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Oracle addresses partners' channel conflict complaints, one by one

Barb Darrow

Partners say Oracle Corp. is addressing some major cases of channel conflict that they have brought to its attention.

John Gray, the new channel chief for Oracle technology (database and middleware)

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products, is helping resolve issues around partner participation in volume license agreements, several partners said.

These value-added reseller (VAR) partners said that when they have brought new customers to Oracle, its sales reps tried to bundle that business into an Enterprise License Agreement (ELA) or Unlimited License Agreement (ULA) in order to take the deal direct, shutting the partners out of the deal.

"Partners were taken out of [those deals] programmatically for a while. So if you brought in a new Oracle account, the Oracle direct guys would push to make it an ELA so they could take it. Now partners can get back in these deals," said one longtime database partner in the Midwest.

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Oracle's stance is that partners can be included in ULAs upon customer request; when the partner created an opportunity in the Partner Relationship Management (PRM) or deal registration system that leads to a volume deal; or if the transaction takes place in an All Partner Territory (APT) or other area carved out for partner participation, according to a spokeswoman.

This partner also said Gray appears to have fixed issues with the deal registration system that partners use to protect new sales leads from encroachment by Oracle direct sales people and potentially competing partners.

The joke among many in the Oracle partner community is that the registration system, instead of protecting their deals, actually opens them up for poaching by Oracle sales people. Several partners said they never register a deal because doing so tips off inside sales people about its existence, and then they're off to the races.

"Now Oracle reps are told to keep their hands off those customers for 48 hours during the approval cycle," this VAR said.

Two West Coast partners confirmed that partner-versus-Oracle contention over ELA and ULA sales is widespread, but they differed over how well Oracle has handled it.

One, a large database partner, said he sees more competition than ever both from Oracle's own sales force and from large volume partners like Dell and CDW. But the vendor has done nothing to stop it, he said. "There's no way to escalate. There's no leadership. When Rauline left, they should have made a big-bang announcement about who was in charge and they did not," he said. Rauline Ochs was the longtime Oracle channel chief who left earlier this year.

The other West Coast partner said that Oracle has fixed problems in his territory every time he has brought them up. Their differing views illustrate a big issue with Oracle, which is that the field and regional managers have leeway as to if and how well they enforce directives from corporate management over partner rules of engagement.

Both partners said they see another problem emerging as Oracle digests its acquisitions.

"I've sold Agile and Demantra products to customers only to have Oracle sales guys come in after the fact and tell those customers they must source Agile and Demantra direct," said one partner. In each case, Oracle regional executives have reined in the offending sales people, he said.

Oracle bought Agile Software and its product lifecycle management expertise last year and Demantra, a supply chain management specialist, in 2006.

The channel conflict issue is rooted in the aggressive nature of Oracle's sales force and the company's refusal to move to a compensation-neutral program, whereby its sales reps would be paid the same margin whether the sale went direct or via partner involvement. Oracle's roots in enterprise sales, which have typically involved a big direct sales and services push, are hard to live down -- even as the company tries to penetrate smaller companies where it needs partner help.

Oracle VARs have said for years that as long as the direct sales people make less money with partners than without, there'll be channel conflict.

The net result is that partners end up fighting off direct sales people, or even other partners, when they should be closing deals and implementing software. "It's counterproductive for us; it's counterproductive for Oracle," said one partner in the Northwest.

The fact that Oracle is fielding so many applications after its acquisitions of PeopleSoft, JD Edwards, Siebel Systems and Oblix -- more than 30 companies over the past four years -- makes matters worse, as partners of those companies try to suss out the complexities of life with Oracle.

"These partners are coming in via acquisition, and they're pulling their hair out trying to understand the Oracle structure," said one California-based partner. "The BEA guys don't know who's on first or second, and these are the kinds of partners whose lifelines have been support contracts which they bill out for two, three years after the sale. Wait till they figure out that Oracle plans to take that support money too. You and I both know that if you look at these acquisitions, the money is not in sales revenue. It's all about support."

It is no accident that the most successful Oracle partners are former Oracle employees who know how to negotiate the company's complex byways. And the rules for channel sales can vary by product line. For example, application sales to new customers with less than $100 million in revenue are supposed to flow through partners, but that cutoff rises to $500 million for JD Edwards.

Now that there are so many Oracle sales people calling into accounts on different products, things are getting really hairy, partners say.

"So I'm in a new account under $100 million and I'm selling a Siebel application. Then an Oracle rep calls in, finds a Demantra lead, and the next thing you know he's trying to take not only the Demantra deal but the whole deal for himself," one Oracle partner said.

This California partner said that once Oracle management was alerted, the company rectified the situation. "But," he sighed, "every day's a struggle."

Oracle's partner organization typically encourages partners who encounter channel conflict to escalate the problem up the chain. The company did not comment on partner complaints about Agile and Demantra sales.


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