P3050: CID - Anthony Donald Kender (Oracle), Deposition Transcript

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00007
11
12		ANTHONY DONALD KENDER,
13	having been first duly sworn, was examined and
14	testified as follows:
15
16		EXAMINATION
17
18	BY MR.ANBEER:
19		Q. Good morning, Mr. Kender. Could you
20	please state your full name for the record,
21	please.
22		A. Anthony Donald Kender.
Kender 05-11-04 00008
1		Q. And your business address.
2		A. My business address is -- oh, man,
3	usually it's an airplane. It is -- you know what,
4	I could check my business card for you. I don't
5	know the address or --
6		Q. How about your home office.
7		A. It's in Berwin, Pennsylvania.
8	My home address is 26 Spring Meadow Drive,
9	Downingtown, Pennsylvania 19335.
10		Q. Mr. Kender, my name is Kyle Andeer.
11	I'm an attorney with the Antitrust Division of the
12	U.S. Department of Justice representing the United
13	States of America in this matter.
14		I'm going to be asking you a series
15	of questions today dealing with Oracle's proposed
16	takeover for PeopleSoft as well as the enterprise
17	software market in general.
18		Have you ever been deposed before?
19		A. I've been deposed once before.
20		Q. Well, let me just go over some ground
21	rules just at the outset, so if there's any issues
22	or questions, we can address them now.
Kender 05-11-04 00009
1		A. Fine.
2		Q. First, I'm going to ask that all your
3	answers are verbal. It's very difficult for the
4	court reporter to pick up nods and "ums" and
5	"hmms" and that sort of thing. I'm going to also
6	ask that you -- I am allowed to finish my
7	questions before you begin to answer. That way we
8	both understand each other. Is that understood?
9		A. Yes.
10		Q. And if you don't understand any of ray
11	questions, I'll -- please let me know and I'll
12	attempt to rephrase and make it a little bit more
13	clear for you.
14		A. Fair enough.
15		Q. And finally, is there any reason that
16	you can think of that you couldn't answer my
17	questions fully and truthfully today?
18		A. No.
Kender 05-11-04 00029
3		Q. How do you go about making a case --
4	and I guess we'll focus on HR first. How do you
5	go about making a case to sell HR software at
6	Oracle?
7		A. If there is a company who is doing
8	active evaluation, do you mean?
9		Q. Sure.
10		A. Then you go in, you understand their
11	requirements, you understand the business they're
12	in and you take their requirements, you map it to
13	what your product does, you go back and you show
14	them your product, how it operates, what the
15	requirements they have.
16		Q. So one, you need to understand the
17	business, the unique company's requirements?
18		A. Yes.
19		Q. And two, you need to understand what
20	industry they're working in.
21		A. Sometimes.
22		Q. Why do you say "sometimes"?
Kender 05-11-04 00030
1		A. Because HR is a fairly horizontal
2	product, so it is not as prone to industry
3	variations as other products. Certain industries
4	it is. Some it is not. Everybody needs payroll.
5	Everybody needs general HR recordkeeping. Within
6	the industry there are some nuances.
7		Q. So it's not something you can ignore.
8	You need to understand what industry they're in,
9	even in HR?
10		A. It is helpful to do so, yes.
Kender 05-11-04 00056
8		Q. Earlier you mentioned that HR -- I
9	think the term you used is more of a "horizontal"
10	application. There are differences in industry,
11	but they're not as great as other industries; is
12	that -- or other products; is that right?
13		A. That's correct.
14		Q. With financial -- would the same be
15	true for financial management software?
16		A. Yes.
17		Q. To the same extent as HR or a lesser
18	extent than HR?
19		A. Hard to say. It's similar. The
20	example I just gave of process manufacturing is a
21	good example. Process manufacturing is very
22	specific to four or five industries who will
Kender 05-11-04 00057
1	actually manufacture items that require a process,
2	like toothpaste.
3		Everybody needs -- everybody company
4	has people that need to be paid. Every company
5	has a general ledger for their financials - to
6	track their financials, so therefore, those
7	products are considered more horizontal.
8		Q. Are there differences -- I mean, I
9	understand at a broad level, a general ledger
10	everybody's got to keep track of their accounts.
11		A. Um-hmm.
12		Q. Are there differences, though, from
13	industry to industry or even company to company?
14		A. Yes.
15		Q. What are some of those differences?
16		A. Well, for example, in government the
17	accounting principles that are used are different
18	than in commercial.
19		In banking and insurance, the
20	accounting -- financial accounting requirements
21	may exist that don't exist in a manufacturer. So
22	although everybody needs a general ledger, you
Kender 05-11-04 00058
1	start to build out industry functionality specific
2	to those industries.
3		Sometimes it is less of actually
4	functionality requirements and more of a comfort
5	level. So if you're a bank -- and I can tell you
6	that I had a lot of banks -- you feel better.
7	Maybe you'll buy it from me because of that even
8	if the functional differences really are minimal.
9		Q. Could you explain -- I mean, comfort
10	level is -- it's sound like customers are
11	interested in knowing whether there are other
12	people using, say, Oracle software; is that right?
13		A. Sometimes. Um-hmm.
14		Q. Do you have -- why is that important?
15	Why is there -- do you have an understanding of
16	why that's important to a customer?
17		A. It varies. Sometimes it's important
18	because people want to know others like them have
19	bought the software and they feel that might lower
20	risk in their mind. It isn't always the case, but
21	it may be perceived that way.
22		Q. Is this what I've also heard referred
Kender 05-11-04 00059
1	to as references and the importance of references,
2	this kind of comfort-level idea?
3		A. Well, the importance -- it is an
4	aspect of it. You can have references that use
5	your software that aren't in that industry that
6	are perfectly fine. You can have references that
7	are in the industry. So it touches on it.
17		How is the term -- what is -- what
18	is -- I mean, what is a reference? In your
19	industry what is a reference?
20		A. It's a wide range. A reference might
21	simply be a name of a company who uses our
22	software that you are looking to buy.
Kender 05-11-04 00060
1		It may also be a company that you
2	would like to call and ask questions to. It also
3	could be a company that you would like to visit
4	and see how they use it.
5		Q. So it sounds like there's three
6	different types of references. One is simply a
7	name reference. Two is someone you can
8	actually -- a potential client can call and talk
9	about the software; is that right?
10		A. Yes.
11		Q. And third is a reference that you can
12	visit and actually see how the software is being
13	used; is that right?
14		A. I wouldn't say there's only three
15	kinds, but those are three kinds.
16		Q. Okay. How does Oracle go about
17	developing references?
18		A. It is a lot of ways. There is the
19	local salesperson in San Francisco knows who a few
20	of his local references are. Because sometimes I
21	want to know -- forget about my industry, do you
22	have anybody here that is a customer?
Kender 05-11-04 00061
1		The industries business unit or the
2	applications business unit may determine a list of
3	customers for specific products or specific
4	industries. There are references that get very
5	finite on a point solution. So there is a supply
6	chain reference, but there might be someone that
7	just uses warehouse management.
8		There might be a human resources
9	reference for someone who just uses recruitment
10	software. So there's layers of it, levels of it.
11	And that's very standard across the entire
12	software industry.
13		Q. Are references -- developing
14	references important to Oracle?
15		A. Yes.
Kender 05-11-04 00076
14		Do you have an understanding of what
15	it means, Leveraging the Power of Integration?
16	What is - is that a strategy? What does that
17	mean?
18		A. Well, it means that when you have
19	various -- when you sell a suite, various products
20	are built to integrate together so that when it's
21	delivered they work together, versus a company
22	buying point solutions or best-of-breed vendors
Kender 05-11-04 00077
1	where they have to make them talk to each other.
2		Q. And does -- what -- how does Oracle
3	position itself. Is it a suite provider or is it
4	a best of -- so-called best-of-breed provider?
5		A. How it positions itself or what it
6	is?
7		Q. What it is?
8		A. It's both.
9		Q. Could you explain? How is it both?
10		A. It's both because Oracle provides a
11	suite of applications that are integrated
12	together. But if it needs to compete in -- with a
13	company who is typically buying a one-point
14	solution or best-of-breed vendor, it can take one
15	of its modules and compete there as well.
Kender 05-11-04 00078
8		Q. Total cost of ownership, what does
9	that mean? Could you define that for me?
10		A. Well, there are various definitions.
11	Basically, what it means is it costs less to own
12	and operate this software versus that software or
13	set of software packages.
14		Q. And how is that determined? How do
15	you come up with a total cost of ownership?
16		A. Again, it is determined various ways,
17	and I'm no means an expert in total cost of
18	ownership, but it is things like the price of the
19	software itself, the ongoing maintenance of that
20	software, the cost to implement it, the ongoing
21	cost to support interfaces between that software
22	and other software packages.
Kender 05-11-04 00079
1		So if you buy software from any suite
2	vendor, theoretically you don't have to maintain
3	those interfaces between various products because
4	they come delivered, and therefore your internal
5	IT staff costs should be less.
6		Q. So you said the one way of messaging
7	this integration -- or one of fee points of the
8	integration message is this lower cost of -- lower
9	total cost of ownership.
10		A. Yes.
11		Q. How does integration lower the total
12	cost of ownership?
13		A. As I just said, you don't have to
14	have interfaces written that you support yourself
15	between various models, if the integration is
16	already there, you don't have to incur the expense
17	of maintaining those interfaces. When a release
18	changes, now you've got to go back and integrate
19	those products again.
20		Q. Are there any other -- in terms of
21	total cost of ownership, is there any other
22	advantages in terms of a suite offering versus the
Kender 05-11-04 00080
1	alternatives?
2		A. Well, the -- all of the different
3	software packages are designed to work together,
4	so theoretically the interface of information
5	should be smoother.
6		The end user, people using the
7	software, learn to use one type of software versus
8	various of them. Your IT organization only needs
9	to understand one technical environment, not
10	multiple technical environments, which would lead
11	typically to lower people -- less people at lower
12	cost.
13		Q. The interfaces that you mentioned,
14	what are -- could you explain that term for me?
15	What are the interfaces between products?
16		A. Well, here you're getting a little
17	bit out of my area of expertise, so I can tell you
18	at a high level
19		Q. Okay.
20		A. As you'd want to get lower, I
21	wouldn't be able to. But if you have a company X
22	general ledger and company Y's HR payroll system,
Kender 05-11-04 00081
1	you need to get transactions from HR and payroll
2	to update the general ledger.
3		If they are two different companies,
4	there has to be an interface to send the
5	information back and forth. When company X or Y
6	comes out with a new release of software, now that
7	interface may not be the same. So now you've got
8	to go back in there, make the changes, fix it,
9	maintain it, learn it, go to training on it. All
10	of that takes time and money and cost
11		If you had a financial system and an
12	HR and payroll system from -- all from company X,
13	whenever mere is a version change that interface
14	is automatically changed. There is nothing for
15	you to do. The information will still pass
16	without you spending any time at all in fixing it,
17	maintaining it, changing it.
18		Q. So the cost with these interfaces,
19	one is just simply maintaining the interface and
20	billing it itself.
21		A. Yes.
22		Q. And two is updating the interface
Kender 05-11-04 00082
1	when, I believe you said, new releases or new
2	versions come on the market; is that right?
3		A. That is correct.
4		Q. Is there a difference in terminology
5	between releases and versions?
6		A. Not really. They're typically used
7	interchangeably.
Kender 05-11-04 00087
10		Q. Okay. Do you recognize Exhibit 107?
11		A. Yes.
12		Q. And what is this document?
13		A. I believe it's a presentation done by
14	Russell Pike who was part of the development --
15	specifically the financials development
16	organization.
17		Q. And who is Russ Pike?
18		A. Russ Pike is part of the financials
19	development team, and he had various jobs in
20	rolling out new products, communicating to the
21	field things that he did, usually not in
22	conjunction with my organization and almost
Kender 05-11-04 00088
1	sometimes counter to it.
2		Q. So he wasn't a part of any of your
3	organizations?
4		A. No.
5		Q. And when you say "counter to it,"
6	what do you mean?
7		A. Well, he would decide to go out and
8	present training on a product or a competitor
9	without coordinating that with marketing or with
10	the ABU, and sometimes that would confuse the
11	field because they would be hearing from different
12	organizations and people not always the same
13	message.
14		Q. And this document is titled Attack
15	PeopleSoft. And it looks like -- you know,
16	Mr. Pike's name is on this document. And also
17	says -- it looks like it was created in November
18	2002. Does that square with your recollection?
19		A. I don't remember exactly. Probably.
20	Probably so.
21		Q. Do you agree with the contents of
22	this presentation?
Kender 05-11-04 00089
2		THE WITNESS: I don't know. I'd have
3	to look. I mean, there is a lot there. I don't
4	necessarily agree with everything that's in there.
12		Q. I know it's a long -- well, then,
13	let's look specifically at page 45395.
14		A. 45395.
15		MR.ROSCH: Thank you. That's
16	better.
17		THE WITNESS; Okay.
18	BY MR. ANDEER:
19		Q. And before I ask any questions on
20	this specific slide, do you recall giving Mr. Pike
21	any feedback on this presentation after it was
22	given?
Kender 05-11-04 00090
1		A. Yeah. I told him I didn't agree with
2	that slide.
3		Q. What about this slide don't you agree
4	with?
5		A. Well, I felt that he wasn't qualified
6	to say that HRMS was a minus versus a plus to
7	PeopleSoft because he's a financials guy and that
8	he would probably be giving the field sales team
9	the wrong impression of the Oracle HR solution.
10	Something like -- something to that -- if I
11	remember correctly.
12		Q. And this slide is titled Selling
13	Against PeopleSoft and there is a table with a
14	series of pluses and minuses; is that right?
15		A. Yes.
16		Q. What's your understanding of what
17	this slide is supposed to depict?
18		A. Well, what - in his opinion -- I'm
19	not sure where he got his information from --
20	where Oracle would have an advantage over
21	PeopleSoft from a sales and functional standpoint
22	I -- I assume, I don't really know what he -- I
Kender 05-11-04 00091
1	don't know exactly what he was trying to get
2	across.
3		Q. And on this slide the first row --
4	rather the second row is HRMS, which is -- is that
5	human resources Management?
6		A. Yes.
7		Q. And it has a minus sign in the Oracle
8	column and a plus sign in the PeopleSoft column,
9	and that's an area where you disagreed with
10	Mr. Pike; is that right?
11		A. He has the minus sign in the Oracle
12	column with the word "close."
13		Q. Thanks for the correction.
14		What is it about that you disagreed
15	with Mr. Pike? I mean, what was the source of
16	your disagreement?
17		A. Well, as I said, I don't think he had
18	the knowledge of HR to say one way or the other.
19	And even if it were true, I'm not so sure that
20	presenting it that way to the sales force is the
21	right way to go about training them.
22		Q. At the time did you believe this to
Kender 05-11-04 00092
1	be true?
2		A. I don't remember. I don't remember.
3	You're saying this was in 2002. Boy, I absolutely
4	don't remember.
5		Q. Do you believe it was true at any
6	time during your tenure at Oracle?
7		A. Yes.
8		Q. And when would that time be?
9		A. My earlier tenure at Oracle.
10		Q. When do you feel that it was no
11	longer true?
12		A. It's hard for me to say. You know,
13	most-- in recent years Oracle functionality has
14	become as good or better in certain areas than
15	PeopleSoft's.
16		Q. in the last two years, would you say?
17		A. It's difficult for me to appoint an
18	actual time to it.
19		Q. Why is it difficult?
20		A. Well, it's kind of an ongoing
21	process, if you will. So more likely in the last
22	two years than in my first two years at Oracle,
Kender 05-11-04 00093
1	that's for sure.
2		Q. Did you play any role in closing the
3	gap since you joined Oracle?
4		A. Closing which gap?
5		Q. Well, you'd mentioned there was --
6	you might have agreed with this when you first
7	joined Oracle in the sense that maybe there
8	were -- maybe Oracle didn't have everything
9	PeopleSoft may have had. Is that right?
10		A. Well, it's hard to say what he is
11	referring to here. He says selling against
12	PeopleSoft. So I don't know if he's referring to
13	functionality or how easy it is to sell or -- it's
14	very -- it's an ambiguous slide.
15		Now, he had certain words he used to
16	present this slide back in 2002. I don't remember
17	exactly what it was he said at the time and right
18	now today. So it's hard for me to answer your
19	question unless I know more specifically what it
20	might be referring to.
21		Q. Would you agree with this
22	characterization today?
Kender 05-11-04 00094
1		A. Well, again, I don't know what -- in
2	what area.
3		Q. Okay.
4		A. Would it be in functionality and
5	selling?
6		Q. Let's just say functionality. Would
7	you agree with this -- if this was referring to
8	functionality, would you agree with this slide
9	today?
10		A. No.
11		Q. Would you -- how would you change it?
12	What's the difference between today and perhaps
13	when the time -- at the time of this presentation?
14		A. Specifically about HRMS?
15		Q. HR functionality.
16		A. I would say Oracle's HRMS is either
17	even or better than PeopleSoft's, generally
18	speaking. It gets more specific if you break the
19	modules down.
Kender 05-11-04 00095
4		Q. How often -- before I leave this
5	slide, the second or third row, depending on your
6	perspective, is Financials, and again there is a
7	plus sign in Oracle and a plus sign in PeopleSoft.
8	In terms of functionality, do you agree with that?
11		THE WITNESS: I don't know.
14		Q. Do you have any knowledge of Oracle's
15	financial products?
16		A. Very little. As far as functionality
17	and how it works, very little. I don't have a lot
18	of knowledge about the HR product because I'm not
19	a demonstration product specialist. I have a high
20	level of knowledge of the HR product. I have very
21	little knowledge of the financials product.
22		Q. What knowledge do you have of
Kender 05-11-04 00096
1	Oracle's financials package on any level?
2		A. Really, the highest level, that --
3	it's one of our stronger applications. It's been
4	out longer, and we have quite a few customers,
5	demonstrates well. We get selected quite often
6	when we sell it. That's pretty much it.
7		Q. Did you have responsibility for
8	overseeing the financial sales consultants or
9	financial sales solution -- or solution
10	specialists?
11		A. They didn't exist. No, didn't have
12	any.
13		Q. Do they have any -- do they exist
14	today?
15		A. No. There are financials sales
16	consultants --
17		Q. Okay.
18		A. -- in the field, not in my group.
19	There are no financials solution specialists
20	simply because we didn't feel the sales force
21	needed support in that area. They were already
22	very strong there.
Kender 05-11-04 00097
1		Q. Looking at this sort of presentation
2	more broadly, how often are vendor-specific
3	presentations given at Oracle?
4		A. I'd say quite often and on various
5	levels. I mean, there's probably one given weekly
6	on some vendor.
7		Q. Does your organization have
8	responsibility for preparing these sorts of
9	presentations?
10		A. Not exclusively.
11		Q. But they have prepared these sorts of
12	presentations in the past?
13		A. We have done some in the past, yes.
14	Anyone can do one. You know, if you were running
15	a small sales team of five or six salespeople
16	right here in San Francisco and you have a weekly
17	sales meeting, which these guys typically do, one
18	of your salespeople may be seeing a vendor quite
19	often, you might sit down and say here's what I
20	know about this competitor. I've come up against
21	him X number of times. I've gathered this
22	information from their Website. I'm sure it
Kender 05-11-04 00098
1	happens all the time, because you have to help
2	salespeople learn how to sell against competitors.
3		Q. Why do you need to educate
4	salespeople to sell against competitors? Why is
5	that important?
6		A. Because that's who they're competing
7	with and they need to know how to position their
8	solution versus what a competitor -- or how a
9	competitor is positioning their solution so that
10	they can compete and win.
11		Q. What types of things do you feel it's
12	important to communicate in these sorts of
13	vendor-specific presentations? What are the
14	messages that you would hope to see in some -- a
15	presentation such as this?
16		A. Well, I can't take any credit for a
17	presentation such as this. This was completely
18	out of my purview. Didn't know what was
19	happening, not something my organization came up
20	with from a content standpoint.
21		Q. But you did say that your
22	organization has created similar presentations?
Kender 05-11-04 00099
1		A. I can answer your question. I just
2	can't answer it as a presentation such as this
3	because we didn't do this.
4		Q. Okay.
5		A. But in a competitive presentation
6	that my group might give, the things I think would
7	be important, is that what you're asking?
8		Q. Yes.
9		A. I would think it would be important
10	to understand where you have an advantage and
11	where your competitor has an advantage such that
12	you know how to position your solution against
13	those advantages and disadvantages.
14		Q. How does your organization educate
15	itself as to where its relative advantage is?
16		A. Oh. Well, the biggest way we do that
17	is after they're involved in a sale cycle, win or
18	lose, basically debrief with the organization what
19	did they learn.
20		Well, I learned that Microsoft is
21	positioning against us this way, and I learned
22	that ADP is positioning against us that way and
Kender 05-11-04 00100
1	they put their pricing together, and I heard that
2	Lawson is using their suite integration this way,
3	and I learned that PeopleSoft does that, and you
4	kind of gather that information and then you try
5	to package it and disseminate it so that you keep
6	people up to date with what they are seeing and
7	what we are seeing in the marketplace. And that
8	has been the way it's been in every company I've
9	worked for and I'm sure way before I joined the
10	work force.
11		Q. So one is the sale cycle debriefs,
12	which after the sale's been completed, either win
13	or loss, you go back to the members of the team
14	and talk to them about what happened?
15		A. By and large the biggest way right
16	there.
17		Q. In that process how did they know
18	how -- whoever the vendor is that they're
19	competing with, how do they know what they're
20	doing? I mean, how do they know the sorts of
21	issues you brought up, the positioning, the
22	messaging?
Kender 05-11-04 00101
1		A. The -- most of the time it's the
2	customer saying, well, wait a minute, you know, or
3	the person who leads the evaluation, the systems
4	integrator, like maybe Accenture or KPMG or
5	something like that.
6		You know, you're saying this and
7	they're saying that or they can do these things.
8	How do you respond to that? Or this is what they
9	say about you or that they can do these things and
10	you can't. What's your response? And so, you
11	know, you need to have a response for that.
12		If you know what they're going to be
13	in advance, then you position that in advance. If
14	you don't know and you get caught, you know, with
15	your pants down on that, you need to then respond.
16	Then you learn from that next time so that you can
17	position in advance.
18		In the government world, a sale at
19	the state of Florida a few years back with SAP,
20	the state of Florida has what they called a
21	Sunshine Law, which means their demonstrations for
22	every software company is public.
Kender 05-11-04 00102
1		So you can sit there and watch me
2	give me a presentation, a demonstration and take
3	as many notes as you want, as we could for the
4	others. So every vendor sits there and they watch
5	everybody else present, they listen to how they
6	position, they watch their demonstrations, then
7	they come back and say, "Here's what I learned."
8		You know, the government, AMS, is a
9	huge competitor of ours and, you know, you watch
10	and see what they do, and then you know the next
11	time you compete with them they're going to do it
12	a certain -- they do it a certain way. So things
13	like that is not unique to anybody. We all do it.
Kender 05-11-04 00114
4		Q. Does this refresh your memory to some
5	of the reasons you may have been losing to
6	PeopleSoft at the time?
7		A. Off-the-top-of-my-head response, yes.
8		Q. And what were some of those reasons?
9		A. Well, as I stated in here, from an HR
10	standpoint, they had been in the business much
11	longer. They had more marketing references in
12	vertical markets, et cetera.
13		I had felt that we demonstrated our
14	software as good or better in HR and that's why we
15	were able to win more than we lost versus
16	PeopleSoft in HR.
17		I think in the general applications,
18	in the field sales consultants, that their sales
19	consultants were not trained as well as mine were
20	and maybe fell into some demo traps that help the
21	customer perceive product superiority where it may
22	not have been.
Kender 05-11-04 00115
1		Q. So referring back -- and I know this
2	is difficult, but to Exhibit 108 in which
3	Mr. Block had asked you about the demo issue, that
4	PeopleSoft was out-demoing. At least that was his
5	understanding.
6		A. Yeah, in 2002 that -- well, right.
7		Q. Right. It's about four months
8	earlier?
9		A. Four months earlier. Yep.
10		Q. At the time of this March e-mail,
11	Exhibit 110, that problem had been solved or -- if
12	there was a problem at all?
13		A. Well, I don't know, because Keith's
14	message on December 14, 2002, isn't very specific,
15	It was--
16		(interruption for clarity.)
17		THE WITNESS: It was not very
18	specific saying I've heard we were getting
19	out-demoed. Tell me why. I didn't know -- I
20	don't know if we had more banter on that. Was he
21	saying in general? Was he saying HR financial?
22	You know -- so I wouldn't say that the problem was
Kender 05-11-04 00116
1	resolved. I always felt that we had people who
2	could demonstrate very well in HR. The field,
3	different story, but I wasn't responsible for
4	them.
5	BY MR. ANDEER:
6		Q. So in Exhibit 108, if it's just
7	referring to HR, you wouldn't have agreed with
8	Mr. Block's e-mail at that time, the December
9	e-mail talking about out-demoing.
10		A. Hard to say. We improved over time.
11	Where we were at mat specific point in time, hard
12	for me to say. But I felt that by the time -- the
13	end of 2002 rolled around one thing we bad
14	resolved from when I was hired was our sales
15	consultants were better at demoing than they were,
16	relatively speaking, in 1999.
17		Q. Focusing on 108, do you recall
18	Mr. Block inquiring about Oracle's ability to or
19	other vendors' ability to out-demo Oracle?
20		A. He might have. I don't remember.
21		Q. You don't remember any other specific
22	instances in which he may have asked you about,
Kender 05-11-04 00117
1	say, Lawson?
2		A. I don't remember. I do know that the
3	demo issue is one that comes up about PeopleSoft a
4	lot because they're good at demoing, so that's why
5	you would expect to hear that question about them.
6		Q. Looking at Exhibit 110, some of the
7	reasons you gave were the length of time
8	PeopleSoft has been in the HR business and the
9	fact that they had references in a number of
10	different vertical markets. Those were two
11	reasons you gave as to why Oracle might be losing
12	to PeopleSoft in HR; is that right?
13		A. Yes, if/when we lost.
14		Q. What -- focusing on the first. What
15	is the length of time in the HR business? Why is
16	that a reason that you may have been losing to
17	PeopleSoft?
18		A. Well, if they were selling HR for 12
19	years, over that time they were able to build up a
20	large customer base, probably across various
21	vertical markets, because in 12 years it would
22	happen naturally. So that is something you have
Kender 05-11-04 00118
1	to overcome, and that's what companies overcome
2	all the time.
3		Q. What was Oracle doing to overcome
4	that?
5		A. What Oracle does to overcome that is
6	the same as what every small or large software
7	company does to overcome if they're not large in a
8	market, product or industry related. You focus on
9	that market, you try to get a foothold by getting
10	a customer or two and you expand from there.
11		It's what companies like Lawson did
12	when they said, you know, we're going to focus on
13	what I call a bowling-pin approach. Healthcare,
14	do that really well, get a couple of customers,
15	grow from there. Retail, hospitality. They did
16	that very well.
17		It's what Chronos did when they said
18	we're going to expand from our dominant position
19	as a time management niche vendor and start
20	selling human resources product. Low barrier to
21	entry. We have a customer base in time
22	management. Let's start going back to that same
Kender 05-11-04 00119
1	group of people selling an HR product, get a
2	couple, grow from there. So it's what we did as
3	well.
Kender 05-11-04 00120
10		Q. The second point you say here is
11	"they have more references in more vertical
12	markets than we do." Why is that an advantage for
13	PeopleSoft?
14		A. Well, if you're selling to a bank and
15	you have only a couple of banks that use your
16	product and they have a list of banks that use
17	their product, that's an advantage for them that
18	you have to overcome with other advantages you
19	might have.
20		And as I said to you earlier when you
21	asked me how do you train -- why do you train
22	salespeople on how to sell against competitors,
Kender 05-11-04 00121
1	that's the reason why.
2		Every situation is different. You
3	have certain advantages. They have certain
4	advantages in that given situation. You try to
5	diffuse their advantages with your advantages. In
6	that case, having more banks, setting to a bank,
7	than we do is an advantage for them.
8		But I've made an entire career out of
9	still finding a way to be successful despite
10	situations like that. And it's not difficult to
11	do. And it's how -- an example would be --
12	Brass Ring is a relatively new vendor in the
13	recruitment software business.
14		Recruitment software didn't even
15	exist a couple of years ago. I believe one of the
16	first companies, if not the first company to do
17	it, was Lawson, was considered a suite vendor.
18	But they're not the leader today. Brass Ring is
19	the leader.
20		Well, how can that be? How did
21	Brass Ring step into the leadership role when
22	Lawson was first? Because they did what I just
Kender 05-11-04 00122
1	said, and they weren't afraid to go head to head
2	even though Lawson may have more customers. So
3	that's how.
4		Q. What are some of the advantages that
5	you encourage your sales consultants or even the
6	field to use in competing against PeopleSoft for
7	an HR opportunity?
8		A. It is a difficult question to answer
9	because it is absolutely dependent on the specific
10	sales situation.
Kender 05-11-04 00124
7		What are some of the -- how have you
8	seen PeopleSoft position itself in a situation
9	such as that?
10		A. Where they have a lot of customers in
11	a vertical?
12		Q. Let me be a little bit more specific.
13	We're using banking as kind of our example and
14	it's an HR opportunity. What sorts of messages
15	have you seen PeopleSoft push? You've mentioned
16	that Oracle has pushed a number of these different
17	areas. What's been the response?
18		A. What's been the response?
19		Q. Or not the response. What, in your
20	experience, has PeopleSoft been emphasizing in
21	these sorts of opportunities?
22		A. Well, in a bank situation they will
Kender 05-11-04 00125
1	have a presentation, I am told, that shows other
2	banks, maybe even some speaking tracks of CFOs
3	from that bank. So when they're finished, the
4	prospective customer, who was a bank, should
5	theoretically have a comfort level -- that's the
6	idea -- to reduce their perceived risk so they
7	will buy -- so they would retrospectively have a
8	comfort level that doing business with PeopleSoft
9	would be a safe thing to do because other banks
10	like them have done it. So I would expect
11	PeopleSoft to press that advantage.
Kender 05-11-04 00129
6		Q. You mentioned that with every new
7	release some percentage of your existing customers
8	will look outside.
9		A. I mentioned any company's existing
10	customers will look outside, not just Oracle's.
11		Q. Right.
12		Do you have -- my question deals with
13	Oracle. Do you have a feel for what percentage of
14	your 10.7 customers looked to other vendors?
15		A. I don't. I don't know. It would be
16	pure speculation. I do know some that -- my -- my
17	point was, Kyle, that they will do so -- they're
18	more apt to do so because a competitor is knocking
19	on their door.
20		They're more apt to listen now,
21	because the life of software is anywhere from five
22	to seven years. So if you bought software two
Kender 05-11-04 00130
1	years ago, you're probably not a prospect for me,
2	because you're going to -- you just bought it,
3	you're going to make it work, and it cost so much
4	money you've got to get some return on your
5	investment by keeping that. And it's typically
6	five to seven years.
7		So when a new release comes out and
8	you have your existing vendor knocking on your
9	door every six months, we'd like you to upgrade.
10	We'd like you to upgrade. We'd like you to
11	upgrade, when you finally decide you're going to
12	upgrade, your competitors -- the competitors are
13	also knocking on your door because they know
14	here's an opportunity. Maybe you'll listen to me.
15	And if I can get one of them to say, hey, you know
16	what, that's pretty good and put a compelling
17	price on the table, now I have an opportunity.
18		So it would behoove that competitor
19	to know when those inflection points are occurring
20	and put a campaign around that to go after it.
21	And that's what SAP's doing to us right now.
22		That's what I did to ADP, because ADP
Kender 05-11-04 00131
1	is probably our biggest competitor in the HR
2	space. And there was a Y2K problem as we
3	approached year 2000. Many customers moved to ADP
4	because it was quick and there isn't a long-term
5	contractual requirement to fix that year 2000
6	problem.
7		We had heard that a lot of those
8	companies were unhappy. So we looked at who are
9	the ADP companies out there, especially those who
10	may already have Oracle software, like in
11	financials, and let's see if we can't unhook some
12	of them. So it's done all the time.
13		Q. This ADP campaign, when did this take
14	place?
15		A. I don't remember. It was a few years
16	ago. Nothing formal. It was, you know, get the
17	team together. Where do we see opportunities in
18	the marketplace. We just had a couple wins in
19	North Carolina, someone said, against ADP. This
20	is what we're hearing.
21		Okay, everybody, get your lists out.
22	Understand who the ADP customers are in your
Kender 05-11-04 00132
1	specific area. Work with your local salespeople
2	and let's see if maybe a few others might be
3	upset. So it wasn't any -- it was let's go get
4	this done and train people up. What do you say?
5	You know, what are the things you do and get your
6	less together and go. So that's what we did.
7		Q. So you said this campaign was several
8	years ago. Was it 2002? 2001?
9		A. I don't remember the exact year. It
10	was clearly two or three years ago, maybe even
11	four. Somewhere -- more likely around three.
12		Q. And you said that ADP is your biggest
13	competitor in the HR?
14		A. I think ADP is -- having worked there
15	I know. In fact, half -- half -- most of the
16	people on my staff of HR worked in a service
17	bureau environment at some time. ADP, Ceridian,
18	Paychecks, Pro Business before ADP acquired them.
19		And having worked there myself, they
20	have the Procter & Gamble approach. You know,
21	when you go to the store shelf you see Cheer and
22	you see Tide and you see a few different products,
Kender 05-11-04 00133
1	and no matter which one you pick it's Procter &
2	Gamble.
3		Well, they have salespeople all over
4	the place. Different divisions, organizations
5	that almost overlap. And there is tension in the
6	model such that, you know, is it your account? Is
7	it my account? Doesn't matter. Someone's calling
8	on it. Even if we're fighting the company gets
9	their market share.
10		So ADP is -- they're everywhere. And
11	even if you don't see them, maybe in an RFP, you
12	think they're not in there, they're in there.
13	I've lost a sale where they weren't in the RFP and
14	they won a sale.
15		Q. So one reason they're a big
16	competitor is their sales approach in the sense
17	that they have people calling all these different
18	accounts.
19		A. Right.
20		Q. Do you see them anywhere else? I
21	mean, how do you measure their significance?
22		A. I message their significance -- if
Kender 05-11-04 00134
1	you look at IDC -- and I don't have the numbers
2	off the top of my head. I think they're in the
3	top two, three or four as far as HR vendors'
4	customer size.
5		I see -- if I look at a pipeline
6	report and I ask my salespeople who they're
7	competing with, I typically -- you know, I have
8	seen it so many times I can tell you, generally
9	speaking, ADP's in many of those accounts, plus
10	from personal experience.
11		I still have friends there. I know
12	how aggressive they are. They have a very wide
13	offering for their product. They're in a lot of
14	industries. They're in a lot of sized
15	organizations. They sell their HR product. It's
16	priced inexpensively which makes it difficult to
17	compete with them.
18		Q. Do you consider their product to be a
19	functional equivalent to Oracle's product?
20		A. In many areas, yes. In some areas,
21	no.
22		Q. How many -- how many areas? Can you
Kender 05-11-04 00135
1	put it on a percentage basis of where they have an
2	equivalent product in the HR suite?
3		A. I would say 75 percent of what we
4	offer they offer just as well. We have things
5	like iLearning and iRecruitment. They don't have
6	that. So they'll oftentimes -- they'll partner
7	with someone to make up for the fact that they
8	don't have it.
9		Like they partner with Chronos for
10	time management. They resell. They just don't
11	partner. They resell the Chronos product for time
12	management. So they have -- they have quite a bit
13	of functionality, quite a bit of a footprint, and
14	where they don't have a footprint, they partner.
15		Q. Now, you think they have a footprint
16	in about 75 percent of the HR offering?
17		A. Yeah. And so does Ceridian.
18		Q. And you had mentioned that one of the
19	sources of your information is the ICD data. Do
20	you find that -- you mentioned there were two,
21	three, four, somewhere in there; is that right?
22		A. You know, I vaguely remember
Kender 05-11-04 00136
1	seeing -- and IDC isn't the, you know, definitive
2	answer, but they're one of the places. And they
3	list size of -- and ADP's up there with the top HR
4	vendors, and we clearly see them.
5		Q. Is IDC something you typically rely
6	on, the figures in there?
7		A. No. But I've seen IDC reports in the
8	past, even at previous companies I worked for.
9	It's one data point, if you will. It's nothing
10	definitive. In fact, I used to --
11		MR. ROSCH: Wait the question.
12	BY MR.ANDEER:
13		Q. You mentioned also the pipeline
14	report is another source of -- or another basis
15	for the fact that ADP is a significant competitor
16	to Oracle.
17		A. Um-hmm.
18		Q. What is the pipeline report telling
19	you?
20		A. I don't have specifics on it, but I
21	have my HR sales team when I manage them
22	specifically list what sales cycles they're
Kender 05-11-04 00137
1	working on and who the competitors were. And we
2	would do strategy, account reviews. Tell us about
3	your sales you're working on right now and let's
4	see if we can help each other. ADP would come up
5	more often than not.
6		Q. For HR opportunities?
7		A. Oh, absolutely. Absolutely.
8		Q. You mentioned the sales campaign
9	against SAP several years ago -- or ADP rather.
10		Actually, before we go into that,
11	going back to the releases, you mentioned
12	currently SAP is attacking your 10.7 customer
13	base; is that right?
14		A. That is true.
15		Q. Are you aware of any other vendor
16	attacking your 10.7 customer base?
17		A. I am aware that all of them are, but
18	I am aware that SAP has a formal campaign.
19		Q. How many 10.7 customers have you lost
20	to a competing vendor?
21		A. I don't know. I don't have the
22	actual specifics on that. I do know that we had
Kender 05-11-04 00138
1	to try and respond and protect that 10.7 customer
2	base because it was under attack, the ones that
3	weren't the early adopters, obviously the ones
4	that are still on 10.7, we try to protect them.
5	And we know from our sales force that SAP is in --
6	giving away software and doing some things to try
7	to unhook them.
8		Q. Are you aware of any other specific
9	vendor doing the same sorts of -- or pursuing a
10	similar strategy?
11		A. I am aware that every vendor sees
12	that as an opportunity and a weakness and is
13	competing to get in there. I'm not aware that
14	every -- other vendors have a formal program, but
15	I wouldn't be surprised if they did because that's
16	what they do.
Kender 05-11-04 00140
11		Q. And so the only vendor you know by
12	name that was targeting your 10.7 base was SAP, or
13	at least it had a formal campaign in place?
14		A. That's the only one I knew about, but
15	I -- but as I said before, it's such common
16	practice that every software vendor would try to
17	do something like that. So the overall idea was
18	protect that 10.7 base.
19		In SAP's case, they were having a
20	similar situation to we were, with their 4.6c
21	release and forcing some customers to upgrade off
22	of it to new software. So one of our items on
Kender 05-11-04 00141
1	this e-mail, as you'll see, is attack SAP's
2	install at the point down below.
3		So force them to defend their base so
4	that they can't only be on the offensive as they
5	were doing to us. Because they had an inflection
6	point such that there was a change in release
7	levels, so we wanted to go after that, which we
8	also did to PeopleSoft because they had a change
9	in release -- major releases, but also did some
10	things that upset their customer base. So clearly
11	SAP went after their customer base as well.
12	That's what they do.
13		Q. So looking at SAP, this meeting and
14	the conference call about 10.7 install base, was
15	that in response to a specific threat by SAP or
16	was it just generally how do we defend our 10.7
17	install base?
18		A. It was both. See, Lawson did that to
19	us as well. Early on when 11i first came out,
20	Lawson ran ads and did some things to try and
21	unhook 10.7 customers.
22		So this was in general protect the
Kender 05-11-04 00142
1	10.7 base, find a way to upgrade them, no matter
2	who they might be looking at, those that didn't do
3	it already, but also go back and attack Sap's
4	install base because they were forcing people on
5	to a new release.
Kender 05-11-04 00181
21		MR.ANDEER: Ask the reporter to mark
22	the following Exhibit 116.
Kender 05-11-04 00182
1		(Exhibit No. 116 was marked for
2	identification by the reporter.)
3		MR. ANDEER: For the record,
4	Exhibit 116 is Bates stamped ORLITF0055295, and
5	it's a one-page e-mail and attached presentation.
6		THE WITNESS: Yes, I remember it.
7	This is the Webcast that I mentioned that we gave
8	to the field.
9	BY MR. ANDEER:
10		Q. And the Webcast was given sometime in
11	the March -- March 2002 time frame?
12		A. I'm assuming it was since this e-mail
13	is dated March 10^th and it was the final cut of
14	the presentation, therefore we must have given the
15	actual Webcast soon thereafter.
16		Q. Do you recall why the focus of this
17	was on Peoplesoft HRMS Version 7 customers? We
18	talked about the version difference, but why HR?
19		A. Because we had had some success in
20	unhooking some of the HR customers -- they have a
21	large customer base -- and that was an opportunity
22	for us to replace those customers who were
Kender 05-11-04 00183
1	unhappy.
2		Q. You had mentioned you bad replaced
3	some. At the time of this presentation, do you
4	recall -- you'd given a number of eight to ten.
5	Was that about right, eight to ten customers that
6	switched from Peoplesoft 7 to Oracle?
7		A. I don't remember how many at the time
8	of this presentation, although we may have made
9	reference to it in this presentation, if you'd
10	like me to look. We list -- we do list a couple
11	in more specifics.
12		Q. Let me ask you, do you recall the
13	expectations for this program'? Was there a quota
14	or a target set?
15		A. I don't recall that there was. I
16	mean, there may have been, but I don't recall if
17	there was or not I would have been -- I was
18	happy with -- actually here it says 18 customers
19	have replaced Peoplesoft HR recently.
20		Q. Does that square with your
21	recollection that there were about 18?
22		A. Yeah. I think that was worldwide, a
Kender 05-11-04 00184
1	list of companies worldwide. As far as goals, I
2	don't remember if there were goals or not.
3		My feeling about any campaign like
4	this when there is an inflection point in the
5	industry with a version release, a major version
6	release, it's hard to put a goal on it. Now, some
7	people like to do that.
8		I believe if you can get one or two,
9	then that can mushroom into multiple others
10	because of the comfort factor and the risk factor
11	I mentioned to you earlier. Who else has replaced
12	Version 7 with Oracle HR? Well, I've got some.
13		So the fact that we had some momentum
14	and this many takeaways and the fact that the
15	window of time was closing, it was impetus to have
16	a more formal campaign to get the last few that we
17	probably could.
18		Q. What was the pitch associated with
19	this campaign? What were you offering PeopleSoft
20	HRMS customers?
21		A. Oh, boy, I don't remember. I'm sure
22	it's listed in here.
Kender 05-11-04 00185
1		As I recall, we weren't really giving
2	anything. We were trying to point out that -- a
3	comparison of what it would cost to acquire and
4	implement Oracle HR compared to not a -- not an
5	upgrade as it was being billed by PeopleSoft, but
6	a new reimplementation, because the technology
7	platform was so different it was a new
8	implementation. And that was said by third
9	parties, not by us.
10		And the fact that other customers
11	were so unhappy that they were looking to bring
12	lawsuits against PeopleSoft; that the perceived
13	risk of upgrading and the possibility of a lower
14	total cost of ownership with a new Oracle system
15	could be impetus enough for some of these
16	customers to move and getting just a handful more
17	was fine with us.
18		So that was pretty much the approach.
19	I don't recall there being anything we wanted to
20	give away or offer.
Kender 05-11-04 00186
3		Q. Was this merely an educational piece
4	to let the field know that there is this set of
5	customers you should be calling upon?
6		A. As I recall. I don't remember if
7	there was some sort of a reward for the
8	salesperson over and above the normal commission
9	they would get for making a new sale, which is
10	usually found in sales of this size.
11		Q. Do you recall what the result of this
12	campaign was?
13		A. No. I'm sure we got a few more
14	customers as a result of it, though.
15		Q. Look at page 5 of the presentation
16	Bates stamped ORLITF0055300, entitled Target
17	Accounts (Segmentation). Do you mind looking at
18	that?
19		A. Okay.
20		Q. What does it mean here saying
21	segmentation? What is it referencing?
22		A. Well, as I mentioned earlier, if you
Kender 05-11-04 00187
1	take your whole list of accounts and you find out
2	where they have Oracle financials already, but
3	PeopleSoft HR, that's a place to start because you
4	already -- if you're not my people, but the
5	salespeople, you should already know that account.
6	They're a customer.
7		The customer already has the Oracle
8	footprint and technology and they're running it.
9	To extend to another application, be it HR or
10	supply chain, it doesn't matter, is a very easy
11	thing to do. So that's the place to start.
12		You have a relationship. They have
13	an Oracle footprint already. Extending it out to
14	Oracle HR is logical and oftentimes makes very
15	good business sense.
16		Q. Um-hmm.
17		A. The second area is if they have
18	Peoplesoft HR and they're running an Oracle
19	database, because we may have had an opportunity
20	with the CIO, who's already an Oracle database
21	customer.
22		So it's simply a matter of where are
Kender 05-11-04 00388
1	the quickest, easiest places to contact because
2	the relationship may already exist.
3		Q. So in this case the relationship is,
4	one, there are -- the customer's already -- or
5	prospect's already an existing Oracle financial
6	customer. That's one group, right?
7		A. Yes.
8		Q. And the second group would be an
9	existing Oracle technology customer.
10		A. Yes.
11		Q. And were lists generated for both
12	target groups?
13		A. As much as the individual salesperson
14	knew. Once again, that's a difficult list to come
15	up with. So I expect the local salesperson to
16	know who their database accounts are.
17		My HR salespeople had a decent idea
18	of who had PeopleSoft HR and Oracle financials
19	because we asked them to look at that sometime
20	earlier. That list needed to be updated. So they
21	worked with these salespeople they're assigned to
22	in concert to -- contact into those accounts and
Kender 05-11-04 00189
1	see if there were some interest. And as I recall,
2	there -- we started to build a little bit of a
3	list of companies who were willing to talk with
4	us.
5		Q. Do you recall who -- you had
6	referenced a list that you attached that some of
7	your people were to come up with, Oracle
8	financials and PeopleSoft HR. Who put together
9	that list?
10		A. My solution specialists put together
11	that list and then it was -- it was consolidated
12	into a spreadsheet, and then it kind of went away,
13	because we didn't focus on it very much after
14	that, and then we dusted it off and dug it out for
15	this and tried to get it updated as to what the
16	latest information would be since it was a couple
17	years old, as I remember.
18		Q. And when did you ask him to put
19	together the original list?
20		A. It was probably early on when I -- I
21	asked them as part of their job maybe in 2000, I'm
22	guessing, that they should know the accounts that
Kender 05-11-04 00190
1	they're responsible for, you know, basic selling,
2	what do they have now? Go find out. If you don't
3	know, call them and find out what do they use for
4	applications, HR, et cetera. So that's what we
5	did. It's just as a matter of understanding who
6	was out there and who to sell to.
7		Q. Do you recall in that 2000 time frame
8	or later whether you asked your solution
9	specialists to make similar lists for other
10	vendors so, say, Oracle financials and Lawson HR
11	or --
12		A. I'm sorry. I misspoke. That list
13	was for all vendors.
14		Q. Oh, it was.
15		A. Yes. That original list was not
16	about PeopleSoft. That original list was about
17	the entire market and the customers or the
18	accounts that they are responsible for. What do
19	they use today? Cyborg, PDS, ADP, PeopleSoft,
20	what do they use?
21		Q. And it was all accounts?
22		A. All accounts as best as they could
Kender 05-11-04 00191
1	identify.
Kender 05-11-04 00192
21		Q. So just -- but there was no other
22	campaign similar to this one for any of the other
Kender 05-11-04 00193
1	vendors we talked about, ADP or Lawson?
2		A. No. The other campaigns we had -- we
3	did campaigns with, I didn't have to involve the
4	field sales force because my team could do it with
5	the field sales force without this.
6		Q. And so those campaigns, those were
7	simply -- and when you say "campaigns," are you
8	talking about conversations with your solution
9	specialists?
10		A. No more than that.
11		Q. What more?
12		A. Well, formal training, what to say,
13	who the accounts are that have ADP, et cetera. It
14	wasn't just a conversation.
15		Q. In terms of the training, were there
16	documents or were there presentations given at
17	those trainings to kind of detail exactly how you
18	should message in these trainings?
19		A. I'm certain there were. I am certain
20	there were.
21		Q. Do you recall any specifically?
22		A. No.
Kender 05-11-04 00194
1		Q. Do you recall anything similar to
2	the -- did any of them have a name such as, you
3	know, "PeopleSoft 7 replacement campaign" or
4	anything similar to that?
5		A. Probably. They probably had the name
6	of who the vendor was and what we were trying to
7	replace.
8		Q. Do you recall any of the names?
9		A. No, I don't. I'm sure it was a
10	replace ADP campaign. I don't remember the exact
11	terminology that we might have used. This is not
12	anything special to say -- the page you pointed
13	out to me segmenting PeopleSoft HR and Oracle
14	financials, that's just basic common sense.
15	That's not a -- nothing fancy.
Kender 05-11-04 00195
20		Q. DM he express any interest in your
21	later PeopleSoft 7 replacement campaign?
22		A. Very well may have been. Part of it
Kender 05-11-04 00196
1	may have been the result of him commenting on
2	this, although we probably had it already
3	underway. And he may have said get it out the
4	door as fast as you can because the window of
5	opportunity is short, as I mentioned earlier. I
6	don't remember exactly, though.
7		Q. Has that window of opportunity closed
8	today?
9		A. I don't think it's completely closed.
10	It's not as wide open as it was. I think you
11	still have the opportunity to replace PeopleSoft
12	where there is an Oracle footprint if the customer
13	has a strategy to consolidate vendors and if they
14	feel that we're the one that should be kept versus
15	the other,
16		It is clearly not as open as it was
17	then because I think they'd fixed much of the
18	quality problems they had in Version 8 and have
19	had more customers upgrade, but there still are
20	opportunities,
21		Q. Were you aware of quality problems
22	with PeopleSoft 8 Version at the time of these
Kender 05-11-04 00197
1	e-mails, February, March of 2003?
2		A. I don't remember. I probably was.
3	Whenever they existed I was aware of them. I
4	don't remember if they were at this specific time
5	or not as we sit here today.
6		Q. But you believe those quality issues
7	have been resolved today?
8		A. I think a lot of them have, which is
9	the natural course of any release after a couple
10	years go by, as when I told you when we had a
11	problem with our 11i release. After a couple
12	years that went away.
13		Q. And what's the basis or source of
14	that understanding? How do you know that those
15	issues have been solved?
16		A. Well, you see that more customers
17	upgrade. You see -- you don't see articles in the
18	trade press that there's still massive problems.
19	You see multiple releases being put out. You hear
20	what prospective customers that you might want to
21	upgrade tell you, no, everything's okay now.
22	That's how.
Kender 05-11-04 00198
1		Q. You mentioned two groups -- or two
2	targets that you encourage both your sales
3	consultants in the field in general to go after
4	and that was existing Oracle FMS customers that
5	may be using PeopleSoft HR as well as other
6	existing Oracle customers.
7		Do you recall the relative success --
8	level of success at either target -- target
9	customer groupings?
10		A. It was probably -- I don't recall
11	specifically- It was probably better on the
12	financials customers. The only reason we listed
13	the database -- Oracle database customers is
14	because if they don't have any Oracle database,
15	since we only run on an Oracle database, it could
16	be more difficult to make that sale. So that's
17	why we had the second category,
18		So I'm sure that there were mote that
19	were in the financials Oracle customer list But
20	we didn't only approach those. Anybody who had
21	Version 7 was somebody we contacted.
22		Q. Do you remember any names of the
Kender 05-11-04 00199
1	accounts that may have switched subsequent to this
2	campaign being announced from Peoplesoft HR to
3	Oracle HR?
4		A. I remember Merrill-Lynch.
5		Q. Was that prior to this campaign or
6	was that after the campaign?
7		A. I want to believe it was finally
8	decided after this campaign. I don't remember
9	specifically. I think it may have been a result
10	of this campaign that it got started. A phone
11	call from a salesperson saying, yes, let's talk.
12	I could be incorrect, though.
13		Q. All right. Were you aware of the
14	opportunity at the Gap for switching from Oracle
15	HR to -- or switching from Peoplesoft HR to Oracle
16	HR?
17		A. I do remember that and then I believe
18	it was stopped and then rekindled again.
19		Q. And do you know what the current
20	status of that opportunity is?
21		A. I believe they are still evaluating
22	Oracle HR and hopefully making a decision to
Kender 05-11-04 00200
1	switch. I don't know much more than that.
2		Q. So they're evaluating Oracle HR
3	versus upgrading their PeopleSoft to HR?
4		A. I think so. I think so- I don't
5	know all the specifics on the Gap, just at a high
6	level that they, I believe, re -- stopped, started
7	again and maybe close to a decision point right
8	now. I don't know much specifics other than that.
9		Q. Are you aware of the MacroMedia
10	opportunity?
11		A. That was the name I'd heard, yeah.
12		Q. Do you know whether that was a
13	PeopleSoft switchout -- or switchout of PeopleSoft
14	HR to Oracle HR?
15		A. I believe it was. I don't know if it
16	was before or after this campaign, though. 1
17	don't remember.
18		Q. Are you aware of an opportunity by
19	Crawford Group?
20		A. I don't remember that one.
21		Q. FDX, are you aware of that
22	opportunity?
Kender 05-11-04 00201
1		A. I remember the name. I don't know
2	anything about the opportunity specifically. But
3	there was an e-mail I think I put out, and I
4	gathered from my sales solution specialist in HR,
5	can you tell me what we've replaced so far and
6	what might be in the pipeline?
7		I'm not sure of the timing of it, but
8	if it was after this we started to try and track,
9	okay, now, let me know weekly. Anyone else -- is
10	it a real opportunity or do they just kick tires?
11	And let's try and track it through to see how we
12	ultimately can do with this.
13		So mere was a list of names in those
14	categories that I -- if I heard names, I might
15	remember the names. I wasn't specifically
16	involved, except I did get involved in
17	Merrill-Lynch when that did occur.
Kender 05-11-04 00208
9		Q. And what was the goal of this e-mail?
10		A. The goal was to let them know about
11	the campaign that we've already discussed, the
12	plans for it, that it was coming.
13		Q. Looking at the -- some of this echoes
14	what we talked about earlier, but the third
15	paragraph specifically, "We are scrubbing a list
16	of about 300 of the largest accounts that will
17	include Oracle financials users who have
18	PeopleSoft HR." Do you see that?
19		A. I sure do.
20		Q. Why do you -- do you recall what you
21	meant by saying scrubbing a list. What were you
22	doing at that point with this 300-account list?
Kender 05-11-04 00209
1		A. Remember when I told you earlier that
2	early on in the formation of the HR sales team I
3	asked help to put a list together of their entire
4	territory and who they use and that we had not
5	touched it for a couple of years and we dug it
6	back up and dusted it off, that was the list we
7	were scrubbing to go back and determine is this
8	still the case since it's a couple years old? Are
9	these still the PeopleSoft customers?
10		And so we had -- I had my sales -- my
11	solution specialist contact or find out from
12	various ways, they might be able to find out were
13	they still using PeopleSoft and were they on
14	Version 7. So when we finished that, we can then
15	give that to the field salespeople because they
16	wouldn't by normal course of their job do that.
17	And that's what I was referring to when I
18	mentioned it to you earlier,
19		Q. And so you have this whole -- a list
20	of all Oracle customers and you come up with 300.
21	Now, are these the only 300 customers that are
22		using Oracle financials and PeopleSoft 7 HR? Is
Kender 05-11-04 00210
1	that what that list represents?
2		A. I don't know if they're the only
3	ones. Believe it or not it's difficult to
4	determine all of the financials and HR and
5	intersect them. So we wanted to take the ones
6	that we thought we knew of, verify we knew -- they
7	were approximately about 300 -- and get those out
8	as opposed to waiting and making sure it's perfect
9	and scrubbing and getting another source, well,
10	too much time would go by. So use the ones we
11	knew -- it's a pretty robust list -- get that out
12	and go executive on the plan.
Kender 05-11-04 00220
15		Q. So we've talked about this campaign
16	targeted at PeopleSoft 7 customers. We've talked
17	about at least discussions surrounding an SAP
18	campaign to target their older versions.
19		Are there other companies -- we've
20	also talked about ADP a little bit, that you
21	believe that there was a campaign three or four
22	years ago targeting ADP.
Kender 05-11-04 00221
1		A. Right.
2		Q. Are there others?
3		A. Yes, there was.
4		Q. And who were some of those other
5	companies that you focused on?
6		A. I have not.
7		Q. Okay.
8		A. But they're -- one that comes to mind
9	is Baan, B-a-a-n. Let me see. It's just not
10	people -- companies with big customer bases. Baan
11	had a small customer base. They had dwindled over
12	the years. And I think there was something
13	happening where they were being acquired or
14	something was being discontinued and people
15	besides me, some of the Europeans and some of the
16	people in our sales force, I think maybe even
17	Lisa Pope at the time, did some things to look at
18	replacing some Baan accounts. So as I said to
19	you, you know, where there is an opportunity it's
20	what you want to do.
21		Q. Why were you not involved in this
22	Baan campaign at all?
Kender 05-11-04 00222
1		A. I think because at the time -- let's
2	see. It happened when I had the ABU. Even if it
3	did, I didn't have many manufacturing -- they're
4	primarily a manufacturing. I have a suite, but a
5	lot of manufacturers use it I didn't have a lot
6	of manufacturing expertise in my organization, no
7	solution specialists, maybe one sales consultant,
8	who I think then subsequently left us and went to
9	work at Microsoft, the other competitor I'm most
10	worried about, and therefore there was no
11	expertise I could deliver, so they did it on their
12	own.
13		Q. And do you know who had ownership of
14	this Baan campaign?
15		A. No. I think some of the Europeans
16	drove it and it spilled into the U.S. I don't
17	know who actually formally owned it, if they did.
18		Q. Do you recall if there was any
19	presentation or similar announcements to what you
20	did with the Peoplesoft 7 campaign?
21		A. I never knew, so I don't know that -
22	so I couldn't recall one way or the other. I
Kender 05-11-04 00223
1	would be certain that there was a presentation,
2	because again you have to explain to the
3	salespeople what are you selling? What are the
4	key message points here? And I never saw that.
5		Q. So the Baan campaign may have been in
6	the last year. Do you recall any other
7	campaigns --
8		A. It would have been in the last two
9	years.
10		Q. Two years?
11		A. Probably.
12		Q. Do you recall any other campaigns or
13	initiatives targeting specific vendors?
14		A. I'm trying to think. Nothing that
15	comes to mind. I know that if there was something
16	that was peculiar to a particular local region or
17	market, as I mentioned earlier, you know, a
18	regional sales team would get together and say,
19	you know, I've had some success here. You guys
20	should do the same thing. And that sort of thing
21	goes on all the time. But I've not been involved
22	in one myself personally.
Kender 05-11-04 00244
17		Q. And why is that? Why is the fourth
18	quarter the biggest out of the four quarters?
19		A. Many intelligent men have asked that
20	question. It's because there is just such a focus
21	by the sales force. It's the end of the year and
22	just things happen because of that energy and
Kender 05-11-04 00245
1	focus that it has brought to the sales process.
2		The other reason is, like it or not,
3	software companies have trained their customers
4	to -- on how to buy. So they knew. And if they
5	wait until the fourth quarter, in fact, the end of
6	the fourth quarter, sometimes it's midnight, that
7	they may be more apt to get a better price as they
8	negotiate with us because we want that sale in our
9	last fiscal quarter. And every software company
10	has never changed from everywhere I worked. That
11	one thing remains the same company to company.
Kender 05-11-04 00248
9		Q. Earlier you talked about one of your
10	significant competitors was ADP. Do you consider
11	PeopleSoft a significant competitor in the HR
12	space?
13		A. Absolutely.
14		Q. Would you consider them one of your
15	top one or two competitors in HR?
16		A. You know, it depends on the market or
17	the industry really. You know, in government AMS
18	is strong. In healthcare, Lawson is the toughest.
19	In retail, Lawson is difficult. So is PeopleSoft.
20	ADP is everywhere.
21		You know, even when you think ADP is
22	not in the RFP, they still can show up because of
Kender 05-11-04 00249
1	their sales force. And we lost a sale we thought
2	we were winning at Aramark to ADP and we didn't
3	even know they were in there.
4		So it really needs to be qualified
5	on, you know, the industry. If we are working on
6	very small companies, a lot of outsourcers, a lot
7	of other software vendors like Ultimate are there.
8	So it does vary.
9		Q. You mentioned AMS in the government
10	space. Did they offer an HR application?
11		A. I don't know. I know they have the
12	financials. They may have an HR system. I don't
13	know.
Kender 05-11-04 00251
18		Q. How does it show that? I mean, it
19	looks -- HRMS 2,400 for Oracle versus 3,500 for
20	PeopleSoft.
21		A. Because 3,500 is the largest number
22	of HR customers, if it's accurate, in the HR
Kender 05-11-04 00252
1	space.
2		Q. And so you're simply responding to
3	the Giga information here?
4		A. Right.
5		Q. You have no independent knowledge of
6	whether -- strike that.
7		You have no other source of
8	information that you're referencing in your
9	e-mail?
10		A. No. I do know that these numbers
11	vary and oftentimes are dubious, because when I
12	worked at SAP, similar issue, how many customers
13	does SAP have, how many does Oracle have, how many
14	does PeopleSoft have, and it almost changes
15	depending on who the -- is it IDC? Is it Giga?
16	Is it Meta? Who is it?
17		So they don't seem to have any rhyme
18	or reason. So sometimes we don't put a lot of
19	faith in those types of numbers. But from what I
20	saw that was the largest amount -- if it's true --
21	I don't know that it is -- of the largest amount
22	of HR customers.
Kender 05-11-04 00253
1		Q. How do you know that would be the
2	largest amount? Why would 3,500 be the number
3	and why would --
4		A. I believe Sap's was somewhere similar
5	but just slightly less and PeopleSoft was trying
6	to show that they had the most. But if the
7	number's accurate, I don't know.
8		Q. Do you have any reason to think that
9	number isn't accurate?
10		A. Yes.
11		Q. And what's that reason?
12		A. Just different people who work in the
13	industry claim that PeopleSoft would do whatever
14	they could to show that they had more numbers than
15	SAP. And if we're talking about financials, they
16	would say something else, but they didn't always
17	fit. We added them up. But nothing empirical
18	that I have.
Kender 05-11-04 00260
7		MR. ANDEER: And for the record,
8	Government Exhibit 125 is a two-page e-mail
9	exchange between you, Mr. Kender, and Bob Greene
10	cc'ing several other folks. The identifying Bates
11	number is ORLITF0050734.
12		THE WITNESS: Okay.
13	BY MR. ANDEER:
14		Q. Government Exhibit 125, the
15	originating e-mail is from a Bob Greene to you.
16	Who is Robert Greene?
17		A. He is my manager of the sales
18	consultants for HR at that time.
19		Q. And what were his responsibilities in
20	that role?
21		A. He managed the sales consultants. He
22	trained people. He did speaking engagements like
Kender 05-11-04 00261
1	this one.
2		Q. And so in this e-mail he's talking
3	about his speaking engagement in Washington, D.C.;
4	is that right?
5		A. Yes, that's what he said.
6		Q. Do you recall this e-mail or that
7	engagement?
8		A. I don't recall the engagement. I
9	somewhat recall the e-mail. I don't recall the
10	slide he's referring to.
11		Q. In your response you say -- and this
12	is starting in the second -- "Remember, SAP is not
13	the enemy, as" -- and I'm guessing that's as much,
14	but you can correct me if I'm wrong -- "as much as
15	you'll want to spank them. PeopleSoft is the
16	enemy. Bury them."
17		What do you mean by saying "SAP is
18	not the enemy"?
19		A. That Peoplesoft is in HR more of a
20	competitor to the United States than SAP is.
21		Q. And why is that? Why do you think
22	that SAP is not the competitor in the United
Kender 05-11-04 00262
1	States that PeopleSoft is?
2		A. Because Sap's market share in the
3	United States is not as big as PeopleSoft's.
4	SAP's market share in Europe, since they're a
5	European company, is much larger than
6	PeopleSoft's.
7		Q. What's -- given your experience with
8	SAP America,, your experience generally in the HR
9	market, what's been -- what are the challenges for
10	SAP America in selling its HR in the United
11	States?
12		A. The challenges are the image people
13	have of SAP in the United States as being large
14	and -- their software being large and unwieldy to
15	use.
16		Q. What does that mean, large and --
17	could you explain?
18		A. Yeah. It's not very pretty. It
19	doesn't look nice. It's not very user friendly or
20	very easy to use. And there are stories about it
21	being very difficult to implement, maintain, not
22	all of which are true, but that is the impression
Kender 05-11-04 00263
1	people have.
2		Q. What are the -- you've mentioned
3	stories of SAP being difficult to implement. Can
4	you explain, what is -- what is -- what is that
5	positioning? I mean --
6		A. It's well documented that there have
7	been implementations for SAP software that have
8	cost millions and millions and millions, tens of
9	millions just to implement it. Over cost,
10	overbudget, and that gets used against them fairly
11	or unfairly in HR or anything else they sell.
12		Q. Do you use that against them? Does
13	your sales -- HR sales consulting force use that
14	against them?
15		A. Probably. I would imagine they
16	would. I don't know specifically if they do or
17	not on an individual basis, but they probably do.
18		Q. Would it be something you would
19	expect them to use in a sales cycle?
20		A. Only is it were accurate. And if it
21	was not accurate I would not want them to use it.
22	In any case it was accurate.
Kender 05-11-04 00264
1		Q. Can you think of specific instances
2	in which an SAP implementation was -- cost
3	millions and millions of dollars?
4		A. Yes.
5		Q. And what are those?
6		A. Coca-Cola comes to mind,
7		Q. Any other specific to HR perhaps?
8		A. Not off the top of my head. I knew
9	there were some, though. Even when I worked
10	there, there were some.
11		Q. Is this a problem faced by other
12	companies, other vendors, such as Oracle -- since
13	you've been at Oracle, had there been instances in
14	which an implementation may have been -- may have
15	cost millions and millions of dollars?
16		A. Every company faces that
17	occasionally. PeopleSoft does, too. Lawson does.
18	Lawson had a large account at McDonald's, very
19	costly, but more so for SAP because of the
20	architecture of their product than anyone else.
21		Q. What is it about their architecture
22	that makes it costly to implement?
Kender 05-11-04 00265
1		MR. ROSCH: Objection.
2		THE WITNESS: Well, I don't know all
3	the details--
4		MR. ROSCH: I was going to say
5	objection; lacks of foundation from this witness.
6		THE WITNESS: I don't know all the
7	details -- the technical details that would cause
8	that.
9	BY MR. ANDEER:
10		Q. Well, you mentioned that one of the
11	reasons that it's costly to implement is this
12	architecture. What is your understanding of why
13	it makes it costly to implement?
14		MR. ROSCH: Same objection, but go
15	ahead if you have the knowledge,
16		THE WITNESS: Sometimes the -- their
17	product is very tightly integrated more than
18	anyone's. So to implement something here you need
19	to consider what it does to a ripple effect down
20	the line as best as I can explain it.
21		So you're just not putting in this.
22	You're considering everything else. We call it
Kender 05-11-04 00266
1	business process reengineering The consultants
2	grab on to that and really expand it and it has
3	created many cost overruns over the years, and
4	that had been their Achilles heel for many years
5	for real. But some people will take that and
6	embellish it and make it seem worse than it is,
7	and that occurs -- and that happens to them more
8	than others because of the real issue at hand.
9	BY MR. ANDEER:
10		Q. Turning to 125 again. In it you say,
11	"PeopleSoft is the enemy." And you said that
12	because -- why is PeopleSoft the enemy in this--
13	in this chain, in this context?
14		A. Because in HR they had been selling
15	in the U.S. market for 12 years, as I had
16	mentioned earlier, therefore, they had a longer
17	time to build a larger customer base and had the
18	mindshare of many of the people in that room. And
19	although Bob had recently come foam SAP and knew a
20	lot about them, he would be so inclined to set
21	them up negatively compared to what we were able
22	to do, I want to tell him that PeopleSoft is our
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1	bigger competitor than SAP right now.
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