Oracle Unveils Open Distribution Program For SMB Software


Under the new Oracle VAD Remarketer program, announced Wednesday, resellers will not have to join the Oracle PartnerNetwork, sign contracts with the vendor or pay upfront fees to resell SMB software. Oracle says the open-distribution program is designed to remove hurdles that have made it difficult for solution providers to sell Oracle products in deals worth $5,000 and less " a market now dominated by Microsoft's SQL Server database software.

"It's just not a market that's well-suited for a direct sales force," Oracle president Charles Phillips said in an interview last week. "This is going to take us further down into the low end of the market. I think a lot of resellers would like an alternative to Microsoft " certainly the distributors have told us that."

Oracle is also streamlining its SMB software order booking and fulfillment process for channel partners and customers which now averages eight days and can take as long as six weeks. Oracle hopes to reduce the order-processing time to two days, says Judson Althoff, Oracle vice president of global platform and distribution sales. Althoff has been named head of the new Oracle SMB Technology Program Office that's managing the initiatives.

"They've never really had a strong channel that serves small business customers like Microsoft or Symantec have," says Forrester Research analyst Michael Speyer, who views the new VAD remarketer program as "a long-term market seeding opportunity. They definitely have some catching up to do with the small-business players."

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Until now solution providers that wanted to sell Oracle products had to join the Oracle PartnerNetwork (OPN) program, sign a partnership contract and pay annual fees in return for technical and development support, training, and sales and marketing assistance. Channel partners that wanted to sell Oracle's enterprise-class products and receive all OPN benefits paid $1,995 a year. More recently Oracle initiated the OPN QuickStart program that, for annual fees of $300, lets solution providers resell SMB versions of Oracle Technology products and receive limited OPN benefits.

But even those requirements are too much for solution providers that need to quickly acquire and resell Oracle product licenses to small businesses at very low cost and with few hassles. Citing IDC market numbers, Althoff says Microsoft SQL Server owns 63 percent of the market for database server deals valued at $6,000 and under. While Oracle leads in sales to customers with several hundred employees or more, Microsoft holds sway among organizations with 100 employees or less, he says. Microsoft charges no partner registration fee and can fulfill channel partner orders in as little as a day, according to Althoff.

With the new VAD Remarketer program Oracle aims to recruit a new class of reseller that has no direct affiliation with the vendor. Instead solution providers will purchase software licenses from designated distributors and receive all training and support from them. Oracle has tapped Ingram Micro, Tech Data Corp. and Arrow Enterprise Computing Solutions as its authorized distributors for the program.

Oracle "brought a very enterprise-centric program into the SMB market and the process was very laborious," says Jodi Honore, Ingram Micro vice president of vendor management, software, speaking of Oracle's earlier SMB market efforts. The new open-distribution model "takes away the barriers that's kept VARs away from Oracle. We're hoping this will change the sales volume dramatically."

Some of the distributors are launching their own programs built around the VAD Remarketer effort. Tech Data unveiled the Go 'n Grow VAR recruitment and enablement initiative that will offer sales, technical and educational support to VARs that enlist in the program, including direct mail and marketing assistance, technical Webinars and access to Tech Data's 4,500-square-foot TDSolutions Center for demonstrating Oracle-based solutions to prospective customers. "What it will do is bring in a new crop of resellers," predicts Stacy Nethercoat, Tech Data software vice president.

The distributor already carries the SE and SE One versions of Oracle's database, as well as Microsoft's competing SQL Server. Nethercoat acknowledges there could be some sales overlap between them. "Resellers like to have multiple products they can bring to bear to put together the right solution to offer their customers," she says.

But Oracle still faces the challenge of getting out the word that Oracle has database software and other products that are price-competitive with Microsoft and other vendors, says Mike Thompson, president and CEO of Groupware Technology, a Campbell, Calif., solution provider that resells SE and SE One versions of Oracle's database. "It's educating the customers. The thing with Oracle has always been the price point," he says.

Products covered by the new program include the Standard Edition and Standard Edition One versions of the Oracle Database 10g, Oracle Application Server 10g and Oracle Business Intelligence. The Java Edition of the application server is also offered through the program. Both Windows and Linux versions will be available.

Later this summer Oracle will add to the number of products available through the VAD Remarketer program, but Althoff declines to provide details. Phillips hinted that some of Oracle's Fusion Middleware software could be added to the program's product list.