There are some vendors that live in the large enterprise space, vendors that we don't think about when the conversation turns around to small businesses. Cray is like that in the hardware world, and in the software realm SAP and Oracle tend to have "really big company" written all over them. I was a little surprised, then, to get a call from Oracle asking for a conversation to talk about their products for smaller businesses. I thought it would be interesting to hear what they had to say, and I was right -- it was a most interesting conversation. I spoke with Tony Kender, senior vice president of Oracle's Global Accelerate Program Office, about the program, Oracle's products aimed at the mid-market, and how Oracle defines the small-business end of its market.
We began by talking about how Oracle defines the small and midsize business market, and why there's an emphasis on it now. According to Tony, the current emphasis goes back a couple of years, to a point when Oracle realized that roughly two-thirds of their customers were in the midsize space. These are companies with revenue of $500 MM or less. The company thought that there was a market mismatch -- people didn't realize how much of the customer base was small. Now, you have to notice that Oracle's definition of "small business" skews a bit larger than that of many other software vendors. Tony admitted that Oracle doesn't actively market to companies below $30 million to $40 million in revenue, but when casting their net with partners they will get companies that are smaller. He said that Oracle really doesn't have customers that have as little as $1 million in revenue, but they go deeper into the small-business market than before.
We started talking about how Oracle works with the smaller businesses, and the conversation very quickly turned to their "channel program," the collection of value-added resellers (VARs) and system integrators that create applications for specific small businesses. To be successful in working with smaller businesses, you have to have a good channel program. Usually, I wouldn't go into a lot of detail on a vendor's channel program, but since Oracle is a company that is working to include more small businesses in its program, it seems like a worthwhile topic to spend a few words on.
Oracle calls its channel program "Oracle Accelerate," and it has three pillars: The first is, not surprisingly, software (both applications and database). These go into the small business category because Oracle repriced versions of both for the mid-market. The other thing they did was break the software into chunks by market segment. Here's an example: Professional services companies don't need manufacturing or supply-chain modules in manufacturing software, so they will only have to buy the modules needed for their businesses. Yes, I know -- this radical concept of allowing customers to only buy what they need can't last, but I think it should be an interesting experiment while it lasts.
The second pillar is made of Oracle Rapid Implementation Tools (Business Accelerators). These are rapid implementation tools for the software suites. Oracle thinks they can pre-configure the software for about 80% of functions that small and midsize businesses need. They built business flows for specific companies and markets and put a front-end wizard on the process. They give the accelerators to their channel partners, so 80 percent is done, and the partner can then do the customization for individual companies. Tony told me that Oracle has had encounters where companies were up and running within 30 to 45 days of implementation beginning. That's an incredibly short implementation time, and the sort of schedule that can leave project leaders at Fortune 1000 companies weeping from jealousy.
The third pillar is the channel organization. Tony says that Oracle has tried to build a channel for the customers that exist in different countries. They now have have 200 industry-specific solutions around the world. Tony told me that Oracle is working with the companies in its channel program to identify additional solutions that will be offered.
So why do I think that Oracle's emphasis on the small and midsize business market is important? In part, it's because I'm interested in seeing just how important smaller customers are to a vendor that's identified as a supplier to the largest enterprises. Another reason is that I'm convinced that small companies will be the collective engine that drives the economy out of the current difficulties. Tony talked about the needs of smaller businesses in difficult economic times. "Oftentimes, when the economy gets tough, you see very large companies streamline and cut back, but the small guy can't do that. We see a need for smaller companies, in hard economic times, to compete with large companies, compete more effectively, and streamline supply chains -- they need expert help to do that. If our channel partners can do that with a lower cost, they go into this perfect storm with products and services that will help the small companies survive and compete. It lets the customers come out of this in better shape, and better able to compete when the economy improves," Tony said.
Oracle software certainly isn't the solution for every company, but their emphasis on small and midsize business is a powerful testament to the impact smaller customers are having on suppliers throughout the computer industry. My next post features another of these enterprise-class vendors that is putting new energy into the small business market -- it's a vendor you'll recognize, and I think you'll be as surprised as I was when I got their phone call.