Oracle's New Partner Path

direct and indirect sales models

In these designated geographic areas, all deals outside of strategic accounts would go through select partners and would be on partner—not Oracle—paper. In theory, that scenario would alleviate many of the direct/indirect sales conflicts that have plagued Oracle.

The first pilot took off last year in the Northeast with more coming online this year, sources said. The company plans to talk more about the pilots at Oracle OpenWorld in October, said Rauline Ochs, group vice president of North America alliances and channels at Oracle.

The idea is to move all sales in these designated territories through partners that are willing to dedicate resources and time to Oracle business, Ochs said. Oracle started down this track a few years back with its E-business Suite Special Edition, a channel-only product attacking businesses with less than $100 million in revenue.

"We started on the apps side and are moving to the tech [database] side," Ochs said. Oracle, Redwood Shores, Calif., is the worldwide leader in databases and the No. 2 player in enterprise applications after rival SAP.

"We did the pilot last year quietly, and when we had the results, we found that for every deal we handed to a partner, we got 1.2 deals back. Once we taught the partner, the [Oracle sales] rep becomes the mentor because he is not taking the paper," Ochs said. "We have high hopes that we can replicate [that] success."

But there are some big caveats. For one, Oracle's large named and strategic accounts would be exempt—and Oracle claims many such accounts.

One longtime partner estimates Oracle derives more than 90 percent of its database business from legacy accounts.

In addition, on the applications side, most sales remain direct by design, the exception being the E-business Suite Special Edition. Partners expect that to change, however.

Some long-standing Oracle partners maintain the software giant's sales force still competes with them for business, even taking over deals the partners brought to the table. They also flame Oracle for taking leads entered into the opportunity registration system set up specifically to protect partner-led deals.

"Inevitably what happens is if you put a deal in, they'll come back and say, 'We knew about that business in 1995,' " one partner said.

Ochs has been working on such issues for years and says partners experiencing these problems should escalate them to seek resolution. The idea of these new territories is that the Oracle reps and partner reps team-sell solutions or value—not just products—to customers.

"We are looking for partners to come forward. They have to be willing to make the investment. We even calculated at X margin how much does this territory have to generate to support a partner. For us, it's almost like committing revenue to them," Ochs said. "They have to commit to being disciplined, to participate in demand generation, to put people on the phone and prospect, to dedicate at least one salesperson to work the territory, to accept a quota, and they have to report back to us on the pipeline. This is very much a discipline thing."

One goal is to fatten up deals. Where a customer might be interested in a database, there will be an attempt to broaden that out and sell applications, middleware and services as well. "We're teaching the silver bullets for broadening the deal," Ochs said.

Current partners who know about the program say the message is right, but the devil is in the details.

"There's always some smoke and mirrors on these things," said another Oracle partner, who requested anonymity. "It sounds really good. They want you to dedicate manpower and become what would be an all-indirect extension of the Oracle field force. But the issue is it's all voluntary on the part of the Oracle regional execs—it's not a top-down mandate and not enforced," he said. "A lot of those [Oracle] managers do not want to go to their people and say, 'Oh, by the way, we're taking this part of your patch away."

Past efforts to cut partners in on more Oracle business have had mixed results. At one point, Oracle opened up enterprise accounts with revenue of up to $1 billion to partners. Before that, partners could sell into accounts with up to $200 million in revenue. But the new cutoff point didn't do much because it was implemented during the dot-com bust and no one was buying software either direct or indirect.

One source involved with partner training in one of the pilots is very jazzed about the prospects. "They're saying all the right things. The Oracle reps will make their nut based on partner sales and partner sales only," he said.

Oracle and partner sales reps alike have to learn more about selling the company's upcoming Fusion middleware—the application server, business process execution language (BPEL) and interconnect software that will knit together the company's now-diverse product lineup.

"Many people still don't know what Fusion is," one partner said.