Will Partners Get Crushed in Oracle-PeopleSoft Merger?

By Lisa Vaas  |  Posted 2005-01-14

Will Partners Get Crushed in Oracle-PeopleSoft Merger?

As Oracles 14,400-strong partner program gears up to swallow the much smaller PeopleSoft partner community, some say Oracles biggest challenge may well be its history of dicey relations with its own partner ecosystem.

"Oracle has only recently gotten back into the religion of partner management in a big way," said Joshua Greenbaum, a principal at Enterprise Applications Consulting. "Thats the largest single difference: Oracle has a much larger partner ecosystem, since theyre a larger company, but they havent been the friendliest and best company to do business with."

Indeed, VARs, systems integrators and other partners have long said that, even pre-merger, Oracle Corp. must become more channel-friendly.

Oracle is known to be difficult to deal with for two reasons: First, the companys sales compensation plan is not neutral to source of sales. Second, Oracles rules of engagement dont rule out competition with partners.

Oracle has been working to change the situation. In August, Rauline Ochs, group vice president of Oracles North America Alliances and Channels, unveiled a program called "Cover the Subsidiaries."

The program was designed to allow Oracles 2,800 North American partners to sell their goods and services to subsidiaries of Oracles biggest, most strategic accounts.

Now, mere months after taking steps to improve relations with its own partners, Oracle is facing the prospect of absorbing hundreds of PeopleSoft Inc. partners. Bronwyn Hastings, vice president of worldwide alliances and channels at Oracle, told eWEEK.com that her division is still working through the exact number, "but its in the hundreds rather than thousands," she said.

It will require time to gauge how well Oracle does with its own partner-repair work, never mind how well it does in setting up relations with its new partners. "Theyve made a lot of promises, and I want to give them some time to see" if theyll improve their partner relations, Greenbaum said.

Meanwhile, as the merger continues, Hastings said its business as usual for partners of both stripes. Oracle is focused on customers needs first and foremost, she said, but it is also speaking with partners to ensure that theres no disruption to their businesses during the merger.

"From a focus perspective, assuring how we continue to service them so they can continue to operate in their business environments is important," she said.

Oracle has been reaching out to smaller partners—those who have the least ability to absorb business disruption—to try to increase communication, Hastings said. Oracle sent out a welcoming letter to the partner community, for example, reinforcing its commitment to keep product development and business development moving forward.

With Oracle announcing layoffs of 5,000 people, there are plenty of options for the victims, writes Database Editor Lisa Vaas. Click here for her column.

PeopleSoft channel partners also have been invited to the Tuesday launch of the combined company, an hours-long Webcast event featuring top Oracle executives that will encapsulate the companys strategy, competitive strength, customer commitment, supported product lines, development roadmap and more.

Next Page: What do partners think of Oracles communication skills?


In the meantime, partners are painting different pictures of what they think of the merger and of how Oracle is handling partner relations.

For USinternetworking Inc. (USi), the largest enterprise ASP and independent Oracle Managed Service Provider, Oracle is doing a "nice job of communicating, and we feel positive about them moving forward to dispel some of the uncertainty around this merger over the past 18 months," said Larry Abramson, senior vice president of worldwide sales and marketing at USi.

That uncertainty flows from USis customer base, Abramson said, and centers on continuing support for products—a subject that Oracle changed its tune on over the course of the takeover.

"Especially early and through the midpoint of the merger process, there was a lot of concern about that, and I think rightfully so," Abramson said.

"I think since that point in time, whenever that happened, Oracle has done an exceptional job articulating and communicating a support strategy, and a strategy for the product set and maintenance and next series of releases."

Other issues for partners include co-marketing and co-sales efforts, as well as channel conflict. "Every partner wants to make sure they have some degree of exclusivity or control over what theyre doing, and they want to make sure the vendor is doing something to help lead generation or co-marketing in some way," Enterprise Applications Consultings Greenbaum said.

As far as channel rationalization goes, there must be a comprehensive market/lead-generation/sales strategy that also addresses the question of whom partners should talk to within Oracle, how they should go to market, and where their sales generations are going, Greenbaum said. PeopleSoft partners will have to be blended into the Oracle sales model, with overlap winnowed out.

Click here to read about how PeopleSoft users are bearing the brunt of the merger.

In the meantime, surviving partners will have to deal with one inescapable hardship: There will be fewer midlevel managers who handle partners. Oracle on Friday announced layoffs of 5,000 people, with some of the layoffs eating away at the partner programs. "Thats the kind of redundancy youd want to eliminate from the get-go," Greenbaum said.

Other partners say, off the record, that Oracle has been stingy in communicating. Thats not surprising, however, given that partner relations arent a top priority for the company at this early point, Greenbaum said.

"Partner relations are not in the top 3" priorities for Oracle, he said. "Maybe in the top 10. Im not surprised a lot of partners feel theyre in the dark right now. Thats not indicative of any deliberate neglect, as opposed to prioritization on the part of Oracle.

"A month from now, if theyre still in the dark, we can point to Oracle and say, Why arent you dealing with these people? Theyre essential to the success of the merger."

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