Oracle CEO Larry Ellison.
For the past two years, experienced salespeople have been leaving Oracle in droves, unhappy with tough sales quotas that stem, in part, from Oracle's acquisition of Sun Microsystems, current and former Oracle employees have told Business Insider.
Oracle is promising investors that this situation is over, but sources inside Oracle tell Business Insider that it's not.
"An enormous amount of the tenured salesforce has left," JMP Securities analyst Pat Walravens told Business Insider this week, citing his own sources within the company.
Many of them had been at Oracle for 10-20 years.
Oracle declined to comment when reached by Business Insider.
There will always be a level of personnel churn in a company of Oracle's size. But the recent exodus of experienced sales talent from Oracle appears to have had an impact on Oracle's performance. The company missed Wall Street's revenue expectations for the last two quarters including an almost unheard-of miss in its fiscal fourth quarter. That's usually Oracle's biggest quarter, when salespeople push to close deals to make their annual quotas.
During Oracle's quarterly conference call with Wall Street analysts on June 20, Oracle president Mark Hurd said that salespeople are no longer quitting at a fast rate anymore.
"I want to say this again, our attrition rates are down. They have declined," Hurd told analysts . "By June 7, that’s roughly two weeks ago, we had 90% of our territory assignments and code is done with sales plans accepted, that is an absolute record for Oracle."
But current and former Oracle employees paint a different picture. Many remaining experienced salespeople are still jumping ship or looking for new jobs, they say.
"Hundreds of people are leaving each quarter," a current salesperson told us, speaking on condition of anonymity. Among this person's team of less than a dozen people, one-third of them have just resigned or are looking for new jobs.
A former salesperson, who had spent more than a dozen years at Oracle, also told us that many of his coworkers at Oracle are still looking to leave.
"Oracle has a horrible reputation in the tech sales circles at this point, so yes I see a migration from those who are competent, experienced, and see the writing on the wall," this person said.
One issue frustrating salespeople is that they have been given quotas to sell Oracle hardware, even though they specialize in software, our sources tell us. That's problematic because at many enterprises, the IT people who buy software are not the same people as the ones buying software. It's an entirely different process.
In particular, Oracle wants salespeople to push its "Exa" line of engineered hardware designed to make Oracle's software run faster.
If salespeople don't meet those hardware quotas, they won't hit their "accelerators" — an increase in commissions — or get other rewards, no matter how much software they sell, the current Oracle salesperson told us.
"I didn't have the opportunity to sell Exadata. I probably missed out on $600,000 on accelerator commissions," this salesperson told us.
During its third-quarter conference call, executives acknowledged that its sales pipeline was a work in progress. Hurd told analysts that the company was fixing it by increasing its salesforce. The company has added 4,000 new salespeople over about the last two years. But Oracle has not commented on how many people it hired for "back-fill," or replacing those experienced employees who quit.
One tactic that Oracle CEO Larry Ellison did talk about was hiring lots of college grads.
"We’ve hired about 500 salespeople and sales consultants directly out of college this year, and virtually all of them will go to our cloud businesses and about 10% will go to our Linux business," he told analysts during a quarterly conference call in June.
Typically entry-level salespeople do what's known as "lead gen," or lead generation, activity at Oracle, a sales model that Oracle invented, Walravens said. They try to find companies interested in buying and then they turn that info over to a more experienced salesperson to make a sale. That's because it takes a lot of experience and technical know-how to sell the kind of software and hardware that Oracle makes.
So more lead gen is helpful, but it still requires experienced salespeople to turn it into a sale. "If Oracle hired 500 23-year olds, and is expecting them to close deals in the field, that's a mistake," Walravens said.
Walravens also believes it will be tough for Oracle to quickly get new sales staff up to speed because it can take years for a sales team to gel together. "That's the hardest part," he said.
We asked Oracle specifically what role these 500 college grads had in selling Oracle's cloud and Oracle declined to comment. Oracle also declined comment on our direct questions about how many experienced salespeople had left the company.
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