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Sales Management

Notes Oracle's adjustment to this rapid growth was not seamless, however. The company developed a
reputation as a leader in "vaporware," or products that are announced publicly but are still under
development and therefore unavailable. Its software often contained numerous bugs or lacked
promised features. The company found itself embroiled in an accounting scandal in 1990, a
result of a widespread practice among the sales representatives of recording sales a quarter
early in order to boost earnings during slow quarters. Oracle was forced to restate earnings, pay
a fine to the SEC, and spend millions of dollars settling shareholder lawsuits. The company's
stock plummeted as a result of these developments.
Beginning in 1991, Ellison enacted a plan that rescued Oracle from the brink. He secured $80
million in financing from Nippon Steel, installed experienced Booz Allen manager Ray Lane as
COO and president, reduced headcount by 10 percent, and imposed stricter policies governing
its sales force. Ellison took a hands-on approach to establishing sales protocol for his company.
He rewrote sales contracts himself and initiated a standard pricing policy that eliminated haggling.
He also altered the compensation scheme so that managers were rewarded for meeting profit-
margin targets rather than for reaching sales volume quotas regardless of cost.

These moves, along with the launch of the next-generation Oracle 7 database in 1993, allowed
the company to complete a turnaround. By 1994, the company was the number-one database
management software maker in the world, with sales exceeding $2 billion that year. Oracle's
revenues tripled between 1995 and 1999, yet the company's sales force doubled during the same
period. In 1998, the company split its sales force into two teams. One team concentrated on the
company's core products-database software-although the other team was charged with selling
Oracle's data-processing applications. More than anything else, however, Oracle's sales reps
were able to handle the heavy workload because the company embraced the Internet. In 1999,
25 percent of the company's software sales were accomplished online.
As business continued to flood the company, Oracle sought to take more of its business to the
Web. It invested in a new e-commerce site called OracleSalesOnline.com-later renamed
Sales.Oracle.com-that enables customers to place orders directly online. The site also lets
customers purchase upgrades and add users to its license. Oracle also developed another site
that sales reps use to demonstrate software during phone calls with customers, who are then
directed to order online. Additionally, it required sales reps to enter detailed customer data into
a central system that other salespeople or executives can access. In 2001, the company integrated
online customer service and support features with the Sales.Oracle.com service, calling this new
site Support.Oracle.com. The company also licensed its sales and support applications to more
than 10,000 companies around the world.

Oracle's network of information and its powerful software helped trim costs considerably. The
company claimed in an aggressive ad campaign that it saved $1 billion in 2000 by running its
own e-business software. In a specific instance, a manager noticed one day that U.S. sales forecasts
dropped $3.5 million. Using the network, the manager identified which company had changed
its purchase and contacted the sales rep working with the account who renegotiated the deal in
less than 24 hours. In another example of cost-cutting, the company moved its sales and training
meetings with customers from hotels and conference centers to the Web. These Web-conferences
reduced costs from $325 per person to $2 a head.
Competitors are quick to criticize Oracle's aggressive sales tactics. An executive from IBM
criticized Oracle's strategy of overpromising: "They take the P.T. Barnum approach to business:
There's a sucker born every minute." Oracle's 85 percent customer-retention rate, which is higher
than either Microsoft's or IBM's, proves that many customers are satisfied with the company's
products and service.

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