How Oracle Engineered Its Sales Staff for the Cloud
August 16 2017 - 5:59AM
Dow Jones News
By Jay Greene
Oracle Corp. is starting to see the benefits of revamping its
sales force, addressing longstanding questions from Wall Street
about the software company's commitment to cloud computing.
Co-Chief Executive Mark Hurd nearly doubled Oracle's sales staff
over the past six years to around 35,000 workers. Many hires were
put through a revamped training program, then charged with winning
over startups and small businesses that Oracle largely had
bypassed.
Annual recurring revenue, a measure of Oracle's ability to
attract new customers to its cloud-subscription business, topped $2
billion in fiscal 2017 that ended May 31, up from $1.4 billion the
prior year. A 15% gain in fourth-quarter profit sent shares up 10%
to a record $50.95, where they have hovered since.
Oracle still faces challenges in the cloud, particularly from
market pioneer Amazon.com Inc. But the sales changes have helped
the 40-year-old company emerge as one of the few pre-internet tech
giants to succeed in the era of cloud computing.
Just a few years ago, Oracle was ill-equipped to do so. Its
highly compensated sales staff targeted chief information officers
at corporate giants, looking for big-budget deals that came with
fat commissions. The company not only bypassed smaller businesses
-- who were among the early adopters of the cloud's web-based,
on-demand computing services -- but also the division leaders at
big companies who were starting to buy cloud services
piecemeal.
While Oracle knew chief information officers, Mr. Hurd said in
an interview, "We didn't know the head of HR. We didn't know the
chief marketing officer."
So he created a program in 2013 to indoctrinate hires fresh out
of college in Oracle's sales methods, rather than solely hiring
veteran sales executives from other companies. Called "Class Of" --
playing off the term for a group of graduating students -- the
program aims to develop a low-cost sales force that prospects for
new markets. Oracle taps its own seasoned salespeople to become
mentors to the newbies.
"We can now go from fundamentally startup to enterprise in terms
of our ability to sell our capabilities," Mr. Hurd said.
Oracle's rethought sales approach has turned some doubters
around.
As Thierry Zerbib prepared to move Telesoft Corp, a Phoenix
maker of expense-management software, to the cloud earlier this
year, the chief technology officer got a cold call from an Oracle
salesperson. Mr. Zerbib couldn't imagine becoming an Oracle
customer, recalling a frustrating experience years earlier when the
company was a reseller of Oracle technology.
But the young sales rep persisted, winning over Mr. Zerbib and
securing a three-year contract for around $500,000 to deploy the
full suite of Oracle's cloud services. "I never felt pressure," he
said of the negotiation. "There's a change that's happening at
Oracle."
The transformation is aimed at helping Oracle, often criticized
by analysts for being late to the cloud, better compete against the
likes of Amazon and Salesforce.com Inc. Gartner Inc. estimates the
overall cloud market, including on-demand computing resources, apps
and cloud advertising, hit $209.1 billion last year. This year it
is projected to reach $245.45 billion.
Winning over smaller accounts for cloud applications may not be
enough, analysts warn. Customers often run Oracle databases on the
computing processing and storage services operated by rivals such
as Amazon, effectively giving the rivals a chance to market their
competing applications and services. The risk is those
cloud-infrastructure competitors swipe Oracle's customers as they
shift from running legacy Oracle applications in their own data
centers to cloud services.
It is "the longer term existential threat," said Stifel Nicolaus
Co. analyst Brad Reback.
That puts pressure on Oracle's sales team to sell the full cloud
portfolio, the databases and other applications as well as the
underlying processing and storage.
In four years, more than 4,500 representatives have gone through
the five-week Class Of program. Mr. Hurd figures that in a decade
or so all of Oracle's sales leaders will be graduates of Class
Of
The program didn't initially sit well with some Oracle veterans,
who worried mentoring duties would pull them away from managing
their own accounts.
"Everybody thought, 'What the hell is this?'" said Mike
Mansouri, a manager in the company's El Segundo, Calif., office,
who has worked two decades in sales, the last three years at
Oracle. "I thought it would do more harm than good."
Two years later, Mr. Mansouri said he was wrong. Recruits he
managed were scooping up smaller customers, and he received
commissions from deals they closed. He estimated his commission
compensation has jumped 25% since the program began.
"They are cracking accounts I wasn't aware of," Mr. Mansouri
said.
Write to Jay Greene at Jay.Greene@wsj.com
(END) Dow Jones Newswires
August 16, 2017 05:44 ET (09:44 GMT)
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