporations, who run Oracle in the large organizations - is alive and well. But it also makes clear, that HCM in the case will be run centrally and globally. Certainly a cost advantage, but as mentioned, we will have to see, that Oracle HCM is not a to expensive solution to implement for the smaller subsidiaries. And then it may pose some interesting integration challenges between Oracle HCM and NetSuite in the subsidiaries.
Deloitte has a business-driven HR approach, global reach, functional depth and SaaS experience to accelerate both the business value associated with HR and ERP transformations, as well as process and technology cost saving efficiencies.
MyPOV
Ok - this translates into a preference for Deloitte doing the first integration work, but I am sure if customers insist on an other SI, that would not hinder a deal from being closed. SI differentiation - even with an early placement in a partnership like this - remains a challenge for the SIs.
Takeaways from the quotes
"Driving the development and retention of the right talent, and getting strategic data around HR practices can help mid-size companies transform their business operations," said Oracle President Mark Hurd. "NetSuite and Oracle are now working together to provide access to Oracle's leading enterprise-level cloud-based HR & Talent Management solutions that are integrated with NetSuite's Cloud ERP suite applications. With Deloitte implementing these integrated solutions, mid-size companies can quickly gain access to an incredible new level of HR management that can help impact their bottom line."
MyPOV
No HCM event without retention and flight risk mentioned in 2012 / 2013. There is a touche of Deloitte in this - but no exclusivity statement.
Side comment for the PR pros - this press release comes from NetSuite - so it's unusual for the partner to be quoted first, usually the issuing entities executive has the first quote.
"We are excited to work with Oracle to bring customers an integrated solution that combines NetSuite's solutions that automate business processes with Oracle's suite for managing people processes," said Zach Nelson, CEO of NetSuite. "Customers will benefit from the commonality of the products' underlying Oracle-based architecture and the enormous investment in R&D and customer service that both companies bring to the table."
MyPOV
While Hurd did not use integration, Nelson uses it once, like Benioff yesterday. Nothing compares to Ellison who used it three times in its quote yesterday. But yes integration is key and customers expect it these days, out of the box.
Interesting Nelson states the commonality - which is hard to see today. For a business user that usually means user interface - but these are differing quite extensively today. If both Oracle and NetSuite wanted to change that - it should have been announced. Behind the scenes commonality usually means architectural harmony - and though both NetSuite and Oracle HCM are build on the Oracle technology stack - some harmonization in utilized products and versions would have to occur. This is equally a point both companies should have mad clear today.
"Mid-sized companies are looking for solutions that allow them to be nimble and respond quickly to market opportunities," said Jim Moffatt, CEO of Deloitte Consulting LLP. "This newly integrated solution will help these organizations deliver better service at a lower cost, ultimately giving them an edge in the war for talent and a true competitive edge."
MyPOVIt's somehow ironic, that the two product executives - Hurd and Nelson - leave it to the service executive to stress lower cost of ownership and better service from an integrated solution. In the past these service provider involved offerings usually have not materialized in too much business for the involved service provider - but we will see how well this works for Deloitte in this case. Let's not forget Deloitte has been partnering with Workday for a while.
Absence of technology and hardware
To some point surprisingly there is no reference to any Oracle technology products. In my view that's not a bad thing, as the expectation is, that NetSuite is using these to the best of their capabilities already. So mentioning here may have been degrading to their reputation. But there is also the possibility that the technical nature of the integration is not sufficiently hashed out yet.
I noticed gladly that the Twittershere and pundits did not lament the lack of hardware related commitments in this announcement - as it is the same as with salesforce.com - if needed NetSuite will use Exaxxx to their advantage. No need to add to this press release.
Workday angle
A lot has been written and said about Oracle doing all these partnership to isolate Workday. Not so much in my view. Workday has not focused on SMB like NetSuite and the companies did not partner for any offering. And I don't see how it is easier for NetSuite to sell against Workday given the partnership with Oracle for Oracle HCM. Customers will decide which of the two is the better HCM product - Oracle HCM or Workday - irrespective of NetSuite. What NetSuite and Oracle could do (like SAP and Infor, too) - is to provide enterprise process level differentiators out of the box, that combine HCM and other enterprise processes. Workday would have to enable the same via interfaces.
But HCM is hot and drives enterprise automation
Across enterprise automation - HCM is certainly the hottest area. We know that since SAP and Oracle invested into buying SuccessFactors and Taleo. So vendors without a HCM strategy - need a HCM story quickly. See salesforce.com yesterday, see NetSuite today. And market pressure most be so high, that NetSuite could not afford to wait for their many partnerships announced at SuiteWorld, to come to fruition. And certainly integrating six and more partners is also a bigger product investment.
MyPOV
While Oracle is now being understood as a provider of cloud technology, today's announcement makes Oracle also a provider of critical SaaS functionality. If you will, the partnership week started with technology only (with Microsoft) to a mix (with salesforce.com) to an applications only (with NetSuite. The salesforce.com partnership certainly can question Oracle's investment in CRM products. But don't expect for a second that Oracle would stop CRM investments. Instead Oracle is working hard to provide the next generation of CRM tools in the area of customer experience and marketing.
For NetSuite this alliance fills the current void in the HCM area, that was something the company only was able to close through partnership - given the recent love and with that investment focus of manufacturing.
So overall again a good move by Oracle and a good outcome for Netsuite. We look forward to learn more on the nature and extent of the integration and of Deloitte's role in detail.
