Government Exhibit [Non-designated testimony redacted]
| 00001 |
| 1 |
SOME PORTIONS DESIGNATED HIGHLY CONFIDENTIAL |
| 2 |
SUBJECT TO PROTECTIVE ORDER |
| 3 |
ENTERED
ON MARCH 1, 2004 |
| 4 |
*
* * |
| 5 |
UNITED STATES
DISTRICT COURT |
| 6 |
FOR THE NORTHERN DISTRICT OF CALIFORNIA |
| 7 |
SAN FRANCISCO
DIVISION |
| 8 |
_____________________________________ |
| 9 |
UNITED STATES OF AMERICA, et al. |
| 10 |
Plaintiffs |
| 11 |
-v- Case No: C-04-00807 (VRW) |
| 12 |
ORACLE CORP. |
| 13 |
Defendant |
| 14 |
_____________________________________ |
| 15 |
DEPOSITION
OF |
| 16 |
DAVID L.
DORTENZO |
| 17 |
VOLUME 1 |
| 18 |
Wednesday,
May 5, 2004 |
| 19 |
9:24 A.M.
TO 5:22 P.M. |
| 20 |
held at |
| 21 |
1735 New
York Avenue, Northwest |
| 22 |
Washington,
D.C. |
| 00005 |
| 1 |
***PROCEEDINGS*** |
| 2 |
DAVID L.
DORTENZO, |
| 3 |
called as
a witness in this case, |
| 4 |
having been first duly sworn upon his oath, |
| 5 |
testified
as follows: |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| 00008 |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| 8 |
Q. Okay. Very good. |
| 9 |
Mr. Dortenzo,
for the record, can you |
| 10 |
spell your name and also state where you work, and |
| 11 |
give the address of your employer. |
| 12 |
A. Sure. It's Dave D-O-R-T-E-N-Z-O. I'm |
| 13 |
a principal with Deloitte Consulting. My business |
| 14 |
address is 1000 One PPG Place, Pittsburgh, |
| 15 |
Pennsylvania, 15222. |
| 16 |
Q. All right. And now, is that Deloitte |
| 17 |
Consulting LLP? |
| 18 |
A. That is Deloitte Consulting LLP. |
| 19 |
Q. And how long have you worked at the |
| 20 |
Deloitte Consulting? |
| 21 |
A. A little bit over ten years. I started |
| 22 |
in April of 1994. |
| 00009 |
| 1 |
Q. Okay. And what did you do before that? |
| 2 |
A. I was a consultant with Pricewaterhouse |
| 3 |
from 1981 through 1994. |
| 4 |
Q. Okay. |
| 5 |
A. I was in industry for four years before |
| 6 |
that. |
| 7 |
Q. Okay. And what do you do as a |
| 8 |
principal of Deloitte Consulting? |
| 9 |
A. I manage our U.S. operations for our |
| 10 |
Oracle consulting practice. I'm responsible for |
| 11 |
all of our consulting operations, our partner |
| 12 |
deployment, and staff growth. |
| 13 |
Q. Now, at one time were you a global |
| 14 |
leader for the Oracle practice? |
| 15 |
A. Yes. I was a global leader last year. |
| 16 |
Q. And when did that end? |
| 17 |
A. That changed in this fiscal year, which |
| 18 |
began in June of 2003. |
| 19 |
Q. June 2003. |
| 20 |
A. Uh-huh. |
| 21 |
Q. Why -- what was the reason for that |
| 22 |
change? |
| 00010 |
| 1 |
A. The reason for that change was that the |
| 2 |
Deloitte Consulting was folded back into Deloitte |
| 3 |
& Touche's parent organization, and the accounting |
| 4 |
structure within the organization is of a |
| 5 |
country-specific nature. And so the leaders are |
| 6 |
assigned to the country levels, and not to the |
| 7 |
global levels. |
| 8 |
There are
some global leaders that are |
| 9 |
more responsible for alliance operations, |
| 10 |
relationship-type of operations than they are the |
| 11 |
consulting operations and the actual practice of |
| 12 |
consulting in the field. |
| 13 |
Q. Okay. Now, that was a lot of |
| 14 |
information. I just want to go through it so that |
| 15 |
it's clear. |
| 16 |
You said Deloitte Consulting was folded |
| 17 |
back into Deloitte & Touche? |
| 18 |
A. That's correct. |
| 19 |
Q. What's Deloitte & Touche? |
| 20 |
A. The -- there's the parent corporation, |
| 21 |
Deloitte Touche Tohmatsu, that is the global |
| 22 |
holding company. |
| 00011 |
| 1 |
The parent
organization for Deloitte |
| 2 |
Consulting is Deloitte & Touche LLP USA. |
| 3 |
Deloitte
& Touche LLP USA is divided |
| 4 |
into two partnerships. Deloitte Consulting LLP |
| 5 |
and Deloitte & Touche LLP so there are two |
| 6 |
organizations that fold up into Deloitte & Touche |
| 7 |
LLP USA, and that is part of holding company of |
| 8 |
Deloitte & Touche and Tohmatsu on a global basis. |
| 9 |
Q. Deloitte & Touche Tohmatsu -- |
| 10 |
A. Tohmatsu. |
| 11 |
Q. Is that headquartered in Switzerland? |
| 12 |
A. That's a Swiss Verein. |
| 13 |
Q. What's a Verein? |
| 14 |
A. It's a holding of partnerships. |
| 15 |
Q. That's just the Swiss terminology for |
| 16 |
holding and partnerships? |
| 17 |
A. Yes. |
| 18 |
Q. Okay. And then Deloitte & Touche LLP |
| 19 |
USA that's the parent organization for both |
| 20 |
Deloitte & Touche and Deloitte Consulting? |
| 21 |
A. That's correct. |
| 22 |
Q. And you work for Deloitte Consulting. |
| 00012 |
| 1 |
A. That is correct. |
| 2 |
Q. Now, before June when there was that |
| 3 |
reorganization, how did Deloitte Consulting fit |
| 4 |
into this organization? |
| 5 |
A. It was a very similar structure, but |
| 6 |
what was going on at the time was Deloitte |
| 7 |
Consulting was going to spin off from that |
| 8 |
structure and become -- it's a legal entity, and |
| 9 |
it's an organization. The partners voted against |
| 10 |
that spin-off, and that's when the organizational |
| 11 |
change took place that is reflected in the |
| 12 |
structure that I just explained. |
| 13 |
Q. Okay. So was Deloitte Consulting, |
| 14 |
before June, solely a U.S. organization? |
| 15 |
A. No, Deloitte Consulting was a global |
| 16 |
organization at that time. |
| 17 |
Q. And -- |
| 18 |
A. That's when I had the global |
| 19 |
responsibilities. |
| 20 |
Q. Okay. So at that time -- at that time |
| 21 |
Deloitte Consulting operated globally and not just |
| 22 |
in the U.S. |
| 00013 |
| 1 |
A. That's right. |
| 2 |
Q. Now, after the reorganization, do you |
| 3 |
still provide global services through the |
| 4 |
consulting organization? |
| 5 |
A. We do. We do, through national |
| 6 |
organizations and global organizations, we're |
| 7 |
involved on a global basis in our local practice. |
| 8 |
Q. So do you continue to work with some of |
| 9 |
the same people that you worked with in other |
| 10 |
countries before the reorganization? |
| 11 |
A. Yes, we do. |
| 12 |
Q. They've just been reorganized into a |
| 13 |
different way within Deloitte Touche Tohmatsu? |
| 14 |
A. That's correct. |
| 15 |
Q. Is there anybody else who is nominally |
| 16 |
the leader of the global organization for |
| 17 |
Oracle -- for the Oracle practice any longer? |
| 18 |
A. No. There is a Global Alliance |
| 19 |
Partner, but they're not operations -- |
| 20 |
Q. Who is the Global Alliance Partner? |
| 21 |
A. Jeff Plewa, P-L-E-W-A. |
| 22 |
Q. And where is he located? |
| 00014 |
| 1 |
A. Chicago. |
| 2 |
Q. So he's in the U.S., too? |
| 3 |
A. Uh-huh. |
| 4 |
Q. And you are the U.S. -- |
| 5 |
A. Practice Leader. |
| 6 |
Q. Practice Leader? |
| 7 |
A. Responsible for Oracle operations. |
| 8 |
Q. And are you a Practice Leader for any |
| 9 |
other -- for any other groups within Deloitte |
| 10 |
Consulting? |
| 11 |
A. Not at this time. |
| 12 |
Q. Okay. And have you been in the past? |
| 13 |
A. Yes, I have. |
| 14 |
Q. Was Retek one of those groups for which |
| 15 |
you were -- |
| 16 |
A. Retek was one of the practices that I |
| 17 |
was responsible for. |
| 18 |
Q. Okay. And when were you responsible |
| 19 |
for the Retek practice? |
| 20 |
A. Retek was the last fiscal year, so it |
| 21 |
would have been from June of 2002 until June of |
| 22 |
2003. |
| 00015 |
| 1 |
Q. Okay. And why did your responsibility |
| 2 |
for the Retek practice end? |
| 3 |
A. Retek is a specialty software |
| 4 |
operation, and we folded that responsibility back |
| 5 |
into our industry practice, because the expertise |
| 6 |
required to implement Retek was very specific to |
| 7 |
our consumer business retail -- excuse me -- |
| 8 |
industry segment. |
| 9 |
Q. Okay. And by the way, how long have |
| 10 |
you been, before the reorganization, how long were |
| 11 |
you the Global Practice Leader for the Oracle |
| 12 |
practice? |
| 13 |
A. 18 months. |
| 14 |
Q. And what was your position in relation |
| 15 |
to Oracle before that? |
| 16 |
A. I was the Oracle Americas Leader before |
| 17 |
that, for one year. And for the year prior to |
| 18 |
that I was the Central Region Practice Leader. |
| 19 |
Q. For Oracle, too? |
| 20 |
A. For Oracle. The year ... yeah, that's |
| 21 |
right. |
| |
|
| 00016 |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| 8 |
Q. Eighteen months back would be about to |
| 9 |
the end of 2000 -- no, the beginning of 2002? |
| 10 |
A. Should be the mid of 2002. The global |
| 11 |
responsibility that I had was June of 2002 through |
| 12 |
the calender year of 2003. |
| 13 |
When I mentioned
that earlier that |
| 14 |
Deloitte Consulting folded back into Deloitte & |
| 15 |
Touche, the legal date for that transaction was |
| 16 |
actually December of 2003. |
| 17 |
Q. Okay. I understand. |
| 18 |
A. So as we went through -- the overlap |
| 19 |
that I was trying to explain is from June of 2003 |
| 20 |
until December of 2003 I was still the global |
| 21 |
leader although the organization was shifting to |
| 22 |
the country-specific organizations, so we started |
| 00017 |
| 1 |
to ramp down some of the global responsibilities. |
| 2 |
But I still had the title, if you will, through |
| 3 |
December of 2003. |
| 4 |
So it would
have been June of 2002 |
| 5 |
through December 2003, eighteen months. |
| 6 |
Q. And as the U.S. Practice Leader, that |
| 7 |
would have been for the year before June 2002, so |
| 8 |
from about -- |
| 9 |
A. That's correct -- |
| 10 |
Q. June 2001 to June 2002? |
| 11 |
A. That's correct. |
| 12 |
Q. And Central Practice, it would have |
| 13 |
been about June 2000 to about June 2001? |
| 14 |
A. That's right. |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| 00018 |
| |
|
| 2 |
Q. Immediately before you became the |
| 3 |
Central Practice Leader were you working with -- |
| 4 |
A. I was working with Oracle -- |
| 5 |
Q. [Inaudible] software -- |
| 6 |
A. Sorry. I did have -- we have major and |
| 7 |
minor responsibilities, so I was an energy |
| 8 |
practitioner as a partner within the firm. |
| 9 |
Q. Uh-huh. |
| 10 |
A. I had a minor or a secondary |
| 11 |
responsibility in the software packages practice. |
| 12 |
And while
I was at British Petroleum, |
| 13 |
which is where my assignment was as a line |
| 14 |
partner, as the lead client service partner on |
| 15 |
that engagement, we did work with both Oracle and |
| 16 |
SAP. |
| 17 |
Q. Okay. Was that your first work with |
| 18 |
this enterprise software at British Petroleum? Or |
| 19 |
had you been working for some time with this |
| 20 |
software in your practice before that? |
| 21 |
A. I had been working -- |
| 22 |
|
| 00019 |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| 14 |
Q. Are you familiar with the term ERP or |
| 15 |
Enterprise Resource Planning? |
| 16 |
A. I am. |
| 17 |
Q. What is that, or how do you use that |
| 18 |
term at Deloitte? |
| 19 |
A. Well, ERP is a categorization of type |
| 20 |
of software that discusses the scope of that |
| 21 |
particular software and how it can be used within |
| 22 |
the company. |
| 00020 |
| 1 |
So when
we talk about ERP, typically we |
| 2 |
refer to software that can be used throughout the |
| 3 |
entire enterprise which takes care of financials, |
| 4 |
which takes care of order management and customer |
| 5 |
relationship management, and also fulfills supply |
| 6 |
chain applications, and business processes. So |
| 7 |
when we talk about ERP within the firm, that's the |
| 8 |
scope of processes and applications we usually |
| 9 |
think of. |
| 10 |
Q. Does it include a human resource |
| 11 |
functionality also? |
| 12 |
A. It can. At Deloitte we have a separate |
| 13 |
practice that's entitled the "Human Capital |
| 14 |
Practice," that also deals with human resource |
| 15 |
solutions. |
| 16 |
So sometimes
we do incorporate HR |
| 17 |
applications into the ERP, and sometimes we deal |
| 18 |
with them independently through our Human Capital |
| 19 |
Practice. |
| 20 |
Q. Okay. And in terms of the types of |
| 21 |
software that is used for the financial management |
| 22 |
of the corporation for enterprise purposes, can |
| 00021 |
| 1 |
you just provide some examples of that, of what |
| 2 |
that software is? |
| 3 |
A. Application examples, Kent or brand |
| 4 |
names -- |
| 5 |
Q. Like a general ledger, for example. |
| 6 |
A. Financials usually incorporates general |
| 7 |
ledger, accounts payable, accounts receivable, |
| 8 |
fixed assets, the primary applications. |
| 9 |
Q. Okay. And in your Human Capital |
| 10 |
software packages, what are the types of |
| 11 |
functionality that are normally included within |
| 12 |
that area? |
| 13 |
A. Basically human resources and payroll |
| 14 |
processes. |
| 15 |
Q. Okay. Is an added functionality that |
| 16 |
is often included now a self-service |
| 17 |
functionality? |
| 18 |
MR. YATES:
Objection. Vague. |
| 19 |
BY MR. BROWN: |
| 20 |
Q. You can answer the question. |
| 21 |
A. Okay. Self-service is a feature within |
| 22 |
applications. It can be a feature that's involved |
| 00022 |
| 1 |
around human resources. It can also be involved |
| 2 |
around customer relationship and supply chain as |
| 3 |
well, depending on how that application is |
| 4 |
designed. |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| 00023 |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| 10 |
Q. Okay. I understand. |
| 11 |
Now, just
one little piece more on your |
| 12 |
background. At any time have you been responsible |
| 13 |
for another -- any other practices at Deloitte, |
| 14 |
other than Oracle and Retek? |
| 15 |
A. Yes. |
| 16 |
Q. What- |
| 17 |
A. I had responsibility for the PeopleSoft |
| 18 |
practice from June of 2001 to June of 2002, as |
| 19 |
well as Oracle. |
| 20 |
Q. And were you the global leader for that |
| 21 |
practice too? |
| 22 |
A. The Americas. |
| 00024 |
| 1 |
Q. Americas. |
| 2 |
A. That was the years I was Americas. |
| 3 |
Q. All right. Now, I'd like if you could, |
| 4 |
could you just explain what a -- the Oracle |
| 5 |
practice is at Deloitte. |
| 6 |
What do
you mean when you say "the |
| 7 |
Oracle practice"? |
| 8 |
A. We have -- we have a number of staff |
| 9 |
who specialize in implementing the suite of |
| 10 |
applications that Oracle sells in the marketplace. |
| 11 |
In addition
-- those could be HR, |
| 12 |
financials, same thing we talked about earlier, |
| 13 |
CRM, supply chain. |
| 14 |
In addition
to implementing those |
| 15 |
applications we have practitioners that specialize |
| 16 |
in Oracle technology. So when I say "Oracle |
| 17 |
technology," what I mean is the database |
| 18 |
applications, the integration of the Oracle |
| 19 |
software with any other legacy systems that a |
| 20 |
client might have within their organization. |
| 21 |
And the
other services that we provide |
| 22 |
around technology have to do with applications, |
| 00025 |
| 1 |
database administration. So it's managing the set |
| 2 |
of applications, sizing those applications, tuning |
| 3 |
them from a performance perspective, making sure |
| 4 |
that the tables are set up correctly, and that the |
| 5 |
patches that come out and the updates that come |
| 6 |
from Oracle are applied. |
| 7 |
So the scope
of our Oracle practice is |
| 8 |
comprised of practitioners who deliver those |
| 9 |
services to the marketplace. |
| 10 |
We will
take those practitioners, and |
| 11 |
join them with practitioners from our industry |
| 12 |
specialties within the firm, and that generally |
| 13 |
speaking constitutes the project -- the people |
| 14 |
component of our projects as we deliver services |
| 15 |
to the market. |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| 00026 |
| |
|
| 2 |
Q. Okay. By the way, with respect to -- |
| 3 |
with respect to the focus of my questions today, |
| 4 |
I'm going to be asking primarily about the ERP |
| 5 |
applications dealing with finance and HR. And |
| 6 |
only peripherally covering the applications that |
| 7 |
might deal with the CRM -- I think that's customer |
| 8 |
relationship management. |
| 9 |
A. Correct. |
| 10 |
Q. And supply chain management. |
| 11 |
If I'm asking
a question about |
| 12 |
applications, will you be sure to think of it in |
| 13 |
terms of financial management and HR management? |
| 14 |
A. I will. |
| 15 |
BY MR. BROWN: |
| 16 |
Q. If I want to talk, or ask about the CRM |
| 17 |
or the supply chain management applications, I'll |
| 18 |
extend the question to those areas. |
| 19 |
A. Okay. |
| 20 |
Q. Now, can you tell me a little bit about |
| 21 |
what types of clients Deloitte works with, with |
| 22 |
its Oracle and its PeopleSoft practices? |
| 00027 |
| 1 |
A. We practice across seven different |
| 2 |
industries to a number of client companies. There |
| 3 |
are about 2000 clients in our Deloitte & Touche |
| 4 |
portfolio. |
| 5 |
Those clients,
generally speaking, |
| 6 |
range in revenue size from $500 million revenue, |
| 7 |
all the way up to the largest organizations in the |
| 8 |
world like General Motors. So multiples of |
| 9 |
billions. |
| 10 |
Q. And do you recall what the seven |
| 11 |
industry practice areas are on which you |
| 12 |
specialize? |
| 13 |
A. We can go through them -- I think I'll |
| 14 |
get them all. |
| 15 |
It's consumer
business; financial |
| 16 |
services; manufacturing; public sector; health |
| 17 |
care; technology, media and telecommunications; |
| 18 |
and energy. |
| 19 |
Q. Now, when you talk about the 2,000 |
| 20 |
clients that you have at Deloitte Consulting, are |
| 21 |
those the 2,000 - are those 2,000 clients that |
| 22 |
Deloitte Consulting has for its U.S. operations? |
| 00028 |
| 1 |
A. It is. That is our client portfolio. |
| 2 |
Q. Okay. And in addition to PeopleSoft |
| 3 |
and Oracle, do you have any other -- do you have |
| 4 |
any other practices that are -- in which you |
| 5 |
provide ERP solutions to -- and that's the |
| 6 |
financial and HR solutions -- to these groups of |
| 7 |
clients? |
| 8 |
A. We do. We have an SAP practice |
| 9 |
effective, as of the first of the year, as the |
| 10 |
firm is all back together there is also Lawson in |
| 11 |
our portfolio. |
| 12 |
Q. Okay. |
| 13 |
A. That's primarily it. Retek is still |
| 14 |
part of the industry practice, so we still do deal |
| 15 |
with Retek. And then any particular software |
| 16 |
applications that support any of these might as |
| 17 |
well be included in our ERP practice as well, |
| 18 |
because that falls under our packages practice. |
| 19 |
So if we were dealing with a specific, or as a |
| 20 |
term "bolt-on packages," something to do with |
| 21 |
sales tax, we would also potentially have |
| 22 |
practitioners who have that expertise as part of |
| 00029 |
| 1 |
this practice. |
| 2 |
Q. Okay. So now, when you talk -- when |
| 3 |
you are talking about this, this would be software |
| 4 |
that would be used together with one of the ERP |
| 5 |
packages that of, say, PeopleSoft, Oracle, SAP or |
| 6 |
Lawson? |
| 7 |
A. That's right. That's right. |
| 8 |
"Complementary," I guess, might be a good term. |
| 9 |
Q. Can you just give us an example of a |
| 10 |
type of software that would potentially be used to |
| 11 |
complement one of the ERP packages? |
| 12 |
A. Sure. It's a company named Vertex, |
| 13 |
V-E-R-T-E-X. Vertex's specialty is to deal with |
| 14 |
sales tax, use tax, processing. So as clients |
| 15 |
look at their financial processes and have to deal |
| 16 |
with taxation issues, that software is specialized |
| 17 |
to work together with the ERP softwares to deliver |
| 18 |
that functionality to manage that tax function for |
| 19 |
our clients. |
| 20 |
So we will
implement that together with |
| 21 |
the ERP packages in a lot of cases. |
| |
|
| 00030 |
| 1 |
Now, you
mentioned after the first of |
| 2 |
the year, your practice with respect to a Lawson |
| 3 |
was within Deloitte Consulting. |
| 4 |
A. Uh-huh. |
| 5 |
Q. Did any of the Deloitte groups have a |
| 6 |
Lawson practice prior to that time? |
| 7 |
A. The Lawson practice was managed from |
| 8 |
our Deloitte & Touche organization prior to the |
| 9 |
reorganization of the firm, effective December -- |
| 10 |
December 27th was that date. |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| 20 |
Q. Why don't - I think that's a good |
| 21 |
idea. After 2004,I think you said there's an |
| 22 |
umbrella organization, and you have -- on one side |
| 00031 |
| 1 |
you have Deloitte & Touche and Deloitte Consulting |
| 2 |
on the other side. |
| 3 |
A. Uh-huh. |
| 4 |
Q. And so to make the question more |
| 5 |
specific, now, how was -- how are the functions of |
| 6 |
those two organizations split up? |
| 7 |
A. Currently they are split where all the |
| 8 |
consulting, effective, again, December 27th, 2003, |
| 9 |
all the consulting is housed within Deloitte |
| 10 |
Consulting LLP. |
| 11 |
Prior to
that, and for a period of very |
| 12 |
close to ten years, about the time I started with |
| 13 |
the firm, the Deloitte & Touche organization had |
| 14 |
commissioned the startup of a practice that was |
| 15 |
called Management Solutions, which was a |
| 16 |
consultancy that was more dedicated to serving |
| 17 |
audit clients, and typically smaller clients, than |
| 18 |
what Deloitte Consulting served in its |
| 19 |
marketplace. |
| 20 |
When I say
"smaller," in terms of |
| 21 |
company revenue, again generally speaking. |
| 22 |
So over
that period often years, the |
| 00032 |
| 1 |
Management Solutions organization had grown, and |
| 2 |
the -- one of the services that they delivered to |
| 3 |
the marketplace was around Lawson implementation. |
| 4 |
That practice was primarily focused around health |
| 5 |
care, although there were also retail and public |
| 6 |
sector implementations of Lawson taking place at |
| 7 |
that time. |
| 8 |
So they
served primarily those three |
| 9 |
industries. |
| 10 |
When the
firm reorganized, and the |
| 11 |
Braxton separation was voted down and the firm |
| 12 |
reorganized and became effective again December |
| 13 |
27th. |
| 14 |
All of the
software practices -- |
| 15 |
software package practices and operations shifted |
| 16 |
at that time into Deloitte Consulting. |
| 17 |
Q. Okay. Did the -- did the Management |
| 18 |
Solutions practice focus primarily on operations |
| 19 |
that were within the U.S.? |
| 20 |
A. Not exclusively. Primarily, but not |
| 21 |
exclusively. |
| 22 |
Said differently,
if we ran into a |
| 00033 |
| 1 |
client situation from a solutions perspective that |
| 2 |
had global operations, again, that would be served |
| 3 |
from the company headquarters site. So if the |
| 4 |
company was headquartered in the U.S. and had |
| 5 |
tentacles into Europe or another part of the |
| 6 |
world, then U.S. firm would also serve that global |
| 7 |
client. |
| 8 |
Q. Okay. I guess what I'm trying to get a |
| 9 |
more precise definition of the types of companies |
| 10 |
that were served by Management Solutions prior to |
| 11 |
the reorganization. |
| 12 |
MR. YATES:
Objection. That question |
| 13 |
lacks foundation. |
| 14 |
BY MR. BROWN: |
| 15 |
Q. Do you know what types of companies |
| 16 |
Management Solutions served before the |
| 17 |
reorganization? |
| 18 |
A. I don't think it's --I don't think |
| 19 |
it's easy to categorize those kinds of companies. |
| 20 |
I can say that the client portfolio was very |
| 21 |
similar to what Deloitte Consulting was serving at |
| 22 |
the time. |
| 00034 |
| 1 |
Q. Okay. But- |
| 2 |
A. So at the early design, Kent, I would |
| 3 |
tell you that there was intent that those |
| 4 |
companies would be smaller, and they, again, |
| 5 |
generally speaking, would be up to a billion |
| 6 |
dollars in revenue. |
| 7 |
However,
over time, as consulting was |
| 8 |
competitive, and as these two organizations, |
| 9 |
Deloitte & Touche and Deloitte Consulting became |
| 10 |
more involved in the marketplace, there was even |
| 11 |
internal competition that led to the solutions |
| 12 |
organizations serving very similar clients to |
| 13 |
Deloitte Consulting. |
| 14 |
So if, in
using the Lawson example, |
| 15 |
they ran into -- let me think of a good |
| 16 |
representative example ... there's a -- I believe |
| 17 |
an organization called . It was a large health REDACTED |
| 18 |
care organization that operated nationally. |
| 19 |
Q. It's a hospital organization? |
| 20 |
A. Yes. And I was aware that there was a |
| 21 |
large Lawson implementation going on there. But |
| 22 |
this would be a, you know, a multi -- |
| 00035 |
| 1 |
multiorganizational -- very large client that |
| 2 |
typically you might have found Deloitte Consulting |
| 3 |
serving. So Solutions was in fact serving that |
| 4 |
client and delivering to a very large client some |
| 5 |
very significant services, which, again, is not -- |
| 6 |
was not that original intent I spoke of, up to a |
| 7 |
billion dollars, smaller types of services. |
| 8 |
So the marketplace
was very similar to |
| 9 |
what you'd find in Deloitte Consulting. The |
| 10 |
specialty of Lawson existed, and was managed from |
| 11 |
Deloitte & Touche as opposed to Deloitte |
| 12 |
Consulting. |
| 13 |
Q. Okay. Now, do you know approximately |
| 14 |
how many people are working in the Oracle practice |
| 15 |
in Deloitte Consulting today? |
| 16 |
A. I do. We quote two numbers. There are |
| 17 |
about 300 practitioners that are solely dedicated |
| 18 |
to Oracle implementations. And there are 1500 |
| 19 |
practitioners that we speak of in terms of global |
| 20 |
capability. |
| 21 |
The difference
between those two |
| 22 |
numbers represents those practitioners who have |
| 00036 |
| 1 |
specialty in our industry practices, who as well |
| 2 |
have Oracle experience, but have not dedicated |
| 3 |
their careers to implementing Oracle applications. |
| 4 |
So they
may have worked in high-tech, |
| 5 |
or they may have worked in telecommunications; |
| 6 |
they may have worked in financial services |
| 7 |
implementing, let's just say, an inventory |
| 8 |
solution or some piece of an Oracle application. |
| 9 |
But after
that project's finished they |
| 10 |
may as well go do SAP or something else. So they |
| 11 |
specialize in the business processes, and in |
| 12 |
business transformation, but they don't specialize |
| 13 |
within any one package. |
| 14 |
Q. So, just so that I understand, you have |
| 15 |
300 who are solely dedicated to Oracle. |
| 16 |
A. That's correct. |
| 17 |
Q. And in addition you have another 1200? |
| 18 |
Or would that be 1500 that you could call on who |
| 19 |
have -- |
| 20 |
A. 1200 - |
| 21 |
Q. -- who have Oracle expertise. |
| 22 |
A. 1200. |
| 00037 |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| 16 |
Q. Okay. Now, do you have a -- and what's |
| 17 |
the size of the Oracle practice in annual revenue? |
| 18 |
A. This year it will be about million. REDACTED |
| 19 |
Q. Is that U.S.- |
| 20 |
A. U.S. |
| 21 |
Q. For U.S. only? |
| 22 |
A. Yes. |
| 00041 |
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| 10 |
Q. Okay. And what about with respect to |
| 11 |
Lawson? |
| 12 |
A. Same thing. Lawson is smaller, though. |
| 13 |
I do know that the annual revenues of the Lawson |
| 14 |
practice are probably $ million. I don't know REDACTED |
| 15 |
the number of people, though. |
| 16 |
Q. Do you know how -- what type of |
| 17 |
global -- whether Lawson has any type of a global |
| 18 |
practice in Deloitte? |
| 19 |
A. I don't know that. |
| |
|
| |
|
| |
|
| 00046 |
| |
|
| |
|
| 3 |
Q. Okay. Now, do you have a practice |
| 4 |
of -- do you have practices set up to work |
| 5 |
specifically with any other ERP vendors other than |
| 6 |
SAP, Oracle, PeopleSoft and Lawson? |
| 7 |
A. Those are the primary ones. We do have |
| 8 |
a relationship with Vertex, as I mentioned |
| 9 |
earlier. |
| 10 |
Q. Okay. |
| 11 |
A. We do have about 40 different alliance |
| 12 |
relationships within Deloitte Consulting that |
| 13 |
constitute relationships with vendors who support |
| 14 |
this marketplace again. |
| 15 |
So there
is a product, as an example, |
| 16 |
named Optio which is used for reporting in many of |
| 17 |
our Oracle projects. We have an alliance |
| 18 |
relationship with Optio, and that is a vendor |
| 19 |
relationship. That actually is software. So |
| 20 |
there are, again, supporting pieces that go with |
| 21 |
the ERP practice, and there are a number of |
| 22 |
alliances around that, about 40. |
| 00047 |
| 1 |
Q. Okay. And the software that's provided |
| 2 |
by these -- by those companies would once again be |
| 3 |
used as a complement with the ERP software? |
| 4 |
A. That's right. That's right. |
| 5 |
Q. Did -- can you tell me in general |
| 6 |
what's the size of Deloitte Consulting's revenues |
| 7 |
all together? |
| 8 |
A. About 3 billion. |
| 9 |
Q. And that's relating now to the U.S. |
| 10 |
A. Consulting. Right. Consulting revenue |
| 11 |
in the U.S. |
| 12 |
Q. And what portion of those revenues in |
| 13 |
general accounted -- is accounted for by the |
| 14 |
enterprise software package business? |
| 15 |
A. About 25 percent. 25 to 30 percent. |
| 16 |
Q. Why do your clients use Deloitte to |
| 17 |
assist in -- with their ERP work? |
| 18 |
A. The reason our clients buy Deloitte is |
| 19 |
because we do business transformation, which |
| 20 |
infers that we take technology solutions, and we |
| 21 |
take industry expertise, and we use the -- the |
| 22 |
technology to enable process redesign and process |
| 00048 |
| 1 |
improvement, so that our clients achieve financial |
| 2 |
benefit and business improvement through the |
| 3 |
implementation of both the technology and our |
| 4 |
services. |
| 5 |
So said
differently, we try to drive |
| 6 |
performance and financial result through our |
| 7 |
implementations and that is the brand that we try |
| 8 |
to carry in the marketplace. |
| 9 |
Q. Okay. And why do you -- why do you use |
| 10 |
the -- let me focus primarily on the portion of |
| 11 |
the organization that you worked in. Deloitte |
| 12 |
Consulting. |
| 13 |
A. Okay. |
| 14 |
Q. Why historically has Deloitte |
| 15 |
Consulting used People Soft, Oracle and SAP as |
| 16 |
the -- as the software with its -- with those -- |
| 17 |
with the clients that it was -- that was providing |
| 18 |
these business transaction services? |
| 19 |
MR.YATES:
Objection. Vague. |
| 20 |
BY MR. BROWN: |
| 21 |
Q. You can answer. |
| 22 |
A. Two reasons I can think of. Number |
| 00049 |
| 1 |
one, those particular software houses are the most |
| 2 |
prevalent within the different industry practices |
| 3 |
that we talk about. Industries. And therefore |
| 4 |
become primarily the vendors of choice in those |
| 5 |
spaces. |
| 6 |
Consequently,
there is millions and |
| 7 |
millions of dollars of revenue associated with the |
| 8 |
implementation services that go together with the |
| 9 |
sale of that software, which is a good business |
| 10 |
opportunity for Deloitte. |
| 11 |
So we have
built our business around |
| 12 |
significant vendors in that space. |
| 13 |
Q. Well, is there anything about your |
| 14 |
clients' requirements in general that have caused |
| 15 |
them to turn to the People Soft, Oracle and SAP |
| 16 |
applications? |
| 17 |
A. I would say there are a few reasons for |
| 18 |
that. One is the scope ... the application scope, |
| 19 |
of those applications, of those particular vendors |
| 20 |
have broadened their footprint, or, said |
| 21 |
differently, they have more functionality than a |
| 22 |
lot of the other softwares that are in the |
| 00050 |
| 1 |
industry. So that's one. |
| 2 |
Some of
our clients, because of their |
| 3 |
global nature, look for solutions that can manage |
| 4 |
multinational organizational aspects of their |
| 5 |
implementations, as well as multicurrency, if |
| 6 |
they're dealing in different currency. As well as |
| 7 |
multiple language requirements. Those are the |
| 8 |
primary reasons. |
| 9 |
Q. Okay. I'd just like to follow-up a |
| 10 |
little bit on a couple of these. |
| 11 |
|