Oracle-Sun Combo Focuses on Direct Sales, Integrated Stack

By Carolyn April  |  Print this article Print

After months of regulatory uncertainty and wide-ranging speculation about the life of the deal, Oracle went public Jan. 27 with long-awaited details about its mega-acquisition of Sun Microsystems, and the strategy involves more emphasis on direct sales and all-in-one solution stacks.

Call it "Back to the Future," or perhaps déjà vu.

After months of regulatory uncertainty and wide-ranging speculation about the life of the deal, Oracle went public Jan. 27 with long-awaited details about its mega-acquisition of Sun Microsystems and the strategy it plans to initiate for business and product integration and a go-to-market model.

One thing is clear: Sun partners used to selling into strategic and large enterprise accounts had better rethink their business model. Oracle’s putting its stamp firmly on the sales structure going forward.

"The big change is that we are going more direct to large customers," Oracle President Charles Phillips told a live and online audience during a near 5-hour event Jan. 27. "Several years ago, Sun had shifted its strategy to go more indirect through partners, but our motto is that our largest strategic customers make big investments and they deserve to do business directly with us."

To that end, Phillips said that Oracle plans to begin aggressively hiring 2,000 new direct salespeople (along with thousands of new engineers) and adding three new sales specializations areas for reps to accommodate the new portfolio of Sun products. Sales reps at Oracle are all in some specialization bucket today—be it ERP, CRM, database, etc.—and will now be able to get skilled to sell storage, tape and servers.

The message that Oracle is taking the reins in going to market could not be clearer. Direct sales are in.

"These are highly complex sales we are talking about," said Phillips. "We are going to have the best-paid reps in the industry, the all-stars with the highest compensation. We are hiring. We want to go back to direct. … Come to us."

Oracle’s direct sales force will service 1,700 strategic named accounts and Sun's top 4,000 customers, Phillips said.

Oracle CEO Larry Ellison, in a separate address later in the day, said channel partners remain critical to Oracle and will be called upon to sell and serve to the remaining 31,000 customers.

"We have a huge number of channel partners to work with us, and we give them the same broad range of products coming from Sun and Oracle combined," Ellison said. "We have our own channel program, and we will combine it with Sun. And we think dividing up the customers will work better for both of us [channel and direct]. These are ours, these are yours. It's a better focus for the channel."

Judson Althoff, Oracle’s channel chief, compared plans for Sun’s existing channel to what is already the existing Oracle model, where enterprise and large business is the mainstay of direct sales, while partners operate in the domain of midmarket customers. 

"The strategy around our Sun partners is to take a much more balanced and focused approach to partnering," Althoff said. "Strictly speaking, in order to provide better service, support and accountability to top Sun customers, we will engage directly, as we do at Oracle. But we will bring partners in on those deals based on the value they can bring to those accounts."

Oracle historically has been faulted by partners for perpetuating massive amounts of channel conflict, though in recent years the company has made a concerted effort to create a well-functioning indirect channel. Althoff said that will not change. "We are very focused in our approach in the midmarket to helping our partners sell there," he said.

Oracle last year revamped its partner program—now called the Oracle Partner Network (OPN) Specialized—to a skills competency model across a choice of 50 different technology and vertical disciplines.

"The program is based on enabling partners to differentiate themselves and to provide customers with a system of preference to select partners that have the right skills to meet their needs and solve their problems," he said.

Today, 40 percent of Oracle’s indirect revenue—net-new software sales—and 80 percent of transactions flow through partners, according to Althoff, who maintained that those targets represent the combined companies’ strategy going forward.

The big strategic takeaway from the first real details on Oracle’s plans for Sun is the decision to evangelize a completely integrated stack, from hardware to management systems all the way up to vertical applications. Phillips characterized the strategy as returning in some way to the historical computing model of all-in-one solutions. The engineering push going forward with the Oracle and Sun teams is full integration across products, with an expectation of specific technology solution bundles.

"Today, there are too many components, and customers have to go to different vendors to buy, then hire integrators to come in and hopefully get it to work," he said.

Phillips said the resulting integration of the Oracle-Sun stack will result in faster performance and innovation and security and a reduction in change management problems.

Phillips said that customers wanted the vaunted "one throat to choke" for sales and also support. To that end, he said that Oracle will enable customers post-sale to use Oracle Support to manage and monitor their systems. The service captures customer data through a portal that feeds the information into management, patching and monitoring systems in Oracle's data centers.

"We will know what configuration you are running, updates will be sent to us daily, we’re monitoring your systems, and we can predict when you are having problems and be proactive about them," he said.

In addition to the massive recruitment of new direct sales reps, Oracle is looking to hire thousands of engineers to focus specifically on the synergies in the Sun-Oracle portfolio. The company is also significantly altering its supply chain distribution model on the Sun side, moving from a build to stock model to a build to order model, eliminating distribution centers and shipping finished products directly from manufacturing plant to the customer.