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1	IN RE:
2	THE MATTER OF ORACLE'S PROPOSED ACQUISITION OF PeopleSoft
3	CIVIL INVESTIGATIVE DEMAND NO. 22795
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7	San Francisco, California
8	Friday, January 16, 2004
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13	Videotaped Deposition of PAUL CIANDRINI, a
14	witness herein, called for examination in the
15	above-entitled matter, pursuant to notice, taken at the
16	Department of Justice, Antitrust Division, 450 Golden
17	Gate Avenue, Room 10-010, San Francisco, California
18	94102, beginning at 9:16 a.m. before Judith Ladd, RPR and
19	CSR.
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11	PAUL CIANDRINI,
12	after being sworn by the Certified Shorthand
13	Reporter, the Witness testified as follows:
14	EXAMINATION BY COUNSEL FOR THE DEPARTMENT OF JUSTICE
15	BY MR. LOHRER:
16	Q. State your name for the record, please.
17	A. Paul Ciandrini.
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12	Q. Who are you employed by?
13	A. Oracle Corporation.
14	Q. What is your job with Oracle Corporation?
15	A. My title?
16	Q. Title.
17	A. My title is senior vice president of North
18	American Application Sales.
19	Q. North American Application Sales?
20	A. That is correct.
21	Q. How long have you had that title?
22	A. Six months.

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1	Q. Beginning when?
2	A. Beginning June of 2003.
3	Q. Was it June 1, 2003?
4	A. Approximately.
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15	Q. Line 9, customer name Gartner, key competitor
16	PeopleSoft.
17	A. Um-hmm.
18	Q. Is the key competitor accurate there?
19	A. They were one of the key competitors, but they
20	didn't really go down to the wire. They didn't make the
21	final cut
22	Q. Who made the final cut?

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1	A. SAP.
2	Q. Okay. And when did that deal close?
3	A. That deal closed the end of the second
4	quarter. So probably about a month later.
5	Q. A couple of weeks ago, right?
6	A. Yeah. No. We ended the quarter in November.
7	Our Q2 ended November 30th. So it's like five weeks,
8	six weeks ago.
9	Q. Let's go back on -- let's forget about end of
10	the quarter because I think the dates are off. Do you
11	remember when that opportunity concluded?
12	A. Yeah, approximately November 30th.
13	Q. Okay. And was Oracle successful in that
14	opportunity?
15	A. Yes.
16	Q. Okay. And in that case, Oracle was successful
17	and SAP was a finalist that was unsuccessful?
18	A. Correct.
19	Q. And how is it that you know that information?
20	A. From talking to the sales team about the
21	opportunity and they talking to the client and the third
22	parties, what I told you before.

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1	Q. Right. And did you have information that
2	indicated that SAP and Oracle were the two finalists?
3	A. Yes.
4	Q. And that PeopleSoft had been eliminated?
5	A. I personally didn't really pay that much
6	attention in that deal relative to early in the sales --
7	the procurement cycle. I usually get involved in them a
8	little later on in the sales cycle.
9	At that time I don't think I heard that
10	PeopleSoft -- I'm sure PeopleSoft was looked at, you
11	know, probably like Lawson, probably like outsourcing,
12	all the other stuff. But in the heat of the battle when
13	we had talked about this exhibit, when it got down to
14	this kind of area --
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6	Q. The deal closed November 30th. When was
7	that -- when was that point in time when you became
8	involved?
9	A. Oh, in November, approximately November or late
10	September -- November. Not really late September, more
11	like November.
12	Q. So that explains why in September the key
13	competitor information on Ciandrini Exhibit 7 might have
14	been incorrect, correct?
15	A. That is a plausible explanation for it
16	Q. Any other explanation?
17	A. It just was never changed.
18	Q. It should have been changed to?
19	A. Well, again, at this time, September 9th, this
20	could have been the viable main competitor, okay. What
21	we would need to do would be to look at this report
22	closer to the actual conclusion date of this opportunity

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1	to see if it was updated appropriately.
2	Q. Right. And where else would we look for
3	information on this particular opportunity?
4	A. For competitive --
5	Q. Yes.
6	A. Just where we're looking.
7	Q. Right. You didn't meet -- did you meet in
8	person with that CEO male we were talking about?
9	A. I did.
10	Q. You didn't meet in person with the Gartner CEO
11	or Gartner -- high-level Gartner employees, did you?
12	A. I did not.
13	Q. Mr. Henley and Mr. Block did, correct?
14	A. Yes.
15	Q. And did you -- were you the primary person from
16	your sales group preparing them for their meeting?
17	A. No.
18	Q. Who did that?
19	A. I believe it was John Bouche.
20	Q. Was there a meeting relating to this?
21	A. There probably was a phone conversation. There
22	could have been a meeting. I'm unaware.

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1	Q. You didn't participate?
2	A. No.
3	Q. You delegated that to Mr. Bouche -- let me take
4	that -- let me withdraw that question.
5	How was it that Mr. Bouche ended up with that
6	responsibility as opposed to you would report directly
7	to Mr. Block?
8	A. This opportunity fells in his geography. Keith
9	is out of Boston. John Bouche is out of Boston.
10	We're -- we communicate. Keith, Bouch, me are a team.
11	We kind of know how we work. Bouch handled it.
12	Q. And do you think you met specifically with
13	Mr. Block and Mr. Henley?
14	A. I don't know that, that they met face to face.
15	I don't know that
16	Q. Would it come up in one of the forecast calls
17	that they were going to meet?
18	A. What would come up in a forecast call would
19	be -- would be a dialogue about strategy on the deal,
20	and from that strategy could be "We want to get Jeff
21	and/or Keith in front of these guys."
22	Q. Have you had a conversation like that, strategy

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1	on the deal when we're in the range when we're
2	negotiating price and terms --
3	A. Sure.
4	Q. --with any of these customer names, these
5	customer opportunities recently?
6	A. Recently?
7	Q. Pick one.
8	A. Recently, Hallmark.
9	Q. All right. Who was involved in that
10	conversation?
11	A. Myself and Matt Mills and Matt Renner.
12	Q. Okay. And when did that conversation occur?
13	A. Sometime in November.
14	Q. Has that opportunity closed?
15	A. Yes.
16	Q. And what was the result of that opportunity
17	closing, who got it?
18	A. We did.
19	Q. Okay. When did it close?
20	A. Sometime in November. I'm not going to recall
21	the exact date.
22	Q. Do you recall the product?

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1	A. Yeah. It was H.R.
2	Q. And what was the conversation you had with --
3	was it the two Matts?
4	A. Correct
5	Q. What was the conversation? What do you recall
6	about the conversation you had with the two Matts?
7	A. I recall that there was some slight preference
8	for Oracle. PeopleSoft understood that. They basically
9	came in and did what they normally do, which is lowball
10	the price to nowhere. And talking to them about steps
11	to find out about where we thought that could be so
12	that, you know, we didn't have to discount any more than
13	we necessarily needed to to get the deal and leverage
14	the positive differentiation that we thought Hallmark
15	saw in our product over the PeopleSoft product
16	Q. Did you discuss other competitors in that
17	conversation with the two Matts?
18	A. No.
19	Q. And how did you arrive at the dollar figure?
20	A. Through negotiation with the client, painfully.
21	Q. How many different levels -- do you know, as we
22	sit here today, the dollar amount that Oracle is going

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1	to derive from that opportunity with Hallmark?
2	A. I will give you an approximate amount. I
3	believe it was a $1.2 million transaction.
4	Q. Do you know what is involved in that? We
5	talked about those four products that you sell. There's
6	license, there's maintenance and the two types of
7	professional services.
8	A. That was comprised of license, services and
9	maintenance.
10	Q. What was PeopleSoft offering?
11	A. Excuse me?
12	Q. What was PeopleSoft offering?
13	A. I'm sure the same things.
14	Q. And how was it -- and again, the dollar amount
15	that you arrived at in the end was what?
16	A. I think, I think that the opportunity went for
17	1.2 million for license.
18	Q. Okay. Where did Oracle start with pricing this
19	opportunity?
20	A. I don't know specifically, I'm sure they
21	quoted them some slight discount off of list
22	Q. It was 1.2 million, correct, at deal's end?

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1	A. We can validate that. That is my recollection.
2	Q. Subject to check, the final amount is 1.2
3	million?
4	A. Correct
5	Q. Okay. And prior to arriving at 1.2 million,
6	how does that painful negotiation with the customer take
7	place?
8	A. Ask me something specific.
9	Q. Who is calling the customer?
10	A. The sales rep, the RM, the RVP.
11	Q. Everybody?
12	A. GVP. Just depends.
13	Q. I understand. Either of the two Matts?
14	A. Both of the Matts were involved in it.
15	Q. Right. And do you know which is the individual
16	who said -- who conveyed to Hallmark "We will go to 1.2
17	million"?
18	A. I believe subject to verification, it was Matt
19	Renner.
20	Q. What was Matt's number before he gave the 1.2
21	million number? What was Oracle's number?
22	A. The original number quoted to them?

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1	Q. Start with the original number.
2	A. To be hosest, I will not recall what the
3	original number was.
4	Q. Okay. So let's try to recall the number prior
5	to the 1.2 million number.
6	A. Might have been -- from looking at this report,
7	what I would say is that they probably started somewhere
8	around 1.9 to $2 million, as articulated in line 26. I
9	would presume that it was a step-down process of some
10	sort.
11	Q. Meaning not all at once but a number of steps
12	to get to the l.9 to 2 million ballpark down to l.2?
13	A. I would presume that to be the scenario.
14	Q. Two or three steps?
15	A. Again, subject to validation, approximately.
16	Q. Okay. Were you involved in those steps?
17	A. Yes.
18	Q. How were you involved?
19	A. We were just discussing strategy.
20	Q. You were discussing the dollar figures, too?
21	A. The dollar figures. But in these procurements
22	the buyer, right, is working multiple angles, right.

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1	They can talk to the -- they can get an offer from, in
2	this instance, PeopleSoft. They can talk to an analyst
3	like a Gartner. They can be talking to a third party
4	implementer.
5	Q. Right
6	A. Right. So there's a lot of strategy around
7	trying to identify what you are competing against
8	because you don't usually know very specifically.
9	There's strategy around how you try to validate the
10	value of differentuation that one vendor has over
11	another.
12	Q. Did that differentiation of value occur in this
13	Hallmark case?
14	A. It occurs pretty much in every sales cycle.
15	Q. Do you recall it occurring in this case?
16	A. Sure.
17	Q. And how did that play out?
18	A. In what respect?
19	Q. How did -- how was it that in your
20	conversations with the Matts you strategized how to
21	differentiate your value?
22	A. By going back to events in the sales cycle

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1	where we were told by the evaluation team that they
2	preferred the way we handled this particular function or
3	they preferred a particular feature.
4	Q. Preferred to whom?
5	A. To whomever they were looking at
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8	Q. Now, in strategizing with the two Matts in
9	trying to win the opportunity for the Hallmark business,
10	what did you talk about in terms of the strategy for the
11	price negotiation?
12	A. Pretty much what I just said to you. Validate
13	that Hallmark sees value in the feature function
14	differentiation, in the product architecture, in the --
15	you know, preference to do business with Oracle versus
16	another competitor, with the relationships that we have
17	established, with the knowledge we had developed of
18	their business.
19	Q. I'm going to break that down to two -- all
20	those reasons, I counted four. There's preference to do
21	business and knowledge of business, and that goes to the
22	expertise and the hard work your sales force has done

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1	throughout the sales cycle, doesn't it?
2	A. Knowledge of their business, of Hallmark's
3	business become important. It could be references as
4	well experience in that vertical.
5	Q. Okay. And then there's the value associated
6	with the features and function and the product
7	architecture, and that certainly is part of the sales
8	cycle that you testified about earlier that goes to
9	meeting the customer's needs in term of functionality,
10	right?
11	A. Correct.
12	Q. Okay. And so you strategized about those
13	things and your strategy revealed, with respect to the
14	customer functionality items, that what, that what, that
15	Oracle was what?
16	A. That what we had heard from Hallmark was there
17	were areas of our functionality that they preferred.
18	Q. Did you believe that?
19	A. The reality of that situation is that there
20	are -- in most instances, there's something in
21	everyone's product that they prefer.
22	Q. What did you tell Hallmark about your product

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1	that might have made them think that?
2	A. Not necessarily that we told them. It would
3	have been something they would have seen in a
4	demonstration based on their requirements.
5	Q. Right. Okay. What do you believe about your
6	functionality for Hallmark as compared to the
7	functionality of PeopleSoft for Hallmark?
8	A. In this instance, I specifically don't know
9	what they preferred in Oracle's functionality versus
10	PeopleSoft.
11	Q. I didn't ask that. What I asked is what you
12	believe about the functionality of PeopleSoft's offering
13	as compared to the functionality of Oracle's offering to
14	Hallmark, what do you believe?
15	A. As the differentiation?
16	Q. Yes.
17	A. I don't really know.
18	Q. Do you think they are the same?
19	A. They are not the same. There are definitely
20	differences.
21	Q. What are the differences?
22	A. I would say the architecture of the products.

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1	Q. What does that lead to for someone in
2	Hallmark's --
3	A. It may or may not lead to anything.
4	Q. Does it go more towards a preference for how
5	the software as opposed to absolute functionality versus
6	non-functionality?
7	A. Fit, preference is in the eyes of the beholder,
8	the buyer.
9	Q. No doubt that PeopleSoft at that point in
10	time, was viewed as by Hallmark as functional, correct?
11	You have no doubt about that?
12	A. They wouldn't be where they were they
13	wouldn't -- if they weren't considered to be able to do
14	the job is my opinion.
15	Q. Right. And it's because of that that Oracle
16	was willing to cut price, correct?
17	A. It was really because in this particular
18	instance, to the best of my recollection, PeopleSoft
19	realized they were losing the deal and they were cutting
20	their price to nothing to compete on price.
21	Q. PeopleSoft was cutting it to nothing to compete
22	on price?

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1	A. Yeah.
2	Q. But it was because PeopleSoft had already
3	passed the functionality test Hallmark's term that
4	Oracle was willing to compete on price?
5	A. I would restate that to say PeopleSoft was
6	probably one of two finalists. As the decision leaned
7	towards Oracle, PeopleSoft realized they were losing and
8	they cut prices as a point of differentiation because
9	they could not find other points of differentiation.
10	Q. What did they cut the price to?
11	A. You know. I don't remember. I could totally
12	speculate, but I won't because I don't remember.
13	Q. I don't want you to speculate. But we have an
14	example here where you're going from 1.9, 2.0 to 1.2,
15	and these are strategy decisions that you make with your
16	North American Sales Groups, a day-to-day thing, and the
17	two Matts have got to do it?
18	A. Right
19	Q. Okay. So what range do you want to give me of
20	where PeopleSofts? If your final number that's going
21	to be the win, retrospective is 1.2?
22	A. I think they were probably somewhere between

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1	800 and a million.
2	Q. And that was -- now that I put it in that
3	context, do you recall now that that's where you and the
4	two Matts thought they were?
5	A. I would say that's approximately where we
6	thought they probably were in the deal price-wise.
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