Oracle is about to appoint a new distributor and swell its integrator ranks for an assault on the mid-market. But a market analyst is warning that its plans could eventually lead to margin erosion.
Oracle's general manager of technology alliances and channels, Fred King, said a new value-added partner would be unveiled this month.
The new distributor will push its eBusiness Suite Special Edition databases to mid-market software integrators. It will join Alstom IT, its Australian technology distributor and Igatech Consulting, its application distributor.
Unlike selling commoditised products, the value-added distributor would need a fairly deep knowledge of Oracle offerings, according to King.
"They must understand our licensing, software pre-configuration and be aware of things like redundancy," he said.
Like its main competitors, including SAP and Microsoft, the mid-market was seen as the next big market opportunity, King said.
The mid-market push has also included the bundling of Oracle's eBusiness Suite with Dell servers through a direct partnership it formed mid-last year.
Growing its number of integration partners would also be a priority, King said. It has worked with channel management consultancy, Channel Enablers, on building recruitment criteria. A selection matrix would be based on industry sector, geography and solution expertise, he said.
Key attributes for prospective integration partners included an installed base of clients and a good track record of sales to mid-market companies, King said. Technology and application partners will both be categorised into three tiers: entry-level Member; Certified; and Certified Advantage.
Recent recruits included BITG in Queensland and Delexian in WA. Existing PeopleSoft and JD Edwards partners would be considered on their merits. The merger of the three vendors, code-named project Fusion, is due to be completed by 2008.
Back in October, Oracle split its sales force into two divisions - applications and technology - to focus efforts in both markets.
General manager of Oracle technology sales, Norman Weaver, said the move was designed to counter a tendency to push quicker selling technology products at the cost of the application range.
Analysts at IDC expect Oracle's integration channel to benefit in the short-term from the PeopleSoft buyout as combined research and development (R&D) efforts spawned more solutions.
Eventually, however, they might find margins were squeezed as niche market solutions were commoditised by the new monolith's R&D powerhouse, IDC's Tim Sheedy, said.
According to IDC, Oracle's channel accounted for 30 per cent of its global revenues in the final quarter of 2004.