Oracle Says Recent Initiatives Are Reducing Channel Conflict

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Oracle channel executives say they are making progress in addressing the company's long-running problems with channel conflict.

This week at Oracle OpenWorld in San Francisco, channel executives said recent changes in the program -- including lifting a restriction on partners registering sales to companies with sales of $1 billion or more -- are making life easier for solution providers.

"I know where the conflict is and I'm pleased to say we have driven a lot of that out," said Ted Bereswill, senior vice president who oversees Oracle's North American channel operations, during a speech Sunday at the Oracle PartnerNetwork Forum portion of the conference.

Managing channel conflict has long been a challenge for Oracle and its aggressive sales force. In Everything Channel's Annual Report Card scores this year, solution providers gave Oracle a dismal score of 45.3 for managing channel conflict in the data and information management software category. Oracle did better in the middleware category, earning a score of 60.1 for its efforts to manage channel conflict there.

Managing such conflict is imperative for the company: Forty percent of Oracle's sales worldwide and 80 percent of all sales transactions in fiscal 2009 involved the channel. In North America, 59 percent of all revenue was partner-influenced, according to Bereswill.

"We're going to continue to do everything possible to make the partner experience better and easier, and that means continuing to drive conflict out," Bereswill said in an interview Tuesday. "One of our biggest resellers on the tech side [database and middleware software] said that he had seen more positive change in the North American Channel in the last 12 months than he had in the previous 12 years."

One step Oracle has taken to improve that partner experience was the recent decision to eliminate the restriction on partners registering deals with businesses with more than $1 billion in annual sales. Bereswill said that effectively locked channel partners out of the best accounts. "I just thought that made absolutely no sense," he said. "So the billion-dollar line is gone."

Once a deal is registered by a partner, direct sales cannot call on that account. While that rule isn't new, Bereswill admits that it wasn't always enforced. Several months ago, Keith Block, executive vice president of Oracle's North American sales and consulting organizations, sent a letter to the company's sales representatives reminding them of the "rules of engagement" and that they could not get involved in a partner-registered deal unless partners asked for assistance.

"If a partner expends all the time and effort to go out and find this new customer for Oracle, we don't want Oracle to swoop in and take advantage of all the work that they did and start selling to them," Bereswill said.

Three months ago, Oracle launched the Partner Verification Program, under which partners in each sales region in North America are identified as experts in specific Oracle products, said John Gray, group vice president of North America alliances and channels, in an interview Tuesday. Those partners, at least two in each region for each key Oracle product, are sponsored by the regional sales manager and become the go-to solution providers for the products in those regions. They are guaranteed at least two sales leads per quarter.

"Really, for the first time, we have the channel, executive management and sales in the same room going through this," Bereswill said.

On the application side, specifically, Oracle earlier this year also began its Market Maker program, under which channel partners -- primarily systems integrators with expertise in specific Oracle products in vertical markets -- are tapped to work with Oracle sales representatives on customer accounts, said Tyler Prince, group vice president of North America Sales, alliances and channels, in an interview Tuesday. Oracle already has identified 25 such "market makers."

That effort complements the Oracle Accelerate program, launched in 2007, where VARs who have developed expertise and technology in specific markets are adopted by Oracle as the go-to-market solution for SMBs.

Oracle also greatly enhanced its partner registration portal in July. Gray said Oracle also has improved its business processes for how quickly partner-registered deals are approved and how Oracle channel managers forecast sales as part of the company's overall sales forecasting system.

The Annual Report Card survey was conducted between late January and mid-March before all these changes and new initiatives were implemented, Gray pointed out, so the company is counting on improving its scores in 2010.

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