Oracle to take integrated Sun business direct to large customers, while exploring new channel opportunities
Oracle’s (Nasdaq: ORCL) presidentCharles Philips came on stage to tell the world his company’s plans for an integrated Sun with Oracle, but when he left there were more questions raised, especially by channel partners, than were answered.
Philips outlined a strategy reminiscent of the high-tech industry during the 1960s where one company would build a complete system that was tested and made reliable before shipping it to a customer, except that Sun Oracle’s complete system will be based on an open architecture instead of being proprietary.
“At the heart of what we want to do is building a complete system at Oracle. Customers are looking for how we can change the industry and improve the experience. This industry has a long history of building systems in a manual way from components sourced from different suppliers. Then they hire integrators to put it together. That’s not very reliable and it costs too much to maintain them. So why not do all this up front and today starts that change,” Philips said.
With Sun on board, Oracle does have every layer of the technology stack in place from applications, databases, middleware, operating system, virtual machines and storage. Oracle will be packaging these products together to be deployed as one along with management tools. However, these complete systems will be delivered direct. Philips also made a startling announcement that the company needs 2,000 more sales professionals for this direct effort.
“We will have the best paid reps and we want all-stars. We want Derek Jeters and you will make more money here if you sell something with our new margin-based compensation plan. If you don’t sell anything you don’t make any money. We need to hire 2,000 sales professionals immediately. We want to go direct and get in front of the customer and we will pay you more that what you are making now. You are probably getting bored at what you are doing anyways so give us a call,” Philips said.
The direct effort will only be with large customers globally. Philips estimated that to be about 1,700 accounts.
Company channel chief Judson Althoff reassured channel partners that there would still be a role for them to play in top-flight accounts if they could add value or had some special expertise necessary for the customer solution.
“We will have a much more balanced and focused approach on value and value as seen in the eye of the customer. Strictly speaking Oracle can better provide service and support to the top customers by engaging with them directly. We still expect to work with partners in those accounts, but only on a value-like integration services,” Althoff said.
He added that the majority of the indirect play will be in the mid market with Sun and he noted that 40 per cent of those sales are indirect and about 80 per cent of all Oracle transactions flow through partners.
Bradley Brodkin, president of HailVail Systems, a 20-year Sun partner in Canada, said this Sun Oracle strategy needed more clarification. “This is how I feel. For the Canadian market there are more questions that still needed to be answered,” he said.
Brodkin doesn’t see how the direct strategy can work in Canada since there are about 10 to 15 of those 1,700 accounts located here. “I deal with one of the largest banks and they wouldn’t fall into that top 1,700 companies list and they are a top five bank. Those types of customers will question this strategy on how much lead time they will have to give Oracle (for this pre-tested, pre-packaged system),” he added.
According to Brodkin, customers today want three-to-five day delivery, not three-to-five week delivery.
Philips also announced that Oracle would rather delivery complete systems on a build-to-order basis. Brodkin said that this model would concern its two distribution partners Arrow and Avnet since they now build solutions for Sun Oracle in a build-to-stock model.
Also the Sun Canada subsidiary has basically become a skeleton crew with several departures of key executives and account managers.
“Locally I think (Oracle) will have to work with the channel. On a global basis it doesn’t matter how much money you want to pay sales professionals. To bring them on board it will take at least a year. That means the partner will be more relevant now than every before,” Brodkin said.
Philips also said that Oracle is no longer interested in the X86 market except on grid systems or high performance computing solutions calling it commodity products.
Philips quipped that Oracle is leaving that market for Dell.
This move concerns Brodkin because customers are still interested in this platform. This could lead to lost sales on the horizon for the channel.
Brodkin was happy about Oracle’s on-going support of the Sparc platform. Philips announced that Oracle would be tripling R&D spending to develop more products on the Sparc architecture to differentiate the company in the market place.
Brodkin was also pleased with John Fowler, Oracle’s hardware chief’s strategy to differentiate around storage and to put more investment in solid state disk.
Also StorageTek made a cameo appearance. Brodkin said that tape is not a dead and is glad that Oracle will support StorageTek technology in the long term.
Even with all these unanswered questions, Brodkin told CDN that he is sticking with Sun Oracle. “I’m not jumping off the bandwagon. I’ve been with them for 20 years and I will stick with my vendor partner to the bitter end. I feel there is a better future for Sun with Oracle than, on their own, or with another company. I really do think this is the best thing to happen to Sun,” Brodkin said.
Oracle is planning on going on a 70-city tour to address more questions from the IT industry, Philips said.
No Canadian dates were announced.