Oracle's Direct Sales Plans Sow Fear, Confusion Among Channel Partners

Oracle's talk about taking a more direct sales approach to its combined Oracle-Sun business is sending shivers through solution providers who fear the move will not only impact their business but that of their customers as well.

Solution provider concerns about their future role with Oracle after that company closed its $7.4 billion acquisition of Sun stem from remarks made by top Oracle executives at a well-publicized conference on Wednesday, outlining changes at the two vendors in the wake of the merger.

At that conference, Oracle President Charles Phillips said Oracle wants more "strategic, direct" relationships with its largest customers, saying they deserve direct relationships because of the huge IT investments they have made.

Those thoughts were echoed by several Oracle execs at the conference, including Judson Althoff, senior vice president of worldwide alliances and channels, Juergen Rottler, executive vice president of Oracle customer services, and even CEO Larry Ellison.

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Despite conflicting estimates of the total number of large accounts targeted by the new strategy, with Phillips citing 1,700 and Ellison citing 4,000 accounts, Oracle executives in general said those customers need a more direct touch, while solution providers who can provide value-added services and certain specializations are free to work with the remainder of the company's customer base.

One long-term Oracle and Sun solution provider, who asked to remain anonymous, said Oracle is not only sending mixed signals to the channel, it is also causing a lot of confusion.

For instance, that solution provider said, Oracle plans to let solution providers work with smaller accounts if they invest in specialization. "If Oracle is looking at VARs making major investments required to sell into the smaller opportunities, good luck with that," the solution provider said.

Furthermore, while Oracle is shifting the legacy Sun product line to being more optimized for Oracle applications, Oracle is not addressing the needs of Sun's legacy customers. "Oracle is building the database appliance, but what's the value of it if the customer is not an Oracle customer," the solution provider said.

The solution provider also saw arrogance in some of Oracle's statements.

"Our customers have eight, 10, 12 years of experience with us and with the same engineering team," the solution provider said. "What's Oracle going to do about that? That's pretty darned arrogant. And they stood up there and said they want to hire my people? What's that?"

Legacy Sun solution providers might do well by investing in a new business: remanufactured Sun servers. "Oracle will insist on selling the latest versions of Sun products, but what about Sun customers who need something else, or who need six months worth of other products before getting ready to buy the new ones," the solution provider said. "Maybe they'll buy used equipment to get by for six months."

Next: Oracle's Modus Operandi -- Direct Sales

Another long-term Sun solution provider, who also asked to remain anonymous, said focusing on direct sales is Oracle's modus operandi.

"I saw Oracle wants to hire 2,000 reps," the solution provider said. "Hey, that means going direct."

Back during the dot-com bust, the solution provider said that many deals that were in the channel pipeline were grabbed by Oracle reps who needed the deals and who said they could save customers 20 percent by cutting the VAR out.

"I don't trust Larry Ellison," the solution provider said. "If I was in the room with him, I'd keep my back to the wall."

The solution provider agrees with Oracle that channel partners need to be able to provide value to customers. "For many Sun VARs, their value-add came from the leads Sun gave them," the solution provider said. "It will be interesting to see where the bar will be set, what we need to get those specializations."

A third major Oracle and Sun solution provider said there are too many questions about what Oracle is looking for from partners.

"We hope we're still relevant to Oracle with what we can do," the solution provider said. "But Oracle's history, they're a very direct company."

It will be important to see just where the line Oracle is drawing with its direct-focus account list is drawn, said Chuck Egerter, president of Eagle Business Solutions, a Clearwater, Fla.-based Oracle solution provider said.

"As a partner, we're not used to touching $1 billion accounts without Oracle working with us," he said. "But below that line, if Oracle wants to go direct, the situation could change. Oracle's reps are at their best with the channel when they have to deal with several customers below that level."

While Oracle talked about taking some customers direct, at least it indicated that partners have a role in servicing customers, said Bob Olwig, vice president of business strategy at World Wide Technology, a St. Louis-based Oracle and Sun solution provider.

"Sun previously had a direct model with its largest accounts," Olwig said. "And in those named accounts, we have worked with Sun and served as the integrator on the commercial side. On the federal side, we have several contracts under which we work with Sun. I don't see a lot of change there."