Oracle: Sun Resellers Need to Invest In Us To Make More Money

Sun resellers are champing at the bit, anxious to know what changes are in store for them under their new Oracle PartnerNetwork contracts. Oracle executives said the details will be available soon, but they hinted at the Avnet Technology Solutions Partner Summit 2010 this week that VARs can expect to be compensated more for selling Oracle/Sun servers to Oracle software partners not on the Sun platform.

CRN’s Scott Campbell sat down to talk about Oracle’s channel strategy with Tom Wagner, group vice president of North America hardware alliances and channels, Jim Standard, group vice president of global alliances and channels, and Lydia Smyers, vice president of worldwide alliances and channels. The following are excerpts from the conversation.

VARs are hungry for details about the new channel program and are worried because of the old saying, ’They don’t know what they don’t know.’ It’s hard for them to plan their businesses without details. You received an ovation on stage for the mere mention that there would be an incentive program. Can you tell us anything more about that?

Standard: We are going to have an incentive program. Most of it has been outlined internally. We are waiting for final executive approval. We’re waiting for approvals of customer levels and product sets. [There will be] certain Oracle IP that we want to drive in enterprise accounts and some stuff around [selling] database acceleration. We’re going to arm the partners with a strong program. We want to commission them around selling those products and into certain specific accounts. We have a named account list. It’s a list of customers that Oracle aggressively sells to. There’s 187 in the U.S. and incentives will be greater outside of those accounts.

Smyers: It’s a significant opportunity for the partner base. We take newly acquired companies and turn around loss situations. What that means for our [Sun] partners is they have a profitability path to look to. They will get back to delivering value-added solutions, but also have products that have true market demand.

Are most of the VARs at this conference legacy Sun VARs or are there some VARs who were legacy Oracle partners that didn’t sell Sun? How are you getting one to sell the other?

Wagner: The majority of guys are legacy Sun, Sun Partner Advantage [program] . Clearly, a number of former Sun top partners have been [Oracle] software partners as well. As they improve and move up in the stack, it enhances their differentiation. A number of folks are doing it today. It’s not unusual to see lot of Sun guys selling Oracle too. There is a mix at end of the day.

Will the new channel program include specific programs to help ease the transition?

Smyers: We have been spending millions in our enablement 2.0 platform. These boot camps are held in rapid fashion to get our partners up to speed to enable them to start adopting those technologies. We also have guided learning paths that map to database, middleware, servers, storage, applications and industries.

How much do you envision having legacy Sun partners truly embrace Oracle if they haven’t in the past? What’s your messaging for why they should do that?

Standard: We may have folks specialized in server or storage capabilities. They move into one or two new areas close to what they do already. There’s 10,000 [Oracle] products out there. Even Charles [Phillips, Oracle president] said, you can’t be specialist in everything. Pick one or two and be relevant to them, not all of them. I’m a Sun partner, but I also do BI. That’s going to be a key solutions message. That’s what we’re trying to get them to do. Don’t try to swallow the ocean. Get a piece of it, get customers interested, go get specialized. Once you specialize in one or two areas, our direct sales force will look to you as a valued partner. We look for specialized partners.

NEXT: Fishing In a Broader Pool of Water

It sounds like a key message from Oracle is that VARs will have to invest in their businesses, sell more and different things to customers. Oracle is certainly not the only company seeking to do that. HP, IBM and others do the same thing. But Oracle is the one going through the big integration [of Sun and Oracle]. Are you worried that VARs won’t listen to that message?

Wagner: I think there will be a subset of our partner community who will for whatever reason continue to try to compete in general purpose infrastructure business. That’s the legacy Sun channel. That’s what they do. These are businesses around selling servers and storage, around virtualization, consolidation, core practices that are related to the management issues related to IT.

What I think is so critical is for partners to really get their heads around the notion of being a part of an ecosystem associated with a company that is a true systems company. That’s fundamental difference between Sun and Oracle. If you want to, go fish in the 35,000 Sun customers worldwide, or fish in Oracle’s 130,000 [in the United States that aren’t on the Sun platform]. Move up the stack, make your self more relevant, work to solve business problems. Fish in a broader pool of water. The earnings opportunity is just exponentially greater. It’s really important and we need to help them get their heads around this paradigm. I believe that the end of the day, guys who embrace that model will succeed.

Standard: We mentioned the 130,000 customers at least three to five times [on stage at the Avnet show]. We’re running like hell to get them on that platform.

While HP and IBM try to get VARs to sell more of their own products, Oracle has an advantage with the Sun VARs because it has an existing customer base not on the Sun platform. How important is that to get across to partners?

Wagner: That’s so key. Our partners have something to say to our customers.

Standard: It’s not all reactive now. It’s all proactive now. We’re spending $4.5 billion this year [on research and development] in the Sun/Oracle stack.

Wagner: Sun in the channel, as a core component for go-to-market, for years was on its heels. They were constantly addressing things that Oracle never had to deal with: ’Will you [Sun] be around? Will you be around?’ All the FUD around Sun’s viability is off the table. Larry [Ellison, Oracle CEO] has made it clear he’s not in the business to sell off servers and storage. We are a true systems company. Jim alluded to it, we’re going to spend $4.5 billion. We are investing in this stack and at the end of day, guys operating high in the stack today see the opportunity. They truly do.

I’ve spent hundreds of hours with these guys. They all see it. It’s rooted in this notion: I have more to sell. I can differentiate like never before. And they don’t need to differentiate on price and fulfillment. The channel stands to win big. But it does represent a fundamental shift. If you think about the two go-to-market models, legacy Sun and Oracle, Sun was very channel centric. That was the result of the desperation, the systematic dismantling of the direct sales force. And through that, market expectations don’t decline. Shareholders still expect the company to grow. You need a market strategy to do that and that’s why they had a heavy channel focus.

Fast forward to Oracle. Our company is rooted in the direct selling model. We’re not going to sweep that under the rug. As I indicated earlier, our ability to maximize our potential in the market is great. We are direct sales at the core, but to achieve our maximize potential, there are huge gaps everywhere with our capabilities and the capacity we have to penetrate the market at the level we think we can. Herein lines the role of the channel. It is important to let go of the past. It is the past. We’re one of greatest companies on planet.

NEXT: What’s In Store For Oracle’s HP, IBM Partners?

Smyers: Change has to be embraced at this point. Jeff [Bawol, president of Avnet Technology Solutions, Americas] mentioned this morning that it’s an intellectual vs. emotional decision VARs face. If you look at the opportunity intellectually, it’s clear as day. But if you get emotion wrapped around it, it becomes challenging. How do you leverage that to move my model to change how business is doing.

Standard: There are three focused opportunities today, and we’ll have marketing plays through Avnet around them: database acceleration, CMT and middlware. We will have marketing training to go at solution-oriented VARs. Avnet is doing training next week. We’re going through Avnet pretty hard to make those solutions available and the training will be there.

What percentage of Sun VARs would you say ’get it’ now? How many get what your message is and working toward changing their model?

Wagner: It’s hard to put a physical number on it. Let me respond this way, partners that are operating higher on the stack see it. Those that build their differentiation around price and fulfillment will be challenged in the model. There whole business is based on coming to you and saying I will match the competition’s price and get it to you in three days. In the Oracle model, that’s a non-starter in my view. I submit to you, guys operating high in the stack get it and I believe will make the investments to go with us. They don’t know how to understand the sheer brand leverage of [Oracle], where we get this portfolio of leads. They have something to say that’s meaningful to say. We have a lot of great partners who will make it to the other side.

What will happen to legacy Oracle software VARs who sell on Hewlett-Packard or IBM or other platforms? Will they have a place in the new world?

Standard: We always want them to sell Sun, no ifs ands or buts. We will engineer products and decisions based on the performance on this [Sun] product. Of the partners on different platforms, that’s their ultimate decision, but we have huge benefit on this [Sun] side. We’ll be clear on that and R&D will make it run based on Sun performance first.

Do you think you’ll lose a lot of overall partners that way?

Wagner: I hate to speculate on what will end up. We have a huge set of really strong solution partners. The ones that see it will adapt now and early be the ones, when Oracle starts investing in Sun and Solaris and SPARC, they will be the ones selling the solutions first.

Smyers: It’s an evolution of our partnering system for the last 10 to 15 years. It’s a natural opportunities for database partners, now to extend into BI. Some have done that.

Standard: We don’t have too many database only partners. We’ve moved our partner base with us. Some of them go willingly. Some go kicking and screaming.

Of all the acquisitions Oracle has made through the years, can you give an example where the partners did go kicking and screaming, an experience that can serve you now as it applies to the Sun guys?

Standard: Maybe the JD Edwards guys. They were big IBM guys. It’s understandable. It’s not something happened overnight. But it’s something that happened. We have great JD Edwards-only partners. They embraced it. [Sun VARs] will embrace the change as well.

Smyers: Each acquisition with Oracle is a study of one acquisition. By design, they’re so different but we’re completing a broad solutions portfolio to our customers. Each of these acquisitions bring different plays, different channels strategies, different product strategies. It’s hard to make a parallel, but we have the experience of integrating operations and folding products into our portfolio.