|
00006
|
1
|
|
2
|
|
|
3
|
|
|
4
|
|
|
5
|
|
|
6
|
|
|
7
|
|
8
|
|
|
9
|
|
|
10
|
|
|
11
|
|
|
12
|
|
|
13
|
|
|
14
|
|
|
15
|
|
|
16
|
|
|
17
|
|
|
18
|
|
|
19
|
|
|
20
|
. |
|
21
|
|
|
22
|
|
Q. All right. This will be the deposition of
|
23
|
Jeffrey O. Henley taken pursuant to notice issued
by |
24
|
the United States. Mr. Henley, would you state your
|
25
|
full name for the record, please? |
| |
Henley 05-04-04 1
00007 5
|
1
|
|
A. Jeffrey Owen Henley. |
2
|
|
|
20
|
|
A. My home is 1605 Alisa Lane, A-L-I-S-A, Lane in |
21
|
Santa Barbara, California. My work address is 500
|
22
|
Oracle Parkway in Redwood Shores, California. |
23
|
|
Q. All right, sir. Could you give us a brief |
24
|
description of your educational background? |
25
|
|
A. I grew up in Southern California, attended |
| |
Henley 05-04-04 2
00008
|
1
|
college at the University of California at Santa
|
2
|
Barbara. Got an economics degree. Then I got a |
3
|
Master's in business administration at UCLA. |
4
|
|
Q. All right, sir. Approximately when was that? |
5
|
|
A. I graduated from Santa Barbara in '66 and I |
6
|
got my MBA in 1967. |
| |
Henley 05-04-04 3
00009
|
8
|
|
Q. All right, sir. Now could you tell me how
|
9
|
long you have been with Oracle? |
10
|
|
A. Just over thirteen years. |
11
|
|
Q. All right, sir. So that would take us back to |
12
|
about '91? |
13
|
|
A. March of '91 I joined. |
14
|
|
Q. All right, sir. What was your position with |
15
|
Oracle in March of '91? |
16
|
|
A. The Chief Financial Officer. I have always |
17
|
been the Chief Financial Officer during my tenure.
|
18
|
|
Q. All right. At some point in time you took on |
19
|
the additional title of Chairman of the Board? |
20
|
|
A. Yes. Very recently. I believe it was January |
21
|
of this year. |
| |
Henley 05-04-04 4
00012
|
3
|
|
Q. Just so we're clear on the record, could you
|
4
|
describe generally what your responsibilities are
in |
5
|
your role as CFO? |
6
|
|
A. Right. So I have responsibility as Chief |
7
|
Financial Officer of, obviously, all the financial
|
8
|
functions. So tax, treasury, controllership, |
9
|
forecasting, so forth. |
10
|
|
And, as I just mentioned, I also have |
11
|
responsibility for some other administrative |
12
|
functions. So more of a management oversight. We |
13
|
have a Chief Legal Officer, General Counsel. We have
|
14
|
a Chief Human Resource Officer. So they run those |
15
|
functions but report through me to the company. |
16
|
|
So, again, HR, legal. I have a -- there is a |
17
|
function called manufacturing distribution that |
18
|
distributes our software and materials to customers.
|
19
|
I have -- we have a leasing business where we perform
|
20
|
a leasing function for some of our customers for their
|
21
|
technology. So that reports to me, as well. |
22
|
|
Q. Leasing what? |
23
|
|
A. Leasing our software. So customers want |
24
|
payment plans, if you will, for buying our |
25
|
technology. So we have a business to help provide
|
| |
Henley 05-04-04 5
00013
|
1
|
financing if they don't care to do it themselves.
|
2
|
It's kind of a one-stop shopping idea. |
| |
Henley 05-04-04 6
00079
Henley 05-04-04 7
00081
Henley 05-04-04 8
00082
|
1
|
compensation because of this relationship?
|
2
|
|
A.They actually have a reseller relationship. |
3
|
So they go to the customers and actually have a right
|
4
|
to sell them our database and then send us a royalty
|
5
|
for the sale, on those sales, send part of that money
|
6
|
back to us. |
7
|
|
Q. Is that done just in Europe or is that true, |
8
|
also, in the United States? |
9
|
|
A. I think it's global. I believe it's a global |
10
|
agreement. |
11
|
|
Q. Do you know how long that relationship has |
12
|
been in place? |
13
|
|
A. Many years. Many, many years. Maybe as long |
14
|
as I have been here. If not, shortly thereafter. I
|
15
|
mean, it's been well over ten years. |
21
|
|
Q. Do you have a relationship with any other
|
22
|
software applications vendor where you have people
|
23
|
that work with them to help them maximize their |
24
|
software's interaction with your database? |
25
|
|
A. Absolutely. We have a number of applications |
| |
Henley 05-04-04 9
00083
|
1
|
companies who draw upon our resources, if they have
|
2
|
questions or want to have training or whatever. So
we |
3
|
have a bigger relationship at SAP only because they
|
4
|
are so large. |
5
|
|
So they have asked for more dedicated |
6
|
resources over the years, and we've been happy to
do |
7
|
it, because it's to our benefit since they generate
a |
8
|
lot of business and generate a lot of Oracle database
|
9
|
business. But we make available to -- some form of
|
10
|
support to literally any company that wants to run
|
11
|
their application on our database. |
12
|
|
Q. But nobody else has a dedicated team actually |
13
|
at their site? |
14
|
|
A. I don't know the answer to that. I am not |
15
|
sure. |
16
|
|
Q. Okay. Does any other application software |
17
|
vendor have a reseller relationship for your database
|
18
|
product, other than SAP? |
19
|
|
A. For our database product. I believe that -- |
20
|
again, I don't get involved in the pricing of this,
|
21
|
but my understanding is we have an option but now
with |
22
|
many ISVs. These are -- SAP would be an independent
|
23
|
software vendor, that's the term. Where they give
us |
24
|
a percentage of their deal, so we have an option.
|
25
|
|
How many people use that option, I don't |
| |
Henley 05-04-04 10
00084
|
1
|
know. But if you go out and sell your software for
|
2
|
$50,000 to somebody and it runs on our database, you
|
3
|
give us X percent of the 50,000 as relating -- as
a |
4
|
payment for the fact the database is running the
|
5
|
application. |
6
|
|
So we actually have royalty payments we get |
7
|
from many, many software companies. But SAP is by
far |
8
|
the largest. I mean, it's a disproportionate amount
|
9
|
of money we get from them. |
25
|
|
Q. Other than SAP, can you name any other |
| |
Henley 05-04-04 11
00085
|
1
|
software application vendors who have an arrangement
|
2
|
with you where you resell their database product in
|
3
|
exchange for a royalty? |
4
|
|
A. Where they resell our database? |
5
|
|
Q. Yes. |
6
|
|
A. I can't name them, but I'm positive there are |
7
|
many. But, again, I'm told that we actually have got
|
8
|
a standardized fee deal now where we offer that. So
I |
9
|
believe there were a number of maybe small ones.
I |
10
|
just don't know. But I just don't know the names. |
11
|
|
Q. But SAP, as you said, would be probably the |
12
|
biggest? |
13
|
|
A. Oh, yes, by far, because they are the biggest |
14
|
applications company in the world. |
15
|
|
Q. Do you have any idea of what volume of sales |
16
|
of your database that they make annually? |
17
|
|
A. I think they generate royalty payments back to |
18
|
us of over a hundred million dollars a year. I mean,
|
19
|
it's enormous. They dwarf any other company in terms
|
20
|
of reporting royalties back to us. |
| |
Henley 05-04-04 12
00088
|
18
|
|
MR. SCOTT: Q. All right, sir. You have in
|
19
|
front of you a document which has been marked for
|
20
|
identification purposes as Plaintiffs' Exhibit 35. |
21
|
It's a multipage document, which does not have |
22
|
identification numbers other than on the front being
|
23
|
June 10, 2003. This was part of the 4C filings that
|
24
|
were submitted to the United States. |
25
|
|
The document is numbered on the bottom |
| |
Henley 05-04-04 13
00089
|
1
|
right-hand corner. It's 48 pages in length. The
|
2
|
first page says Board Presentation on M&A |
3
|
Opportunities, April 14th, 2003. |
4
|
|
Do you see this? |
5
|
|
A. Yes. |
6
|
|
Q. Is this -- does this document have anything to |
7
|
do with the board meeting that you talked about where
|
8
|
M&A opportunities were discussed? |
9
|
|
A. Yes. |
10
|
|
Q. And what is the relationship between that |
11
|
board meeting and this document Exhibit-35? |
12
|
|
A. We periodically have had discussions, so we |
13
|
decided at this board meeting we should update the
|
14
|
board and have a discussion about what potential
M&A |
15
|
ideas we had. |
16
|
|
Safra Catz made - led the discussion and |
17
|
presented this package or presented some of these
|
18
|
documents to the board in terms of ideas that we had
|
19
|
about possible acquisitions. |
20
|
|
Q. And you are a member of the board? |
21
|
|
A. That's correct. |
22
|
|
Q. And were at that time? |
23
|
|
A. That's correct. |
| |
Henley 05-04-04 14
00092
|
13
|
|
MR. SCOTT: Q. And this document, Exhibit-35, |
14
|
was put together by the M&A group that works
for |
15
|
Ms. Catz? |
16
|
|
A. That's my - as well as her. I don't know |
17
|
what role she played, but obviously she probably had
|
18
|
some role in terms of this, as well. But she has |
19
|
people in her group that clearly helped her put this
|
20
|
together. |
21
|
|
Q. All right, sir. If you would look at page 3 |
22
|
of the document. Again, we're still talking about
|
23
|
Exhibit-35 to your deposition. |
24
|
|
On page 3, there is a chart headed Enterprise |
25
|
Software Competitive Profile. Do you sec that? |
Henley 05-04-04 15
00093
|
1
|
|
A. Up here (indicating)? |
2
|
|
Q. Yes, sir. |
3
|
|
A. Yes, sir. Yes, I do. |
4
|
|
Q. Do you recall whether this document was the |
5
|
subject of discussions with the board at the board
|
6
|
presentation? |
7
|
|
A. I don't remember if we showed this particular |
8
|
slide. They got a copy, I believe, of all of this.
I |
9
|
don't think we went through every slide. So I am --
|
10
|
but, I mean, it wouldn't surprise me if they presented
|
11
|
this. But clearly they were exposed to the |
12
|
information. |
13
|
|
Q. All right, sir. Do you have any understanding
|
14
|
of what it means across the top, the Key: No |
15
|
Presence, Not Significant, Player, Competitive? |
16
|
|
A. Yeah. I think this was an attempt to kind of |
17
|
take all these different areas where we either compete
|
18
|
or might want to compete, look across at some of the
|
19
|
larger competitors. There is, obviously, other |
20
|
.smaller competitors that you just can't put everybody
|
21
|
on the list, and try to give visually some way of
|
22
|
saying, here is the landscape. Here is some of the
|
23
|
major competitors. Here is kind of where even Oracle
|
24
|
plays. |
25
|
|
But, I mean, there are some areas here where |
Henley 05-04-04 16
00094
|
1
|
we don't play, but they were still listed because
they |
2
|
were areas where we have logically from time to time
|
3
|
thought about maybe going next. |
4
|
|
Q. Well, for example, when you have got on the |
5
|
Key the indication, "No Presence," I take it that
|
6
|
would mean that the company that you are referring
to |
7
|
on the charts does not have a product? |
8
|
|
A. Yeah. For instance, IBM - and, again, it's
|
9
|
an oversimplified chart. IBM actually does have a
few |
10
|
applications, but we don't think that they are |
11
|
material, so we say "no presence." |
12
|
|
But, typically, they have a big business in |
13
|
implementing other software for Siebold, us. They
|
14
|
bought PWC, so they are in the business of |
15
|
implementing Oracle applications. |
16
|
|
They have an outsourcing business where they |
17
|
run our applications. So, but yes, they don't have
|
18
|
any significant play in products per se in the |
19
|
applications space. |
20
|
. |
Q. Well, then we've got the presence here, the |
21
|
next key point is Not Significant. So what is the
|
22
|
difference then, as you described it, between Not
|
23
|
Significant and No Presence on this chart? |
24
|
|
A. Again, I think the idea is sort of going up |
25
|
the level of importance or amount of presence, at
|
Henley 05-04-04 17
00095
|
1
|
least at the present time. So it's kind of a way to
|
2
|
visually say they have something but at least for
|
3
|
right now they don't appear to have as much as some
of |
4
|
the other people on this chart. |
5
|
|
Q. Okay. And Player, what does that mean? |
6
|
|
A. There, again, going up this level that they |
7
|
are clearly more presence than not significant, but
|
8
|
they are maybe not fully effective yet. So it's a
way |
9
|
|
of kind of rating the effectiveness of the
|
10
|
competition, at least. |
11
|
|
And, again, this is not meant to be so much |
12
|
perspective as right here now a year ago when they
put |
13
|
this chart together. And, again, based on their |
14
|
knowledge. Sometimes we have imperfect knowledge,
|
15
|
too. |
16
|
|
Q. And Competitive, what was meant by that on the |
17
|
chart?
|
18
|
|
A. Clearly, we see them here and now. We see |
19
|
them a fair amount of time. So they are clearly one
|
20
|
.of the people we really are battling with right now
in |
21
|
the space that we're in, which changes, as well. |
22
|
|
Again, I'd stress in every one of these spaces
|
23
|
there is many other competitors. There is a whole
|
24
|
bunch of business intelligence people that weren't
|
25
|
displayed on here. |
Henley 05-04-04 18
00096
|
1
|
|
For instance, Business Objects, Cognos, I
|
2
|
mean, people that are really the major business |
3
|
intelligence players don't even show up on this list.
|
4
|
This was meant really just to sort of a give a quick
|
5
|
overview to the board without getting into the details
|
6
|
of every segment. |
7
|
|
As you know, the bulk of this related to just |
8
|
a few key people we thought would make sense to look
|
9
|
at. In fact, I just saw Business Objects on here. I
|
10
|
don't think they are even on this top
screen here. |
11
|
|
Q. But they are listed as one of the -- |
12
|
|
A. Yeah, but they are not on this chart you have |
13
|
been making me go through here. It's clearly not all
|
14
|
inclusive chart of all the competitors or people
that |
15
|
are competitive or people who are players. |
16
|
|
Q. All right. So let me ask you to flip over, if |
17
|
you would, in the document to Exhibit-35, page 36.
|
18
|
|
A. (Complies.) |
19
|
|
Q. All right, sir. Was Lawson one of the |
20
|
.companies, potential acquisition partners, that was
|
21
|
discussed at this board meeting? |
22
|
|
A. I can't remember if we discussed it. I
|
23
|
believe we probably would have at least talked briefly
|
24
|
about it, I mean, in these meetings, these things
|
25
|
trigger a lot of conversation, and so typically you
|
Henley 05-04-04 19
00097
|
1
|
sort of, you know -- but I'm sure we must have at
|
2
|
least mentioned it. |
3
|
|
But, again, the whole pack was here, I just |
4
|
don't remember what degree of discussion we would
have |
5
|
had about Lawson. But we wouldn't have put it in here |
6
|
if we didn't think this was something we should think
|
7
|
about.
|
8
|
|
Q. All right, sir. Do you know if there were |
9
|
ever any discussions between Oracle and Lawsons |
10
|
regarding potential acquisition? |
11
|
|
A. I don't know. |
12
|
|
Q. All right. So looking at the Lawson chart on |
13
|
page 36 of Exhibit-35, under the heading Potential
|
14
|
Upside, there is a bullet point which states, "Focus
|
15
|
on mid-market services sector is complimentary to
|
16
|
Oracle's strengths," and then it goes on to say, |
17
|
"Health care is strongest vertical with 21 percent
of |
18
|
customer base. Others include retail, 12 percent,
|
19
|
professional services, 8 percent, financial services,
|
20
|
. 8 percent, and public sector, 6 percent." Do you
see |
21
|
that? |
22
|
|
A. I do.
|
23
|
|
Q. Do you recall any discussions regarding Lawson |
24
|
having a focus on mid-market services sector? |
25
|
|
A. Again, I don't remember the discussion but, I |
Henley 05-04-04 20
00098
|
1
|
mean, it's ironic. I mean, clearly we misuse terms at
|
2
|
Oracle. When you talk about health care, clearly some
|
3
|
of their health care customers are hardly small |
4
|
customers. Mayo Clinic Center, enormous, enormous
|
5
|
hospital chain. |
6
|
|
So we mix all kinds of terms here. But I |
7
|
don't remember exactly what we would have discussed
|
8
|
about Lawson in the meeting.
|
9
|
|
Q. So is it your testimony that the use of the |
10
|
term "mid-market services sector" in the presentation
|
11
|
to the board on potential acquisition products is
|
12
|
somehow inaccurate in describing Lawson? |
13
|
|
A. I am saying that to use the word "mid-market" |
14
|
and to put in below it health care is a vertical does
|
15
|
not imply that the only health care customers we serve
|
16
|
are mid-market customers. And, again, the whole word
|
17
|
mid-market, my experience in this industry is |
18
|
everybody has a definition, differing definitions
of |
19
|
what mid-market means. |
20
|
. |
But if the term, I think, generically means at |
21
|
some point something smaller than large is what they
|
22
|
call. I don't know where you break that off.
|
23
|
Everybody has different definitions. Then I would
|
24
|
submit that Lawson sells lots of health care |
25
|
organizations that are clearly not small or that are
|
Henley 05-04-04 21
00099
|
1
|
medium. They are large health care companies.
|
2
|
|
So that's why I say to me if I were doing the |
3
|
presentation I would have segmented health care off
to |
4
|
the side and never implied that that's a mid-market
|
5
|
sector. |
6
|
|
It's just like any other sector. There is |
7
|
some large small hospitals and there are some very
big |
8
|
ones. There is big health care chains. So to me it's
|
9
|
just a little bit confusing. |
10
|
|
I am not trying to be critical of whoever put |
11
|
this chart together, but it kind of makes two |
12
|
different points under one bullet point, in my |
13
|
opinion. |
14
|
|
Q. Do you recall any discussions at the board |
15
|
meeting regarding this part of the study focusing
|
16
|
mid-market service sectors and talking about Lawson
|
17
|
health care was inaccurate? |
18
|
|
A. No, I don't. I'm just telling you since you |
19
|
keep asking me about mid-market, I'm just telling
you |
20
|
.looking at the chart, thinking about it, I have no
|
21
|
idea if we even went through this particular chart
at |
22
|
the board meeting.
|
23
|
|
Q. Do you know, are there health care companies |
24
|
that you would consider to be in the mid-market?
|
25
|
|
A. Again, in my definition, which I think |
Henley 05-04-04 22
00100
|
1
|
everybody has their own definition, even in our
|
2
|
company, let alone industry analysts, I would say |
3
|
there clearly are very small hospitals that might
have |
4
|
a hundred beds, and then there is very big hospitals
|
5
|
that might have 1200, 1500, and then there is |
6
|
something like Mayo that actually has multiple |
7
|
hospitals.
|
8
|
|
So, at some point, you know, one is large, one |
9
|
is small, and what's medium I have no idea. But |
10
|
clearly the hospitals vary in size and scope and
all |
11
|
that sort of thing. |
12
|
|
Q. What is your definition of mid-market?
|
13
|
|
A. I have tended in the commercial side to think |
14
|
of businesses around a quarter of a billion and |
15
|
smaller. But, again, you can interview five people
at |
16
|
Oracle, and I bet you they will all give you a |
17
|
different size. Different industry analysts, some
|
18
|
people say 500, some people 50. |
19
|
|
It's a term that I think is meant to be |
20
|
.something less than very large. Then the breakdown
is |
21
|
how do you really define that. Everybody has a |
22
|
different definition. At some point, where is this
|
23
|
break point? |
24
|
|
Q. Okay. Do you believe that there is, in fact,
|
25
|
though, however you define it, a group of customers
|
Henley 05-04-04 23
00101
|
1
|
that you would define as being in the mid-market?
|
2
|
|
MR. ROSCH: Object. |
3
|
|
THE WITNESS: I think there are customers that |
4
|
are clearly significantly smaller than large |
5
|
customers, and clearly -- at a minimum much smaller,
|
6
|
have many fewer employers and that sort of thing.
And |
7
|
then sometimes they are in one country. |
8
|
|
So sometimes large connotes just an enormous
|
9
|
US company versus some small US company, or sometimes
|
10
|
large gets even more complicated because they are
|
11
|
multi-national. |
12
|
|
But I think there is clearly small customers, |
13
|
there is medium customers, there is big customers. So
|
14
|
as I testified earlier about these break points, you
|
15
|
know, we've tended to recognize that there are |
16
|
different kinds of customer needs, price driven, all
|
17
|
sorts of things, and so there is classic market |
18
|
segmentation that goes on in our industry in terms of
|
19
| kind of thinking about the differences between |
20
|
customers. |
Henley 05-04-04 24
00110
|
15
|
|
MR. SCOTT: Q. Why - do you have any
|
16
|
recollection as to why Oracle thought JD Edwards would
|
17
|
be a good fit as an acquisition partner? |
18
|
|
A. Again, the theme has been that we felt that |
19
|
getting a stronger presence in the applications space
|
20
|
would be useful to us. So they were in the
|
21
|
applications space, along with Lawson, Peoplesoft,
a |
22
|
number of other -- Cerner, a number of other companies
|
23
|
that are in the package there. |
24
|
|
So it was really in that spirit that it gives
|
25
|
us a bigger presence, a bigger foot print in the
|
Henley 05-04-04 25
00111
|
1
|
applications business.
|
2
|
|
Q. Well, if you would look at page 26 of |
3
|
Exhibit-35. |
4
|
|
A. Uh-huh. |
5
|
|
Q. Under the heading Potential Upside, the second |
6
|
bullet point indicates one potential upside of Oracle
|
7
|
acquiring JD Edwards is it would be "addition of
a |
8
|
strong mid-market presence." Do you see that?
|
9
|
|
A. Yes. |
10
|
|
Q. Do you recall any discussions about that? |
11
|
|
A. Whether this meeting - |
12
|
|
Q. At the board meeting. |
13
|
|
A. Again, I am not sure. I mean, clearly, we've |
14
|
had discussions, but I don't know at the board meeting
|
15
|
if we talked specifically about that. |
16
|
|
Q. Did you talk to anybody in any context other
|
17
|
than the board meeting about JD Edwards adding a |
18
|
mid-market presence to your portfolio? |
19
|
|
A. I'm sure we have. I mean, JD Edwards had a |
20
|
strong AS-400 base over the years. Clearly, the |
21
|
AS-400 market IBM has huge presence in the AS-400
|
22
|
market that's on their hardware. It's clearly been
|
23
|
geared more towards either smaller customers or |
24
|
divisions of big companies. |
25
|
|
But, I mean, it's classically -- you know, IBM |
Henley 05-04-04 26
00112
|
1
|
had their mainframes and then they had their AS-400s.
|
2
|
Classic market segmentation on the part of IBM. |
3
|
|
JD Edwards had that business and then they got |
4
|
into Unix and some other platforms, and they were
|
5
|
selling also to large customers. |
6
|
|
Q. When you talk about the AS-400 that JD Edwards |
7
|
had a product for, and you said that that was used
|
8
|
primarily by smaller companies, what did you mean
by |
9
|
"smaller companies" in that context? |
10
|
|
A. Again, I don't know where you draw the line, |
11
|
but typically either companies of, you know, a few
|
12
|
hundred people versus thousands and tens of thousands
|
13
|
or divisions of big companies that had chose to use
|
14
|
that platform. |
15
|
|
That platform has been around for years, and |
16
|
there is many, many people who have used the AS-400
|
17
|
platform, and JD Edwards built a good business around
|
18
|
selling packaged applications on that platform. |
25
|
|
Q. When in Exhibit-35 it has the phrase that a |
Henley 05-04-04 27
00113
|
1
|
potential upside is the addition of a strong
|
2
|
mid-market presence by acquiring JD Edwards, do you
|
3
|
know what definition is used there for mid-market? |
4
|
|
A. No. Again, I believe that it's the same. I |
5
|
think everybody has got a difference, but in my mind
|
6
|
it connotes, you know, smaller to substantially |
7
|
smaller organization size than, very large, large
|
8
|
organization size.
|
9
|
|
Q. All right. And the significance of the |
10
|
company's being smaller is what in the context of
|
11
|
segmenting the market, as you referred to it? |
12
|
|
A. Again, to me it's just numbers of people and |
13
|
transactions. It's not necessarily a reflection of
|
14
|
complexity or sophistication. It can be that, too.
|
15
|
It can be a company that's just real simple and basic, |
16
|
but I don't think that's the big -- the biggest thing
|
17
|
is just size, and ultimately budgets. |
18
|
|
There is a lot of people that actually want -- |
19
|
that's why we think we can do better and better with
|
20
|
our products if we can hit these price points. |
21
|
|
It's just you have to be -- you have to figure |
22
|
out a way to hit a certain price point to get smaller
|
23
| organizations interested or have enough budget to
be |
24
| able to take on your products. |
25
|
|
Q. Is that the rationale behind running out the |
Henley 05-04-04 28
00114
|
1
|
-- rolling out the Oracle standard product in Europe?
|
2
|
|
A. That's what I told you earlier. That's |
3
|
correct. It's very much geared towards simplification |
4
|
and ultimately getting to a price point that we can
be |
5
|
competitive in smaller organizations. |
6
|
|
Q. Was the rollout of that product in Europe the |
7
|
first time that you had actually come out with a
|
8
|
package of software that was configured in a way that
|
9
|
you thought would attract to smaller customers with
|
10
|
lower price points? |
11
|
|
A. It's one of a series of things we've tried |
12
|
over time. We've had an active program in the United
|
13
|
States to try to sell to smaller companies. We've
|
14
|
organized a separate sales force for a number of
|
15
|
years. So there is a variety of techniques we've |
16
|
tried to do to get focus to find different partners
|
17
|
who could implement cheaper. |
18
|
|
The distinction, I would say, with Standard |
19
|
Edition was that in addition to that in Europe we
|
20
|
tried to say, okay, we will just sell it to this
|
21
|
channel and we will preconfigure a set of apps, and
so |
22
|
we will really, really go to the extreme here to see
|
23
|
if that will work. And if it works in Europe, then
|
24
|
maybe we can make it work in Asia, the Americas, and
|
25
|
so forth. |
Henley 05-04-04 29
00115
|
1
|
|
Q. You indicated that at some point in time you |
2
|
had a separate sales force aimed at smaller |
3
|
companies. Did I hear that right? |
4
|
|
A. Oh, absolutely. |
5
|
|
Q. Do you still have that? |
6
|
|
A. Effectively, yes. |
7
|
|
Q. What does that mean?
|
8
|
|
A. Well, we used to have a separate sales |
9
|
management in the United States that we carved out.
|
10
|
We said, you people are what we call general |
11
|
business. |
12
|
|
IBM has used that term over there, so people |
13
|
have all kinds of terms: Mid-markel, general |
14
|
business, whatever. But basically geared towards
|
15
|
smaller organizations who had, who are very price
|
16
|
sensitive. And so we think that the sales force has
|
17
|
to behave differently. |
18
|
|
They have to learn how to be very nimble, not |
19
|
get involved in long sales cycles so that we can make
|
20
|
money with these small companies. |
21
|
|
We worked with a different set of small local
|
22
|
implementers. So then we put the groups back together
|
23
|
again a couple years ago. But effectively, the way
|
24
|
the sales force in many of the cities works, there
|
25
|
still is a general business sales force. They just
|
Henley 05-04-04 30
00116
|
1
|
happen to be all part of one geography now.
|
2
|
|
But you cut through it and there is still |
3
|
managers and all they do and their sales reps is call
|
4
|
upon these smaller organizations. We think it's |
5
|
important to be organized that way, because we have
to |
6
|
be very nimble. |
7
|
|
The only way we can make money is we've got to
|
8
|
turn a lot of deals and we've got to learn how to
use |
9
|
different partners and that sort of thing. So there
|
10
|
is a segmentation in the way we think and the way
we |
11
|
focus. |
12
|
|
Q. You say that -- and you just used the term |
13
|
"general business." That talks about the smaller
|
14
|
companies that you are hoping to be able to get price
|
15
|
points that are attractive for? |
16
|
|
MR. ROSCH: Objection. |
17
|
|
THE WITNESS: That's what we called the |
18
|
organization that we at one time had in the US, our |
19
|
general business sales force. We don't call it that
|
20
|
anymore, because it's been melded into the regular
|
21
|
sales force. |
22
|
|
But, effectively, that's the way they are |
23
|
still organized in some of these markets. They still
|
24
|
have this sort of separate group of people that tend
|
25
|
to sell to smaller companies. |
Henley 05-04-04 31
00117
|
1
|
|
We also have sales forces that sell to
|
2
|
industries. So it's very complex. There is some |
3
|
people that have an industry focus and they may even
|
4
|
sell to smaller and large customers, too. |
5
|
|
MR. SCOTT: Q. But you indicated that the |
6
|
folks that sell to the smaller businesses, the ones
|
7
|
that used to be called the general business sales
|
8
|
force, have to be more nimble and do a shorter sales
|
9
|
cycle so you folks can make money, right? |
10
|
|
A. Uh-huh. |
11
|
|
Q. What did you mean by that? |
12
|
|
A. That when you are selling to some big |
13
|
companies sometimes they -- the sales cycles are
much |
14
|
longer, there is many more people involved, and so you
|
15
|
get used to a way of selling. |
16
|
|
You are trained as a salesperson to go through |
17
|
all the steps of selling, and how - you can't afford
|
18
|
to do that in these small companies. |
19
|
|
So we've found that the mentality of a |
20
|
salesperson who had sold to IBM or sold to some huge
|
21
|
company was - the way they are prepared, the way they
|
22
|
just thought, that it was almost counter intuitive
for |
23
|
them to now go out and now call on 20 customers in
the |
24
|
course of a year. |
25
|
|
And we're not the only people, by the way. |
Henley 05-04-04 32
00118
|
1
|