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Oracle Going Direct In Sales Of Sun Products To Large Accounts

The move, in the wake of Oracle's $7.4 billion Sun acquisition, reverses Sun's emphasis on indirect sales, Oracle executives said during 'road map' presentations.

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Oracle will continue to rely heavily on partners for sales to midmarket customers. But the emphasis will be on working with resellers that provide integration services and other "specializations" as Oracle does now with its software resellers.

News of the shift to a more direct distribution strategy came Wednesday from Oracle President Charles Phillips during a lengthy presentation on Oracle's business and technology road map for its Sun acquisition.

Oracle completed its $7.4 billion acquisition of Sun Wednesday morning, nine months after the deal was first announced.

"We want more strategic, direct relationships with our largest customers," Phillips said. "Sun had shifted its strategy over the last decade to go a lot more indirect through partners. Our model is for our largest, most strategic customers that are making huge investments with us -- they deserve to have a direct relationship with us. That's what they want. We need to understand their business better. We need to be on-site."

Phillips did not say just how much of Sun's sales to large-account customers went through channel partners.

Juergen Rottler, executive vice president of Oracle customer services, later echoed those comments. "We're looking to have a very direct relationship with our customers," he said during a presentation on the customer-service and support strategy of the newly combined companies. "We believe we should be the one supporting our customers."

Phillips said the shift to "a more direct model" applies to Sun's 1,700 largest customers. Oracle will organize Sun's sales force into three areas of product specialization: servers, tape and storage, following the specialization model Oracle now uses with its software sales representatives. And Oracle intends to hire 200 new sales representatives, Phillips said. "We're going to have the best-paid reps in the industry."

"We're going to have a more balanced and focused approach to partnering," said Judson Althoff, senior vice president of worldwide alliances and channels at Oracle. "In order to provide better service, support and accountability to our top customers around the world, we will be engaging those accounts directly, much as we do at Oracle."

"We still expect to work with partners in those accounts, but it will be based on value, value in the eyes of the customer," Althoff said, citing partner-provided services such as value-added implementation and integration services.

Althoff noted that 30 percent of Oracle's software license sales, and 80 percent of its sales transactions, are handled by Oracle's channel partners. "This is part of our strategy today; this will be part of our strategy going forward," he said.

Under the Oracle Partner Network Specialized program the company unveiled at the Oracle OpenWorld conference in October, channel partners are encouraged to become specialized (and certified) in specific Oracle products. Althoff indicated the same model would be applied to Sun partners. "Now that we have servers and storage added to [the Oracle] portfolio, we will have specializations so that partners can become branded, certified and accredited in all of those technical areas."

Some Sun partners were taken aback by Oracle's announcements. "We are not leaving our clients, so I guess we will wear a new logo shirt," said John Murphy, executive vice president of Advanced Systems Group, a Denver-based Sun reseller. At least one longtime Sun partner is buying into the Oracle vision. "Judson made it clear they are looking for partners with technical specializations that are valued by customers," wrote Bob Olwig, vice president of corporate business development at World Wide Technology, a 15-year Sun reseller based in St. Louis, in a blog. WWT recently became an Oracle partner as well.

"This partnering approach, which values technology specializations, creates tremendous new opportunities for WWT," he wrote, noting that WWT recently received certification to work with Oracle's Exadata database server product.

During a Q&A session at the end of the presentations, CEO Larry Ellison took a softer tone on the direct sales plans, maintaining that channel partners that provide value-added services to large customers will continue to do so. "To those partners that do add value we're going to continue accessing these large customers through [you]. We'd be foolish to bypass our value-added partners. In fact, the customers wouldn't let us if we tried."

But Ellison also made reference to the "4,000" large-account customers Oracle would target through direct sales, a different number than the 1,700 customers cited by Phillips.

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