Oracle Seeks To Mend Channel Woes With New Rules, Programs

Solution providers say the changes can't come fast enough. They maintain that Oracle's hypercompetitive direct-sales culture frustrates channel partners now more than ever.

Rauline Ochs, group vice president of North America channels at Oracle, is doing her best to remold what partners term a "rogue sales culture" at the Redwood Shores, Calif., software powerhouse, according to solution providers. The question is whether her channel-friendly message will permeate up to the highest levels--that is, Oracle CEO Larry Ellison--and down to the sales staff who work the accounts.

Ochs said culture change won't happen overnight, but Oracle has plans to foster cooperation that will be rolled out over the next few quarters.

"We are republishing those base expectations and reminding folks about [acceptable] behavior," she said. "You can't hold people accountable if they don't know the rules."

Oracle also plans to publish margin guidelines and rules for its Global Channel Opportunity Registration System (GCORS), which was implemented a few years ago for lead registration. And Ochs said that starting next quarter, Oracle will award "Channel Hero" bonuses to one person in each of its internal sales organizations to promote better collaboration with partners. Regional and field-sales reps and management also will take courses and seminars to learn how to work better with the channel, she added.

Partners laud these efforts but insist that until Oracle changes the way it compensates its sales force, no real change is possible.

Mick Gallagher, CEO of Life Sci Technologies, a San Clemente, Calif., partner, echoed the sentiments of a half-dozen others who told CRN that Oracle must institute a "compensation-neutral" model so its sales staff don't lose margin when a deal goes through a partner. Ochs declined to comment on whether compensation changes were in the offing.

"The present rules of engagement confuse the customers, erode overall margin and create bad blood between the VAR community and the direct-sales force," said Deke Johnson, president of Aware Technologies, a Belmont, Calif.-based Oracle VAR. "Until there is comp-neutrality or the rules of engagement push the sales reps to work with a VAR whenever a VAR gets involved in the cycle, there is going to be conflict."

Oracle executives say the perception of Oracle as channel-hostile is outdated. Yet partners disagree.

"In my opinion, things have never been worse," said one longtime West Coast VAR, who requested anonymity.

"[Oracle] needs to stop the confrontation and work with us to do what's best for the customer," said Life Sci's Gallagher. "The product is second to none for an independent businessman to represent. It's just that the channel conflict is like climbing Mount Everest."

Mike Feldman, CEO of Lucidity, a Dallas-based Oracle solution provider, said he's happy with his Oracle relationship, for the most part. The fact that Lucidity provides implementation expertise at a price below that of Big Four-type consultancies is a perfect fit for Oracle, he noted.

But many say the current reality in many engagements is that VARs and Oracle reps play elaborate games of hide and seek with customer information for fear of losing margin or the entire deal to the other party. One partner recalled a multimillion-dollar sale he had sewn up--only to lose it at the last minute when the Oracle rep got wind of it and discounted the price $10,000 per processor in order to make his own sales quota.

The partners applaud Ochs' efforts but worry about their chances at a company where Ellison is seen calling all the shots and that implicitly condones a culture of cutthroat sales competition, even within its own ranks. VARs cited examples of Oracle field-sales staff undercutting their prices and competing with Oracle's own telemarketers.

Ochs, who joined Oracle last July, is in the unenviable position of having to sort all of that out. "My fear is that the shelf life on that job is two years, and she's well into her first," said a Midwestern partner, who asked not to be named.

Matt Reaves, vice president of software business at Agilysis, a Cleveland-based distributor, said he's optimistic. "Oracle has a very powerful name in the market. The day it can get its channel program as engaged as the others', it will have an unbeatable combination."