One of the largely unheralded changes at Oracle this year has been its sudden willingness to partner at a strategic level with other enterprise software companies. This departure from previous strategy has been noted here before, as has its implications for the enterprise software community. (Great if you’re an ISV looking for a strong partner with long reach and a huge sales force, bad if you’re an Oracle competitor trying to build your own partner community.)
The latest announcement from the newly partner-friendly Oracle comes in the form of a joint agreement between Oracle and E2Open, one of the poster-children of the nascent SaaS 2.0 movement. The specifics of the deal are simple – Oracle Transportation Management is now strategically connected to E2Open’s ELN supply chain hub-in-the-cloud, making it possible to use the massive connectivity and aggregation of data in ELN to power OTM.
Networks like ELN – really latter-day net markets – have an enormous value to tools like OTM by providing data and process connectivity to a worldwide supply chain network that grows more valuable to its stakeholders the more that stakeholders in a supply network sign on to the network. I’ve been a fan of this model of SaaS company for a while, as the self-improving, self-appreciating aspects of E2Open’s ELN provide a significant value-add that cannot be brought to bear just by flipping on-premise functionality into the cloud a la Salesforce.com
What is perhaps more significant than the new functionality unleashed by this agreement is what the agreement itself means to the industry. Oracle’s avid interest in cultivating strategic partnerships has become a virtue that gives the company some new credentials beyond its highly successful M&A chops (though, I have to question the pending Sun deal – this one may break the mold yet.) Those new partnership credentials have yet to morph into a full-blown ecosystem strategy, which may mean a reprieve for SAP, which has made its ecosystem a calling card in the enterprise software market for the last few years.
But whether there is a formal program or not, the softening up of Oracle’s former strategy – as characterized by Charles Philips’ comment three years ago that “if we like a company and they demonstrate success in our market, we’ll buy them” – is a major move in a market that needs to track and understand every move by top tier players like Oracle and SAP.
The bottom line analysis is that this is a smart, pragmatic move on Oracle’s part that also puts the pressure on SAP to put up or shut up in the partnership/ecosystem category. The idea that an arms race might now be on in the enterprise software market for the best partner ecosystem should be somewhat heartening to the myriad companies looking for a big brother or sister to walk them into the CEO’s office. The cautionary side to this is that a stepped up partnership strategy may signal a slow-down in Oracle’s acquisition strategy, something that every privately-held ISV would hate to see happen in a market that hasn’t had a decent run of enterprise software IPOs since forever. But, a strong partner is certainly better than going it alone, and as such the new Oracle may engender the same interest in the software community as SAP did when it acquired Versa and launched its own ecosystem/IPO-alternative market.
It will be interesting to see what level of exclusivity Oracle requires of its partners in order to play in the Oracle partner sandbox. E2Open already has a number of SAP and Oracle customers, and is a “Powered by NetWeaver” SAP partner as well. That could signal a certain willingness to waive the usual exclusivity requirements, though E2Open is a relatively big and established company. Things may be tighter for the smaller ISVs that both SAP and Oracle are courting.
Whatever the details, the overall strategy is good for the industry, and good for customers looking for choice, built-in integration, and a set of vendors that come to the table already playing well together. The trick will be to keep things that way, and avoid the puppy farm partner mentality that places a greater value on quantity than quality. So far it looks like Oracle is getting it right.