Oracle Sales Force Reorg Finally Bears Fruit

The company's second-quarter profit gains point to an improving economy, a more effective Oracle sales force and proliferating RAC.

Oracle Corp.s recently reported 15 percent leap over year-ago net income means that the companys yearlong sales force reorganization effort is finally bearing fruit, according to one financial analyst.

"The main take-away [from Mondays earnings report] is that Oracle is improving its sales execution on the database side and, most importantly, on the applications side," said Cheng Lim, a research analyst at Fulcrum Global Partners LLC, in New York.

Of course, it also means that spending on IT is improving, Lim said. This is borne out by positive earnings reports from companies including Cisco Systems Inc., Hewlett-Packard Co., Adobe Systems Inc. and Infineon Technologies AG.

But the sales reorg is key to driving profits, Lim said. At its AppsWorld conference in January, Oracle Chief Financial Officer Jeff Henley announced that salespeople would henceforth sell either database and other infrastructure technology or applications, but that overall account management would come to an end.

Selling all the different options of the companys meat-and-potatoes database product—particularly RAC (Real Application Clusters) and partitioning—drove the success of the second quarter, he said.


Those database technologies are the underpinnings of the companys grid computing platform, the first components of which are now being released. Even though the pricing for 10g is still to be released, grid computing—including Oracle Database 10g and Oracle Application Server 10g—is driving sales of RAC. "The foundation for 10g is RAC, which is a clustering technology and part of the database offering," Lim said. "The more theyre able to convince people to buy 10g, the more RAC sales they will generate. Which again will boost the database numbers for 10g uptake."

Although some news reports construed Oracles healthy profit growth in application software sales—27 percent over year-ago figures—as being good fuel for Oracles takeover of PeopleSoft Inc., Lim discounted both the notion that Oracle had healthy applications growth and that a takeover is more likely to happen in light of the earnings. "PeopleSoft is an applications software company. Oracles applications business fell slightly short of expectations," said Lim, in New York. "People were expecting $140 million, and they got $137 million. If they did $150 million, $160 million, that would be impressive, but that did not happen."


As far as the takeover goes, its nothing but short-term bad news for sales, Lim said. "Most institutional investors understand that this competitive bid for PeopleSoft may drive deals away from Oracle," he said. "PeopleSoft is offering a customer assurance program where theyre offering three to five times customers money back. This and other marketing and sales strategies are actually hurting Oracles applications software business. … It will help Oracle after they acquire them, should it come to fruition, because theyll then have more customers to sell to. A broader footprint. But in the interim, its definitely not helping."