Repurposing Sales Teams as Products Change is Challenging, a Contentious Structure May Produce Better Results

Results for the business quarter ending May 31, 2013 at Oracle® weren’t well received by Wall Street. Don Clark and Nathalie Tadena summarized the results and investor reaction in an article published on June 20, 2013, Oracle Earnings: Shares Slide on Flat Revenue, Cloud-Software Challenges in the online edition of The Wall Street Journal. The authors wrote: “Oracle lifted its profit 10% in the fiscal fourth quarter ended May 31, doubled its quarterly dividend and authorized a stock buyback of up to $12 billion.”, but investors still took 9% off of the stock price in simply 1 day of trading.

Why? As the authors aptly note, revenue reflected zero growth from the prior year. Sure Oracle is making more money from its businesses, but the bottom line is not growing. We think an important reason for insignificant revenue growth is an effort to train an existing sales force, familiar and committed to enterprise markets, to sell multi tenant cloud alternatives. Oracle reported on sales difficulties in its Q3 2013 report. The Q4 report claims substantial improvement in the effectiveness of sales teams, but there are no results to substantiate the claim.

We don’t think efforts to retrain sales teams, like this one (there are other examples at Dell and HP) work very often. We think a better approach is to restructure sales teams into a contentious formation, where enterprise sales teams can compete with sales teams dedicated to selling multi tenant cloud products for the same business. A simple review of the history of efforts by Oracle’s peers and competitors–Microsoft®, and IBM® shows little success at extracting the gold from repurposing the same sales personnel onto new products.

In contrast, a review of how other industries, for example newspaper publishing, handled similar difficult challenges, shows management fostering healthy contention between sales teams. In the 1990s and the first decade of the new millennium, separate sales teams were dedicated to selling print vs. online editions. A healthier New York Times in 2013 is an example of how contention can be used to produce better results. We think Oracle®, Microsoft®, and IBM® should think about how to use internal contention methods to better manage sales to produce the revenue improvement they need.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

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