Sun Revamps Sales Organization as IBM Buyout Looms

By Chris Preimesberger  |  Posted 2009-04-03

Sun Revamps Sales Organization as IBM Buyout Looms

Sun Microsystems has finalized significant changes to its sales and service organization, resulting in a more centrally structured chain of command-a significant move away from the distributed regional model it has used for years.

Employees were informed of the changes through an internal memo issued April 2.

Under the new plan, Sun's top salespeople will focus exclusively on the company's 300 top customers-primarily in the telecommunications, government, financial services, education, health care and high-performance computing sectors. Channel salespeople will handle all the rest, amounting to about 80 percent of Sun's customers.

The reorganization is tied directly into the March 30 announcement that Sun is laying off another 1,500 employees, effective immediately. Many of those who will lose their jobs are in the sales and professional service groups.

An industry insider who asked not to be identified told eWEEK that the structure changes may have been initiated as a way to help smooth the way for a rumored $7 billion acquisition by IBM, since the new Sun sales organization will look very similar to IBM's.

The timing of the announcement is intriguing, considering that it is late in the negotiation process. eWEEK obtained information from a knowledgable industry source on April 3 that the deal finally will be announced on Monday, April 6.

However, the planning of the reorganization goes back at least four months, when, on Nov. 14, 2008, Sun announced it would lay off between 5,000 and 6,000 employees.

"That's possible [that the restructuring and the acquisition are connected], but I would say that if an acquisition does go through, there will be a major reorganization of the sales groups anyway," said Charles King, principal at Pund-IT and a longtime enterprise IT analyst.

"But I would expect that making a change as major as this had to have started months before any kind of acquisition was being considered."

IBM reorganized its sales and service structure several years ago into a more centralized, globally matrixed model that has worked well for the high-end enterprise market and less well in the midmarket.


Sun Revamps Sales Organization as IBM Buyout Looms

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Sun's sales setup had featured a regional approach, Kristi Rawlinson, a Sun corporate spokeswoman, told eWEEK. Conflicting channel and Sun in-house sales agendas were causing friction with customers.

"Each region had a lead, and they would manage industry-specific salespeople [software, services and systems] as well as line-of-business [vertical] salespeople," Rawlinson said.

Previously, a Sun customer may have had three or four people to call to get a request filled. Under the new plan, a midrange or SMB customer will have only one or two people to call: one channel rep and one Sun rep.

Sun's new setup centers around three main groups: Global Accounts and Industries, Partner Sales, and Lines of Business specializing in systems, software and services (replacing the previous Industry Sales and Practice organizations).

"All the industries expertise now has been moved into the new Global Accounts organization, which is a smaller set of folks who cover just Sun's largest accounts," Rawlinson said.

"All of these functions will have a global scope, and this will represent a move to a globally led and managed sales and service organization," she said.

Responsibilities of current regional organizations in North America, Europe and Asia Pacific will therefore change to be matrixed to a global leadership team, she added.

This is a fundamental change in Sun's global sales account coverage model. The new Global Accounts and Industries organization will cover Sun's major accounts in telecommunications, financial services, government, education and health care industries. Specialists in lines of business (LOB) sales and in technical roles will have responsibility for all direct and partner sales revenues for their products outside the global accounts. 

Direct sales within these LOBs will provide specialized coverage through Sun-led or partner-led "named account" and territory coverage models, Rawlinson said.

"Named accounts" are customers who buy directly from a company's in-house sales force and do not interact with channel people.

"This is not to say that a midrange customer will not have a Sun systems contact, financial services contact, software contact or services contact," Rawlinson said. "We're really trying to streamline that process, and give the customer one primary contact from Sun and one from a channel partner. We're trying to eliminate some of that channel conflict that we had before."

Sales 'Fiefdoms' a Longtime Issue

Such sales "fiefdoms" are a historical problem-and that goes for any kind of sales organization, King said.

Another industry source told eWEEK that even though Sun said that channel partners will be handling more of the direct business relationships with customers, salespeople within the Sun staff undoubtedly will still be initiating contacts.

"Frankly, from an economic bottom line standpoint, this is like Tom Sawyer white-washing the fence: You hopefully take some of the responsibility and cost off your own plate and put the work into the hands of willing participants," King said.

New Opportunities for Laid-off Sun Salespeople?

Given the regional and industry-centric nature of many of the sales in the midmarket, King said, there may be some new job opportunities for sales reps who get caught in the Sun layoffs.

"At the end of the day, sales is all about relationships. If you can go to somebody who's now going to have the responsibility for that area or those customers, or that industry, and say, 'I used to be with Sun, I've got this many years, I know all those players you're going to want to talk to; I'm happy to bring myself and my Rolodex to come to work for you,' it's a heckuva lot easier to get up to speed with a rep like that than trying to train somebody up from nothing," King said.

Editor's note: This story was updated to include new information about when the acquisition will be announced.

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