Oracle Corp. is expected to revamp its partner program next week in response to complaints that the current program does not let partners clearly differentiate themselves.
The changes will come at a price. Sources said Oracle will require partners to invest more to earn top-level designations in the Oracle Partner Network (OPN). Oracle started briefing some sources on the changes last spring, with executives saying they would offset these higher entry costs by offering higher margins on sales.
As part of the shift, The OPN will also eliminate its Certified Advantage Partner, Certified Partner and Partner levels and replace them with Platinum, Gold and Silver tiers. Details are expected to come out at Oracle OpenWorld in San Francisco on Sunday; Oracle would not comment.
Sun VARs fear eclipse
This OpenWorld will be the first since Oracle's near-complete acquisition of Sun Microsystems. Many Sun partners are hoping for reassurance beyond Oracle's recent Wall Street Journal advertisement that promised to continue funding Sun hardware research and development.
Some of their fears about the future were allayed when Oracle announced a Sun-based Exadata database appliance last month. But that box is based on Intel processors, so there is still concern that Oracle might pull back on Sun's SPARC chips and servers -- which many partners see as superior (and higher-margin). Partners expect to hear news about more hardware-software bundles at OpenWorld.
Several Sun VARs said hardware rivals Hewlett-Packard and IBM have approached them in recent months, hoping to play on the fear, uncertainty and doubt around the future of Sun -- and to recruit them and their customers.
On the software side, solutions providers that built their business on Sun software will also have to navigate Oracle's byzantine organization and rules of the road. As BEA Systems and Stellent VARs learned the hard way after Oracle purchased those companies, they will no longer get a cut of recurring maintenance and support contracts, because Oracle keeps all that revenue to itself.
"BEA partners used to get a cut of the maintenance and very generous [marketing development funds] and a lot of latitude in how to use it," said analyst Ray Wang, a principal with Altimeter Group. "No more."
Still, Oracle did a great job integrating BEA's WebLogic application server franchise and other key middleware into its own Fusion push, Wang said.
"It actually ripped out its own stuff and put in WebLogic," he said. "That makes sense, because WebLogic was the winner and by doing so, Oracle convinced high-end companies that this platform is even more viable and valuable than before."
Scott Barnett, co-founder and chief operating officer of Bluenog, a long-time BEA partner in Piscataway, N.J., said his experience with Oracle was mixed.
"We joined OPN before the BEA buy actually closed, because we wanted to learn about the Oracle culture, and that turned out to be a positive thing," he said.
But it was not positive enough to make up for lost maintenance and support revenue.
"That was a big hit for us," Barnett said.
His customers were also displeased that they could not renew through Bluenog, as they had always done in the past, he said. When Oracle raised BEA [and database] prices in summer 2008, "that was like adding insult to injury," he added.
"BEA, as far as I can remember, had not raised their prices or their maintenance for at least five years. Then all of a sudden you get this huge hike," Barnett said.
The fact that it came in the midst of a terrible recession irked many users, other partners said.
In the aftermath of the BEA deal, Bluenog became more of an ISV, developing its own solutions. The company's Integrated Collaborative Environment is more affordable for midmarket companies than Oracle software. But these kinds of companies are not big enough to demand the huge discounts that Oracle typically works out with its largest customers.
Mike Chadwick, CEO of Prolifics, a New York-based solutions provider, actually moved his company away from BEA before the Oracle buyout. There is more customer interest in moving off of BEA WebLogic to IBM's WebSphere since the Oracle acquisition, he said.
Navigating the Oracle maze
Longtime Oracle partners shake their heads when asked how newbie VARs will fit in.
"They've gone from having a good thing to trying to figure out the Oracle maze," said one Oracle partner in the Midwest.
Oracle has its own terminology that is not immediately clear to outsiders, this partner said. "Technology" refers to the database and middleware business, as opposed to the business applications group. And "pillars" are designated technology areas within those groups.
"By the time you separate tech from apps and the pillars within tech, and then state and local [accounts] from education from healthcare [accounts], you have a huge headache," he said. "Then there are the named accounts. You can sell to anybody, but if you [go into named accounts], you're going to compete with Oracle all the time."
Many Oracle partners acknowledge that they sound like broken records when they talk about channel conflict and getting cut out of the maintenance flow.
Questioned about why he remains with Oracle after more than a decade, Mick Gallagher, managing partner of LST [LS Technologies LLC], a Fallbrook, Calif., partner, asked what the alternatives are. Mentions of IBM and Microsoft prompted laughter.
"Look, despite all the monkey wrenches [Oracle] throws in year after year, we still make money," he said. "I guess that's the bottom line."