P3059: CID - Mark Johnson (Oracle), Videotaped Deposition Transcript

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Government Exhibit P3059 [Non-designated testimony redacted]

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16	THE VIDEOGRAPHER: Will the reporter
17	swear in the witness, please.
18	Whereupon,
19	MARK JOHNSON,
20	a witness, was called for examination and, having
21	been duly sworn, was examined and testified as
22	follows:

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10	Q. Okay. Mr. Johnson, with whom are you
11	currently employed?
12	A. Oracle Corporation.
13	Q. And how long have you been employed with
14	Oracle?
15	A. I started in 1989.
16	Q. And what is your current official title?
17	A. Senior vice president, federal sales.
18	Q. And how long have you held that position
19	in federal sales?
20	A. I believe 1998.
21	Q. What position did you hold at Oracle
22	before '98?

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1	A. I ran our civilian sales. I was
2	director of civilian sales for Oracle.
3	Q. Any other positions at Oracle?
4	A. Before that I was a branch manager
5	within our civilian sales organization. And
6	before that I was a sales representative in the
7	civilian organization.
8	For the record, I did -- I had been at
9	Oracle since 1989. I did leave for three months
10	in early -- I think it was 1992, but I came back.
11	So there was a three-month period where I left and
12	came back, just so you know.
13	Q. Okay. And what did you do during that
14	time?
15	A. I left, went to a company, and shortly
16	came back.
17	Q. Okay. And how long were you the
18	director of civilian sales?
19	A. Approximately two years.
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3	Q. -- as senior vice president of federal
4	sales at Oracle. What would you say are your
5	primary responsibilities in that position?
6	A. I run the sales organization to the
7	federal government, the product sales.
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13	Q. And, in that capacity, you're familiar
14	with the sales process to federal customers?
15	A. Yes.
16	Q. Okay. And you possess knowledge of the
17	product functionality?
18	A. Yes.
19	Q. Is it part of your responsibility to
20	keep current with the federal marketplace
21	generally?
22	A. Yes.

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1	Q. The trends in the marketplace --
2	A. Yes.
3	Q. - in technology and applications?
4	A. Yes.
5	Q. Also, I guess generally, the
6	requirements for a federal customer, what they're
7	seeking in technology and applications?
8	A. As far as I can, yes. I try to keep as
9	current as possible.
10	Q. And, with that, are you familiar, then,
11	just in your responsibilities, with the rules and
12	regulations that affect the applications that are
13	sold to the federal customers?
14	A. Yes.
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3	Q. Who runs the government, education and
4	healthcare, I guess, section?
5	A. Kevin Fitzgerald.
6	Q. And is that who you report to directly?
7	A. Yes.
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5	Q. How is that different than the product
6	that is offered to the commercial customer?
7	A. It's -- we develop a financials product,
8	and then, for different industries, we will
9	develop enhancements for those specific
10	industries.
11	For example, in the federal government
12	there are certain legislative or regulatory
13	requirements that they have, that we have to
14	ensure that we meet within our software. And our
15	development organization will include those in the
16	software.
17	Q. Okay. If you can elaborate on the --
18	you said certain regulatory requirements that are
19	developed with the software. What do you mean by
20	that?
21	A. The way the government operates is
22	different, in some cases, than the private sector.

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1	So the way the private sector may close their
2	books, the way the private sector handles money,
3	let's say, is different, in some cases, than the
4	public sector. So the software has to conform to
5	that in order to meet the needs of the federal
6	government or other government entities.
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3	Q. But is the federal sector general ledger
4	functionality unique in comparison to the private
5	sector?
6	A. There's different processes, different
7	functions that would have to be performed.
8	However, the software that's developed, the
9	commercial release, is the platform for which we
10	build and execute for the federal government.
11	So, in the federal government, you would
12	have additional requirements, let's say, that
13	would have to be added to a product so that you
14	were compliant with how the federal government
15	required a module, like general ledger, to work.
16	Q. Okay. You said that you build these
17	modules to meet the federal requirements. What
18	exactly do you mean by that? Are you writing
19	software code for that?
20	A. We have a development organization,
21	engineers, who develop product. So they are the
22	individuals I'm referring to.

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1	Q. And they write code specific to meet the
2	functionality requirements that are demanded by
3	federal customers?
4	A. Yes.
5	Q. And one example of that is these core
6	functionalities that you were talking about, the
7	four core functionalities within the financial
8	management product that you offer to federal
9	customers?
10	A. Well, those four modules are offered to
11	the private sector as well.
12	What I'm referring to would be as it
13	relates, let's say, to JFMIP and the requirements
14	that they distribute to the software community.
15	An engineering group -- a development organization
16	will have to look at those requirements and ensure
17	that the software that was developed could meet
18	those needs and, if not, they'd have the developer
19	enhance the software.
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9	Q. And what do you do to -- what has been
10	done to federalize HR?
11	A. We collect requirements from agencies.
12	We fuel them back through product development, the
13	engineers. And they, through their
14	product-release cycles, will develop product. So
15	as we release to Oracle customers, it includes
16	that capability for the federal government.
17	Q. And what are some of the unique
18	capabilities of the federal government, within HR,
19	that are demanded?
20	A. I believe there is something called an
21	SF52, which is a standard form that the government
22	uses to track personnel actions. I believe that's

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1	unique. I'm sure there's many other areas. I
2	just can't go into details around those areas.
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5	Q. And you said it's the responsibility of
6	the sales team to understand the customer needs.
7	What exactly is involved in that? What does a
8	sales team do to understand the customer's needs?
9	A. There's not just one individual that
10	does that. There is a sales representative, but
11	they are merely a facilitator, I will say, to a
12	customer.
13	So, for example, the Department of
14	Justice, as an example, has a number of sales
15	representatives within my group that service the
16	Department of Justice. They will assemble a
17	number of other resources that help them manage an
18	account, and that team will meet with various
19	individuals across Department of Justice,
20	understand what their IT requirements are, and
21	they will, in turn, consistently meet with a
22	customer, like DOJ, to understand what those

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1	business requirements are, propose solutions to
2	help them meet those needs.
3	So it's more of an iterative dynamic
4	process that we establish with all the customers
5	that we have within my responsibility.
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20	Q. Let me ask in sort of a different way.
21	How do you know, from your perspective, what to
22	propose to the customer, if they're asking for a

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1	financial management system, whether it be your
2	outsourcing service or maybe just selling them a
3	license to your application?
4	A. We read the requirements within that
5	request for proposal and respond to the
6	requirements.
7	Q. Okay. So the requirements will dictate
8	what type of proposal you give, whether it's
9	applications or whether you're outsourcing the
10	service.
11	A. Sure.
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16	Q. Back on page 20, the strategy for HR,
17	under the applications initiative. The second
18	sentence there reads "target competitive win-back
19	accounts with replacement strategies."
20	A. Yes.
21	Q. What does that mean?
22	A. Accounts where they may be running

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1	another product. Go back in and try to win it
2	back.
3	Q. Another vendor's product, HR product?
4	A. Yes.
5	Q. And how do you -- how do you target, you
6	know, your competitive win-back accounts?
7	A. I think customers that have purchased a
8	product and have failed in implementing it, that's
9	one potential win-back.
10	Customers that have purchased a product
11	and are not referenceable, for example. They may
12	have it up and running, but they're not happy with
13	the experience or the software. That could be a
14	potential win-back as well.
15	So we'll look at accounts or services
16	like that and see if there's an opportunity for us
17	to come back in and sell our software.
18	Q. Is there a particular vendor that you
19	target specifically for the competitive win-back
20	accounts?
21	A. For HR?
22	Q. Yes.

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1	A. PeopleSoft is -- they have a lot of the
2	core HR systems today. So they would be,
3	probably, the primary software company that we'd
4	be going after as it relates to owning some of the
5	core HR functions today in the federal government.
6	Q. They have the majority of HR
7	installations in the federal government for HR,
8	the core HR?
9	A. I wouldn't say they have the majority.
10	They have a number of agencies that have selected
11	them years ago.
12	Today, I'm not seeing a lot of core HR
13	procurements, I will say. A lot of those
14	procurements have been done many years ago. A lot
15	of what I see today, from an HR perspective, are
16	the surrounding modules, the things like
17	self-service, things that compliment a core HR
18	system.
19	And in that case, you know, there's a
20	number of -- whether it's SAP or PeopleSoft or
21	niche solution providers can - that we would, you
22	know, provide or go competitively against in that

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1	area.
2	But this bullet is referring to where
3	customers have selected a COTS package, let's say
4	a PeopleSoft, and how they're doing, and are they
5	potential for possibly getting Oracle in there.
6	Q. Okay. And the vendor that you would
7	target most often for these type of accounts would
8	be, as you testified, was PeopleSoft?
9	A. Yeah. I'd say they have most of them,
10	that we'd be targeting here.
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8	Q. Okay. Are you aware of any other vendor
9	that has a core HR implemented at any of these
10	agencies, aside from the ones that are listed.
11	PeopleSoft and, you said, SAP for a couple of
12	those. Any other vendors?
13	A. I don't believe so. I think it's
14	Oracle, SAP, and PeopleSoft for the HR. I
15	believe. That's my understanding.
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5	Q. First, let me ask, you testified earlier
6	that AMS doesn't have an HR product for the
7	federal market, correct, that you're aware of?
8	A. I'm not aware of one. No, I'm not.
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8	Q. And when you are in selling an ERP
9	application, such as your core financial
10	management or your HR, how you sell or what you
11	propose depends on who you're up against?
12	A. Not necessarily. As I mentioned
13	earlier, any acquisition that we go into, there is
14	a set of capabilities that we provide, and we are
15	going to communicate those to a customer. Okay?
16	Regardless of whether we're going up against
17	multiple competitors.
18	So if you're going up against one
19	company or five companies, you're going to follow
20	the same process, communicate the same
21	differentiators, let's say, when you're up in
22	front of a group or trying to help them make a

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1	decision around a software package.
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19	Q. Speaking specifically about the HR
20	marketplace with federal customers.
21	A. Yes.
22	Q. Earlier you testified that SAP,

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1	PeopleSoft, and Oracle are the primary competitors
2	in that space; is that correct?
3	A. From a COTS, commercial off-the-shelf
4	software perspective, yes.
5	Q. What other vendors, if any at all, do
6	you compete with to sell commercial off-the-shelf
7	software HR solutions to federal customers?
8	A. The only other competition we'd have
9	would be existing systems that they have, an
10	existing system that's currently running, and
11	they'd have to make a decision whether or not they
12	wanted to go out and automate that.
13	You're also competing with the
14	franchise-fund agencies -- the NFCs, the
15	Interiors -- that actually have COTS solutions
16	that they're cross-servicing other agencies. They
17	are a competitor.
18	And then you have systems integrators
19	who may come in with a creative proposal to
20	actually provide a software as a service through
21	their host of capabilities.
22	So the traditional -- the traditional

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1	acquisition of "I have three companies," when you
2	enter in outsourcing or software as a service, it
3	changes that paradigm to offer a lot of
4	opportunities and alternatives to federal
5	customers today.
6	Q. And just to clarify. The systems
7	integrators, they will come in and compete for the
8	business using, say, a license software they
9	received from PeopleSoft, SAP, or Oracle, for
10	example.
11	A. Yeah, but let me clarify. The
12	government, when they send out a solicitation for
13	a service, they don't care what software is
14	running in that service.
15	For example, TSA came out with an RFP a
16	year or so ago. I don't know if you're aware of
17	that one. They were looking for a service for
18	their human resource requirements. They never
19	stipulated a product. They wanted a service.
20	Accenture actually won that with an already hosted
21	solution that they had.
22	So, yes, they have to, obviously, go out

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1	and buy a package or have a package already
2	running. But, in many cases, it's not something
3	the agency is going to dictate or allow them to
4	compete. They're going to provide what they have.
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15	Q. And why is it that some of these
16	discounts varying? What's your assessment of why
17	the discounts vary between the different
18	opportunities that I've been presenting you?
19	A. It depends, you know, how well you're
20	positioned in an account.
21	Q. And what do you mean by how well you're
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1	A. You know, how are you perceived in an
2	account, for example. You know, are you -- have
3	you been working in the account for a long time,
4	do you have a presence, that type of thing. In
5	some cases, if you're not in early, you're just
6	coming in at the end, you might be asking for high
7	discounts, like in this situation.
8	Q. That's what occurred here? Oracle was
9	coming in at the end?
10	A. We were not well positioned for this
11	opportunity.
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Updated August 14, 2015