Special Report: Oracle's hard sell illustrates industrywide problems
Published: 02 Jul 2001 13:31 BST
It is a scene repeated countless times in the corporate jungle: a company endures months of sales pitches, pays millions of dollars for new software, discovers massive problems, and spends far more to fix the product than the original cost of buying it.
And customers have little choice but to keep eating the expenses while sales people walk away making up to $1m in a single year.
In dozens of interviews, executives, customers and sales representatives have described systemic problems that begin with the need to satisfy Wall Street's dual demands of stability and growth -- a schizophrenic goal that has driven some companies to practice a kind of creative accounting that has drawn scrutiny from federal regulators.
We examined database giant Oracle and its business practices as a case study in the chaotic world of corporate software sales, which includes such industry stalwarts as IBM, SAP and Siebel Systems. Although high-pressure tactics are common among all major players in this arena, the $100bn database company stands out because of market dominance and a reputation for aggressive competition.
The pitch: Inside the pressure cooker
Sources say Oracle salespeople, facing intense pressure from chief executive Larry Ellison on down, push the limits in nailing a deal--including making promises to customers that are never fulfilled.
The deal: Customers pay a high price
Some companies that buy corporate software say their products do not work as billed, leaving them in a perpetual state of emergency. With scant time and resources to fight back, these customers keep paying out of fear that reversing course would be even more costly.
The system: Searching for solutions
From revenue accounting to product complaints, the problems behind today's sales practices are increasingly finding their way into the courts and Congress. Through lawsuits, legislation and industry guidelines, customers hope to change the system.
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