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Oracle Partner Network changes stress VAR specializations

New Oracle VAR specializations being offered through the Oracle Partner Network are valuable but pricey. Will higher margins make up for the expensive entry costs?

SAN FRANCISCO -- Oracle VARs and integrators should specialize in vertical markets and specific technologies, company executives urged here at Oracle OpenWorld 2009.

By honing industry- and technology-specific skills, partners can solve customer problems and boost their own profitability, Oracle Corp.'s co-presidents Charles Phillips and Safra Catz said.

It's a message Oracle partners have heard privately throughout the year. VARs have been told that they will make more money if they develop skills in other areas of the Oracle stack, beyond the bread-and-butter database and middleware products.

Product lifecycle management, identity management and content management are among the technology pillar areasOracle is pushing. The theory is that these technologies -- which are mostly the result of prior acquisitions -- will carry higher margins than more broadly deployed products.

As reported last week, the company will also phase out its current Certified Advantage Partner, Certified Partner and Partner levels and replace them with Platinum, Gold and Silver tiers.

New Oracle Partner Network tiers
Remarketer: Low-end designation for VARs that want to compete with Microsoft and open source products. There is no fee or contract, and products are sourced through distribution.

Silver: For midmarket-focused VARs that want a direct relationship with Oracle. They have access to support and discounted educational products.

Gold: Four specializations are required. This branding alerts customers and Oracle field sales representatives that these partners have special talents.
 
Platinum: At least five specializations are required. Platinum VARs can identify themselves as experts in specific technology areas and industry verticals.

 The ability to advertise a partner's specific competencies is good for partners of all sizes, said Mary Niemann, the global Oracle alliance enablement manager for Capgemini. "It will help small companies especially, but for us, we can declare more specializations," she said. "What does 'Certified Advantage Partner' mean? How do you know what experience they have with PeopleSoft, [E-Business Suite], database? We couldn't differentiate before."

Several top-level Certified Advantage Partners warn that this change is no free lunch, however. Entry costs for the Platinum level -- not including any training and education -- will now be $9,995 per year, compared to $1,995 for the Certified Advantage Partner level. Sources said Oracle will halve the fee for partners that commit to making the transition by the end of the year.

A smaller Oracle VAR that already specializes in some of the company's less-entrenched technologies agreed that the branding will be helpful but balked at the higher price tag. "It's not so much the $10,000," this VAR said. "It's the five certifications. That's big money."

Oracle did not publicly specify the fees. Partners with expertise in niche products and vertical markets can take the certification test without paying for training, and if they pass, they're in.

With these changes, the goal of the Oracle Partner Network is to let specialized partners brand their expertise, said Judson Althoff, Oracle senior vice president of alliances and channels. Instead of being a generic Oracle Certified Partner, a VAR can carry an Oracle Platinum logo in, say, identity management, customer relationship management (CRM), healthcare or other areas.

"Think of the front page of Oracle.com," Althoff said in a pre-OpenWorld interview. "It is brilliantly simple. It breaks out the products into database middleware, applications and industries. There are 50 major subcategories under those four pillars, and we will offer specialization in every one of those areas and let the partners brand themselves by getting accredited."

What about Sun partners?

Althoff would not get too specific about how Oracle's acquisition of Sun Microsystems will affect Sun partners because the acquisition is not complete. But given the outlines of the new Oracle Partner Network, it would make sense to have Sun specializations, he said.

There is bound to be angst around this issue. Sun, after all, fields its own Java-heavy software portfolio.

Steve Giovannetti, CTO of Hub City Media, a Sun software integration partner, wants to know how "Sun's identity management stuff -- Sun Identity Manager, Sun Access manager, the Sun directory" will fit in with Oracle's own ID management offerings and how the two sets of channel partners will be handled

There are about 30,000 Sun partners and 22,000 Oracle partners worldwide, Althoff said.

"There is a decent amount of overlap in Sun's reseller base, but there are also a lot of ISVs and hardware-specific resellers that are not part of the Oracle partner ecosystem yet," he said.

Oracle is not alone in this push to specialize. Microsoft, SAP, Sun and Cisco Systems have all started down this path. Cisco, in particular, was credited by several Oracle OpenWorld attendees with pioneering this verticalization push several years ago.

This report was updated Monday afternoon with additional VAR comment.

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