Oracle Wants More Specialization, Value From Partners

Sun Microsystems VARs will have to wait a little longer for the details they so crave about a new channel program from Oracle.

The vendor, which purchased Sun earlier this year, hasn’t finalized its plans for bringing Sun VARs into the Oracle PartnerNetwork (OPN, including ironing out details around incentives for selling specific products into certain accounts.

But while the company plans to invest more resources in direct sales, it will also need more help from VARs, said Tom Wagner, Oracle's group vice president of North America hardware alliances and channels, at the Avnet Technology Solutions 2010 Summit in Broomfield, Colo., Tuesday.

’Despite the fact we continue to invest in direct sales, the selling capacity required to [reach those accounts], we’d run out of cycles very quickly. That’s where you come in. Trust me, we need you desperately,’ Wagner told the audience of mostly legacy Sun VARs.

’There’s a lot of uncertainty in the room, in the market, with respect to the business proposition through you," he said. "We all went through the partner change-in-control document and know what has gone away. I get that. But suffice it to say the opportunity is enormous and you play a critical role. I believe we can grow it together profitably.’

Oracle’s additional resources in direct sales has more to do with getting closer to current customers than replacing channel relationships, Wagner said.

’The closer we are to our customers, the better opportunity we have to maximize a customer’s performance in the marketplace,’ Wagner said. ’But I’ll tell you what. Our company thrives in the top accounts, but there are things you do for customers every day that are neither simple nor standardized. Whether it’s supply chain logistics, or favorable government contract terms and provisions, we want to leverage various kinds of vehicles that don’t fit our model.’

Oracle intends to work with partners even in named accounts to identify certain opportunities and offer them to partners that have made strategic investments, Wagner said.

’IT requires early engagement. You need to understand the customer’s needs and objectives to transform that discussion into a solution that I can present to and sell and deliver,’ he said.

Wagner said he understands that VARs want answers and he received a round of applause for mentioning that Oracle will introduce an incentive program at some point this year.

’Notice I didn’t use the word ’rebate.’ It will be managed by Avnet and our distributors, and incentives will be managed around products with a particular focus on Oracle [intellectual property]. Stay tuned. There really is truly something in it for you,’ Wagner said.

He also said Oracle recognizes it is asking VARs to do something they haven’t done a lot before, move downstream, but it is necessary to shape the company and its channel program for the future.

’We are moving into a different segment of the market. That’s where opportunity lies for both of us," Wagner said. But he added that he understands VARs have questions. "If I invest in an account, or a segment of the market, or a territory, I want to be well positioned to capitalize on the investment I made. More importantly, can I make money?’

Wagner said he was barraged by messages from partners starting seconds after Oracle CEO Larry Ellison said in January that he wanted to have a direct relationship with Sun's largest customer accounts.

’Larry went on to say that as long as you’re delivering value, there’s a place to play. You can see it from the top. We place tremendous value on partners,’ Wagner said.

Of course, that value has yet to be defined, at least to the satisfaction of many Oracle/Sun partners. For several months, Sun VARs have griped about the lack of communication from Oracle regarding its future channel plans.

’There’s a value proposition there, but it’s been challenging from a channel perspective because the information flow hasn’t been readily available,’ said one Avnet VAR who asked not to be identified. ’From a technology perspective, combining those technologies provides a great opportunity. But it’s hard to know how the channel will be involved. They terminated our legacy Sun contract but they haven’t described how the new [Oracle] contract will look.’

During Wagner’s speech, you could hear a pin drop in the rapt audience of VARs hanging on every word.

During the presentation, Oracle showed a video interview between Judson Althoff, senior vice president of worldwide alliances and channels at Oracle, and Charles Phillips, Oracle’s president, in which Phillips tried to define how the value of solution providers to the company will increasingly focus on specialization of technologies and vertical markets.

’What’s happened over the years, after 62 acquisitions, is our product portfolio has become hard for customers to consume what we’re doing and understand the span of technologies we’re doing. The same is true of partners. What’s needed is specialization. What it means is, saying ’I’m an Oracle partner’ doesn’t quite tell you much anymore. We need the same thing customers need, partners in specific areas of domain expertise that can solve particular business problems with Oracle,’ said Phillips in the interview.

’We aren’t asking partners to do anything we haven’t done,’ Phillips continued. ’Asking one sales rep to walk in representing all of Oracle is just not practical. We have specializations within our sales force that have paid off handsomely. When we put someone in front of a customer, we want them to know what they’re talking about. We don’t all need to be the exact same thing in front of the exact same customer.’

Wagner added that Oracle’s direct sales force ’will be leaning toward partners who are specialized.’

Solution providers who achieve more and higher levels of certification are likely to get more attention from the company, he said. ’Opportunity lies with the ability to move up the stack. All of us are engaged with the sale of servers, storage. Think of how enhanced our capability is building more into that.

"Partners who have maximum earnings opportunity are those who are in the best position to deliver comprehensive solutions to customers,’ Wagner said. ’If you’re in a position to build database implementation services, middleware implementation services, the gross profit stack will be greatly enhanced.’