Oracle-BEA combo to boost partner product portfolio

By Barbara Darrow and Colin Steele, Staff 17 Jan 2008 | SearchITChannel.com

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IBM's application server WebSphere is "the big target," said Scott Jenkins, CEO and managing director of The EBS Group, a Kansas City-based Oracle partner.

What Oracle gets out of the BEA acquisition is a league-leading application server in Web Logic, one that even Oracle insiders admit is faster and more standards-based than Oracle's own app server.

More on Oracle's acquisition of BEA Oracle to buy BEA Systems   The SOA implications of Oracle's BEA purchase

Oracle execs have touted the company's Fusion middleware as "hot pluggable," in that it will interoperate with third-party offerings from both BEA and IBM. They have also been careful to pledge continued support for their apps to run on databases from archrivals Microsoft and IBM.

With furious mergers and acquisitions activity continuing in technology -- in the past two weeks alone, Sun Microsystems proposed an $800 million buyout of MySQL BA; Oracle bought Captovation Inc.; Microsoft announced a $1.2 billion buyout of Fast Search and Transfer; and SAP announced the first fruits of its three-month-old acquisition of Business Objects SA -- clearly, vendor-affiliated channel partners have to be on their toes.

While Oracle's acquisition of BEA gives both sets of partners more stuff to sell, it could also set off in-territory contention between partners for Oracle's business.

The consolidation in general is both good news and bad news for partners, according to Yacov Wrocherinsky, CEO of Infinity Info Systems, a New York-based Sage and Microsoft partner.

"On one level, consolidation makes life easier for us, because there are fewer companies defining the playing field. It's almost like Republicans and Democrats versus a lot of splinter parties," Wrocherinsky said. "The challenge is if the acquisition ends up impeding the evolution of innovation. Will the buyer invest in the purchase or kill it?"

He said that, as an example, IBM's buyout of Lotus Development Corp. helped slow momentum for Lotus Domino/Notes. "Lotus Notes was taking off until IBM gave it the big hug," he said.

Generally, partners of the buying company are better off post-acquisition because they get new products and services to sell, said Paul Myerson, senior channel analyst for The Enterprise Strategy Group in Milford, Mass.

"Once things get integrated and streamlined, it will make things a lot easier," he said. "There's a tremendous upside."

But there can be bumps. Most problems occur when the vendors integrate their business processes and channel programs, which can adversely and inadvertently affect partners. As long as the vendors have channel-friendly reputations, and their partners trust them to do the right thing, the problems usually work themselves out, Myerson said.

"There's some wait-and-see there," he said. "It depends on the company, and it depends on the partner."

The BEA acquisition, the latest purchase in Oracle's hyperactive buying binge, affirms the belief of many observers that the IT segment is maturing, and for vendors the choices are to get bigger or get gone. "There is so much pressure from Wall Street for these companies to grow or else," Wrocherinsky said.

"By the end of 2008, there's going to be like three companies left," joked Darren Bibby, software sales channels program manager for Framingham, Mass.-based IDC. "I don't know how many more mega-deals there can be."

Oracle's acquisition of BEA will inevitably cause confusion in the channel as the two companies integrate their channel programs, but solution providers should persevere and be optimistic that the merger will eventually help them. BEA partners especially will be able to take advantage of Oracle's name recognition, expertise and resources, although "it will probably take a year before BEA partners feel they're a part of Oracle," Bibby said.

Another wrinkle in this deal is that neither BEA nor Oracle is known particularly for its channel friendliness, although Oracle has made some progress in recruiting and retaining partners in the small and medium-sized business (SMB) space, especially in applications.

What is very clear is that Oracle must manage the converging channels very carefully. Many Oracle partners, especially in the enterprise arena, already have customers running Web Logic, so it is conceivable that they will start bumping up against BEA partners in those accounts as competitors going forward if Oracle does not do its job.

But some partners and analysts say that Oracle's digestion of PeopleSoft and Siebel Systems have gone smoother than anticipated in terms of both internal reorganization and bringing partner sets into a single, if segmented, fold.

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