Cardinal Initiatives Newsletter May 27 2023 10 min read

This week I share a story about how your negotiations today can impact future business.

May Magic - The Cingular Wireless Story

The technology supplier was Oracle Corporation.

The customer was Cingular Wireless, now known as AT&T Mobility and the second largest wireless carrier in the US behind Verizon Wireless.

The characters:

Bill and Ken - the two Oracle Account Managers who worked as the team leads

Arun - the Director from Oracle Consulting, responsible for Cingular

Cathy - the lead Oracle pre-Sales Consultant

Sherri - the Customer Support Analyst

Kevin - the Sales Consulting Manager

Gayle - leader of Sales Consulting for Oracle’s Communications vertical

Wendy and Brian - members of Oracle’s Business Practices organization

Greg - Cingular IT asset management

“T” and Victor - Cingular IT leadership

Jeffrey - Cingular Sourcing

Juanita - SBC Financial Applications

Maynard - SBC IT leader

John - SBC Sourcing

Cingular Wireless is famous for having the very first iPhone bought in one of its retail stores. Created in 2000 through a joint venture of SBC and BellSouth, Cingular was the name chosen for the merged wireless operations of Southwestern Bell Mobile and BellSouth Mobility.

Cingular chief executive Stan Sigman signed a secretive deal with Apple in 2005 before seeing any designs or prototypes of the phone. Apple’s reputation for control over every aspect of its products had scared other carriers. But Stan wasn’t betting on the handset. He was betting on Steve Jobs. AT&T inherited the Apple deal and phased out the Cingular brand just as the first iPhones hit the stores. But the very first iPhone was sold in a Cingular store, and Oracle software placed the order.

AT&T would have exclusive rights to the Apple iPhone for the next four years.

Our story begins in 2001-2002 with Cingular and SBC based in Atlanta and San Antonio, respectively.

Selling Enterprise Software Is Complex

The formation of Cingular required asset transfer from SBC and BellSouth. Oracle was releasing a new version of Oracle ERP applications - SBC was an existing customer and had the prior version. Cingular chose to conduct an evaluation to ensure that it implemented an application suite best suited to its business. Its needs differed from SBC’s, and Oracle may not be the best choice.

Like other clients, SBC had experienced issues with Oracle’s current version. They liked the prior version better than the one they had installed now. The current version was Oracle’s first attempt at implementing a thin client instead of the fat client found in a client-server architecture, the former industry standard. The thin client was the architecture of the future, born of the Internet. So where we should have had the advantage as the incumbent, and with a reduced investment required due to a license transfer option, we had to sell both SBC and Cingular on the new version due to be released after the decision timeframe.

Selling enterprise software is not easy, and there is no better example than this opportunity. One must identify all of the stakeholders involved in making the decision. Determining who, what, and how these stakeholders are influenced is crucial. We like to call it “a contact sport” (basketball is a contact sport, but swimming is not.) To be successful, one must possess considerable people skills. Fortunately for us, we had a couple of the best.

Ken, based in Atlanta, had relationships with Cingular. Based in Dallas, Bill had relationships with SBC and Southwestern Bell Mobile. Over the next year, Bill, Ken, and our extended team would meet frequently to calibrate and recalibrate our strategy for this opportunity. We noted where we had relationships and how to use them. We identified where we needed to build relationships and why. Some of our targets were employees of Cingular and SBC, and some were outside influencers, such as System Integrators, Big Six Consultancies, and boutique implementers of application software.

The Strategy

To win this deal, we decided to treat Cingular as if we had no advantage with the SBC connection. This meant running a full-blown application sales campaign which entailed selling the “Oracle technology stack.” To fully differentiate Oracle Applications from alternatives, we needed to highlight how Oracle’s Applications were built to run on Oracle’s database and middleware technology and what advantages that delivered to the business of Cingular.

For additional perspective, we also had to develop and execute competitive positioning strategies, which we subtly built into our messaging. The list of competitors included the ERP suite from SAP and point solutions like Peoplesoft, Siebel, Baan, and Manhattan.

With an applications sale, the stakeholders are a mixture of people from IT and line of business (LOB). The messaging is different for IT people than it is for LOBs. IT messaging was commonly represented as “speeds and feeds and architecture.” LOBs were influenced by “more revenue, less cost, growth, expansion, time-to-market, market share, inventory management, and reduced risk.”

In parallel, we needed to run a separate campaign for SBC. They were existing users. They had liked our prior version but had become disenchanted with the current version. We needed to convince them that the next version would be better. We needed to sell them on Oracle’s vision for the new E-business suite.

The last pieces of the puzzle were the license agreements. Telecommunications carriers were notoriously difficult in the contract negotiation stage, and in Oracle’s eyes, SBC may have been the most difficult. One could accurately use these adjectives to describe SBC’s license agreement(s) with Oracle: complex, old, patchwork, egregious, voluminous, teleco-specific, and challenging to interpret. Remove “Teleco-specific,” and you have how SBC felt about its contracts with Oracle. With both parties feeling this way, you can imagine how much fun these sales cycles were (when we won.) We needed a strategy if and when we got to this point. (More on this later.)

The Team

The use of team selling is the best way to win in enterprise sales, in my opinion. This Cingular opportunity was no different. We utilized resources from sales, sales management, sales consulting, sales consulting management, industry-specific knowledge, implementation services, business practices, contracting, and legal.

Ken was Mr. Outside. We utilized his relationship-building skills for the stakeholders with Cingular. Ken was badged and walked the halls of their headquarters in northern Atlanta daily. Ken was also our point for external influencers from third-party consultancies. He was humble and professional, and everyone that met him trusted him. He was perfect for this role.

Bill was Mr. Inside. He knew the ERP game. He knew sales strategies. He knew the end-users with SBC. He was excellent at establishing relationships as well. He had done so with SBC’s procurement group. Bill knew the license agreements. He is one of the few sales professionals in my career that appeared to enjoy understanding the legal terms and conditions. He may have forced himself to like this part of the job, but he ate this stuff for lunch. No one is better than Bill; he was precisely the person we needed for this opportunity.

Cathy was our pre-sale database SC and was in charge of the technology component of our strategy. Cathy is a legend at Oracle. I think her employee number is less than 100.

Kevin was a Sales Consulting Manager, but we used him for his industry-specific expertise and his Big Six background to help us face off with potential partners.

Sherri was always called upon for all things SBC and Cingular and provided guidance based on what she saw through the customer’s eyes.

Arun covered the Comms vertical for Oracle Consulting, and we used him to help us with our implementation strategy with Cingular users. Arun was also great at building relationships and helped Ken with “T” at Cingular.

Gayle had been part of the early Teleco team that sold to AT&T in 1996 what was considered at the time to be a landmark win for Oracle in telecommunications. Gayle understood how these carriers operated and was sympathetic to our challenges. Gayle was helpful when we needed internal support for things we wanted to do that were not straightforward.

Wendy was assigned to our group from Business Practices. She also understood the SBC contracts and helped us with pricing and contract terms. Wendy also helped prepare us for any interactions with Brian.

Brian was in a small Oracle headquarters group known as HQAPPs. This is where you went for approval to do something non-standard. In our Teleco vertical, it felt like everything our customers wanted and did was non-standard for Oracle, so we knew Brian well. Because of this, we did not think that Brian was an adversary. He was more often an advocate because he knew the challenges we regularly faced.

Friendly Fire and Section 9

There is a wonderful sales story with many lessons in the events that transpired over the twelve months leading to May of 2002. This is not that story. I am sharing a more interesting perspective on this deal in hopes that it helps others in similar situations.

We now go back in time to May of 2000.

Friendly Fire

Bill was covering SBC and working on a year-end deal created by SBC’s acquisition of Ameritech. I led a different team at that time in that same telecom vertical. I was an interested bystander and therefore was present and witnessed the events I’m about to share.

Bill was the lead salesperson on a team that combined Oracle’s Ameritech and SBC sales teams. To add to the challenge, Ameritech and SBC were in different Oracle sales organizations.

Both parties had agreed to the price and terms of the deal, but in typical SBC fashion, they had played the game such that they had withheld their “verbal” until May 31st. They had done so to allow someone in the Oracle sales management chain to fear that the transaction would not close and offer a last-minute concession contingent upon a signature by midnight.

Bill had been able to close the negotiations down without that drama, or so he thought. As the afternoon turned to evening, Bill’s updates to the respective sales management teams had been: “It’s in for final signature.” He then received a call from SBC that the signatory had left the office and could not be found. (If I’ve heard this once, I’ve heard it a hundred times in my career. Bill? Likely less than one hundred, but he’d heard it before and suspected it to be one last-gasp effort by SBC to shake things up in Oracle’s sales office.)

Unfortunately, Bill did not have coverage up his management chain to support him. We were all new to this leadership team due to a reorganization for FY2000. None of the management chain had worked with one another, so when the last update from SBC was “can’t find signatory,” a stressed-out sales leader assumed the worst.

The situation escalated, and Jay, a seasoned sales leader running a $1B business unit for Oracle, inserted himself. For perspective, Jay had several open deals, enough to make his forecast, but only five hours to get them all in before the books close for the fiscal year. Jay’s forecast had a material effect on the Company’s results and Wall Street’s subsequent reaction. As described in the May 6th edition of this newsletter, “China Syndrome - The Slipped Deal Meltdown,” it is, unfortunately, a numbers game at Jay’s level. He cannot concern himself with collateral damage.

Jay asks Bill’s manager to provide an assessment of the situation. Bill helps his manager, and Jay welcomes his input. With time of the essence, he asks the team to make a couple of calls that prove unsuccessful over the next 60 minutes. He learns that a member of SBC’s Board of Directors might be able to shake our deal loose and asks Bill’s manager to call him. The translation of this sequence became “Wake up a board member if you have to.”

Bill’s manager refuses to do what Jay has asked, explaining that he will not compromise his principles. Before Jay can respond, Bill has located the signatory. Jay instructs Bill to offer him a new price if he signs it within the hour. Bill is shocked by Jay’s words. The price and terms are already agreed to. The paperwork reflecting this agreement is in this person’s hands. The price agreed to is in the mid-eight figures. Jay’s number is more than 15% less than they agreed.

As Bill begins to explain this to Jay, a now-famous response interrupts Bill.

As legends have a way of doing as time passes, this one has multiple versions, with the latest memory having Jay channel his inner Jules (Samuel L. Jackson in Pulp Fiction) by saying:

“I don’t remember asking you a GD thing.”

My personal memory has Jay saying:

“Bill, I don’t recall asking for your opinion!” (expletives, if there were any, are deleted)

You get the picture. Bill did.

Jay leaves the call and is off to his next crisis with only 4 hours left in the year.

Our discount was already non-standard, and we could not offer Jay’s number without Jay personally walking HQAPP through why we needed this approved. He had a posse of assistants listening in a war room, and they were on it the minute he said it, so we were able to turn paper quickly and close the deal.

More from “China Syndrome”:

…by making a new offer at the last minute…with better terms, you are training your account to withhold any “verbal” or positive feedback about every transaction they do with you.

You become the culprit for the very predicament you now find yourself in as it relates to a Forecast filled with risk because your accounts won’t give you “verbals” until the very last minute.

Fast-forward to May of 2002 and the Cingular negotiation.

Section 9

We had won the evaluation at Cingular and entered the contract negotiation stage. For SBC and Cingular, this was the final stage in their buying process. SBC’s Sourcing team took the lead, and John was responsible for completing this transaction.

To say that John had a reputation within Oracle was an understatement. He was respected for knowing their license agreements as well or better than our team did. He was also a life-long employee of SBC and knew the inner workings of that enterprise backward and forward. John famously used to tell us that the temper he sometimes displayed during negotiations came from his Irish blood.

To close this deal, we had to execute two transactions. We needed paperwork for SBC to transfer licenses to Cingular and to put a new Software Licenses and Services Agreement in place with Cingular. Bill did a masterful job working with our contracts and legal to pull the appropriate provisions from the SBC Agreement and repurpose them for the new Cingular SLSA. We created the paperwork for the license transfer. Bill hosted a final call with all of the customer stakeholders to walk them through how we handled this and what the outcome would look like. We received a verbal okay after that call.

Bill circled back with John to set up the final steps to execution. We had a glide path to closure. John had done an excellent job complaining about having to work over the Memorial Day weekend because of Oracle, yet managing to string this transaction out until Friday, the 31st.

You see, John was involved with the SBC/Ameritech transaction of 2000.

SBC sourcing professionals had long memories.

Section 9 of the SBC License Agreement was written before the advent of the Internet. It contained dated and possibly obsolete language that attempted to give SBC rights to the Oracle software beyond those granted with named user licenses. Back in those days, enterprise software was generally licensed by computer or user. Oracle had introduced employee-based licensing based on the total number of full-time employees a company reported in its annual 10K. The difference between employee-based and named user was that with named user, one was licensing software based on how many would actually access and use the software. Employee-based was licensing based on the size of the enterprise, using full-time employees as the metric. Employee-based also allowed for an annual true-up versus the need to buy a license every time another user wanted to use the software.

The intent of Section 9 was to make it clear that SBC’s employee-based license indeed licensed their enterprise as they knew it at the time by granting rights to SBC to enable them to run their communications network without Oracle requiring them to buy a computer-based license for every computer in that network (tens of thousands of computers.) This language may have been obsolete because the market had matured. Whenever SBC bought a computer for their network that ran a network application based on the Oracle database, the network application supplier, typically a Network Equipment Manufacturer (NEM), had already purchased a run-time license for the Oracle database from Oracle.

Are we in the weeds? We sure are.

Just think how Bill and Ken felt trying to close this deal.

The birth of the Internet created software usage not contemplated by Oracle or our customers when these agreements were written. As much as many would like to think that any of these enterprise agreements are “one and done,” they never are. We began seeing Oracle software being used to create applications that anyone on the Internet could use. How do you license that? For uncountable populations of users, external to how a company defines its enterprise, Oracle brought back computer-based pricing.

On Friday morning, May 31st, Bill received a request from John for “one small change” to the new Cingular SLSA. SBC’s attorneys had taken Section 9, which wasn’t currently part of Cingular’s new SLSA, added some additional language, and requested Oracle to add it. They explained that they had missed that Section 9 had not been included in the earlier versions approved by everyone and wanted to add it for consistency.

We had sixteen hours to go before the books closed for the year.

Conclusion

Bill was fuming but kept his composure. We suspected that John was behind this. These guys were excellent. We respected the job they did for their employer. I knew, of course, that Bill had gone paragraph by paragraph in constructing the new SLSA for Cingular, explaining what he was doing and why all along the way with the stakeholders. We had not tried “pulling a fast one.” We had spoken with Wendy and Brian and knew that Oracle would not grant Cingular a license for an unlimited number of computers to support uncountable external users for the price we had negotiated for the new Cingular agreement. We had numerous conversations with our excellent legal team to understand that Oracle’s position on Section 9 did not allow for an uncountable population of external users. We had done everything we could to prevent Section 9 from becoming the “third rail” issue we knew it would if it was put on the table.

Since we had already had all of these discussions with Cingular and within Oracle, we decided to tell John “no” and explain to him the economics behind the version of Section 9 that he had just introduced to us on the final day. John reacted professionally and requested an escalation on the Oracle side.

We were ready for this as Bill had air cover this time. The simultaneous bursting of the dot.com and telecom bubbles, coupled with the pullback of US business following the attacks of September 11th, 2001, had caused temporary organizational changes in the Oracle sales organization. I was the only one left of eighteen sales managers in the telecom vertical, reporting to George, who led North America Sales. I was Bill and Ken’s executive sponsor for this deal.

Bill arranged the call for me and John. There was no last-minute cave coming from me. I knew Brian would not approve it, making it easier for me to walk if I had to. John knew both me and Bill, and that may have helped our situation. But we were both surprised that he backed off the request, and we had signatures by the afternoon.

We helped Cingular utilize the Oracle software to support unprecedented growth and scale. They opened their applications to millions of external users, enabling value to their enterprise in the hundreds of millions of dollars. Over the next ten years, Oracle sold licenses to Cingular to support this external usage, generating over nine figures in revenue for Oracle.

Bill and Ken, and their team had delivered a spectacular result for their customer and their employer by holding the line in that negotiation.

Summary & Lessons Learned:

1) Seek to understand precedence, then account for it in your strategy.

2) Team selling is the best approach to enterprise sales.

3) The devil is in the details. Embrace them to be the best.

4) Enterprise sales is a contact sport. There is no substitute for establishing relationships.

Thank you for reading,

Jeff

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