Small businesses, which, Oracle spokesmen say, use almost no 'heavy' software and are mostly concerned with their survival in uneasy economic conditions, remain out of the company's focus. But the mid-market segment consisting of around 200,000 companies with 100 to 500 employees in the CIS countries will now get its close attention.
According to IDC, in 2004, SMB drew 55 percent of all IT expenses in Russia and, analysts forecast, the annual IT expenses growth rate within small and middle-sized businesses will have remained as much as 19-20 percent until 2009. Oracle could not pass by such a market. As its potential customers, Oracle considers companies that have already tried some sort of accounting and management software, like 1C:Enterprise, a software package quite popular in the country developed by a Russian company.
'Technologies for SMB are our investment zone' Boris Scherbakov, Oracle vice president and CEO at Oracle CIS rep office, said. He claimed that the amount of the investments was measured by 'millions of dollars'. 'We are not developing this market; but, as you know, oil prices develop it' he said.
In Russia, where, according to Scherbakov, business leaders often do not understand what they really need, 'an enormous billow of mid-market companies demanding reasonably priced reliable and scalable databases' is surging up today. As for business software, he thinks that small companies do not have such a big demand for it as well as middle-sized companies that are also extremely limited in budgets. Therefore it is too early for Oracle to speak about entering the SMB market segment with business applications yet.
Maria Kuvanova, was appointed the new SMB center manager. Previously she was Oracle's technology products sales manager in the SMB sector and was responsible for partnership network development in this segment as well. The center she is in charge of includes three units -- marketing, sales and telesales. The primary aim of the new division is increasing the customers' awareness of Oracle technologies for small and middle-sized businesses.
Nine of the ten SMB center employees have already started working. A sales manager has been assigned to each focus sector, i.e. telecommunications, public sector, financial institutions, retail, transportation and manufacturing. These sectors are currently making almost equal contributions to the center's revenue.
The call center has moved from Prague, Czech Republic to Moscow this year and employs two people now. They are involved in product promotions and providing the customers with information on technologies, the costs and licensing conditions.
As Scherbakov said the whole telesales cycle is not suitable for Russia as Russian customers mostly prefer a face-to-face contact. Nevertheless, last year, around 150 leads generated by the call center passed to over 70 Oracle partners.
The outcome of the first, most difficult year wasn't bad, Oracle representatives said. The number of customers rose by 418 to 650. The sales to SMB increased 75 percent, making up approximately 15 percent of Oracle's annual revenue from technology products in the CIS.
In the meantime, the company's partnership network structure started to change. While the total number of partners has increased by 55 percent compared with the previous year, the number of partners operating mainly in the SMB segment has grown 2.5 times. About a half of the new partners are entirely SBM-oriented.
Oracle lowered the threshold for entering the partnership program for companies focusing on small and middle-sized customers. The partnership fee for entering QuickStartPlus program, which provides joint marketing and sales support from the corporation and its distributors, has been set at just US$300 with the alternative of a free transfer to the standard program as soon as the partner's business with Oracle increases to a certain level. However, the period of membership in the simplified program has been restricted to 2 years.
'Ten new SMB-oriented partners join the network each month' Pavel Zakharov, Oracle CIS partnership manager, said. According to Oracle, around 200 developers from its partnership network offer approximately 300 custom products for small and middle-sized companies. Yet, against the common idea of the middle market craving for off-the-shelf solutions, 80 percent of customers purchase databases to run applications developed in-house, Zakharov noted.
The SMB center is planning to boost license sales by 40 percent and double the number of customers, with 70 percent first-time clients, in 2007 fiscal year.
'We're very interested in the segment of 1C customers. They are already using some databases for their business software. And we'd be happy to consider transferring their 1C systems to Oracle database', Kuvanova said. She has neither officially confirmed the fact of negotiations with 1C nor has she denied the possible talks with this vendor in the future.