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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.