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P3062: CID - Richard Scott Elliott (Kerr-McGee), Deposition Transcript

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Government Exhibit P3062 [Non-designated testimony redacted]
21Q   Okay. And can you please state your full
22name and address for the record, sir?
23A   Richard Scott Elliott, 410 North Mercedes
24Drive, Norman, Oklahoma 73069.
15Q   Mr. Elliott, what is your current job
17A   Human resources portfolio manager for --
18or in information management and technology.
19Q   And who is your current employer?
20A   Kerr-McGee Corporation.
21Q   And how long have you held this position
22at Kerr-McGee?
23A   Three years and a few days.
24Q   And can you please give me a general
25description of your job responsibilities in your
1current position?
2A   Sure. I manage a group of IT
3professionals that supports several of our
4corporate clients, human resources, legal and
5medical groups.
6Q   How many IT professionals do you manage?
7A   Eight other folks besides me.
8Q   And how many of those report directly to
10A   All of them.
18Q   Do you also do any work that would
19support the financial aspect of Kerr-McGee?
20A   No, that's handled by another group in MI
21& T.
22Q   Is there another person who would be
23considered your counterpart that handles the
25A   Yes.
1Q   And who is that?
2A   Bryan Wilks.
3Q   And what's his position?
4A   Portfolio manager as well for financial
6Q   And do your job responsibilities also
7include responsibility for software procurement?
8A   In an advisement capacity, yes.
9Q   What do you mean when you say in an
10advisement capacity?
11A   Our strategy at Kerr-McGee is that our
12customers are the ones who drive software
13procurement decisions and we are advisors to them
14in that process.
17Q   Are you also responsible for working to
18insure that Kerr-McGee gets the best deal that it
19can on software procurement?
20A   We act in different roles depending on
21the, depending on the procurement activities.
22Q   Is it ever a goal to try to get the best
23value or best price that you can on software
25A   Always.
9Q.   (By Ms. McKinney) Can you explain to me
10generally what the nature of Kerr-McGee's
11business is?
12A   Yes. Again, back to our two main lines
13of business, oil and gas exploration and
14production and then chemical manufacturing. Our
15main product is titanium dioxide, a pigment. We
16do produce a few other electrolytical chemicals
17and for a short period of time we still have a
18small business producing railroad ties. It's
19being phased out at the end of this year.
20Q   And does Kerr-McGee have any
21operations -- or let me ask it this way. In what
22geographical areas does Kerr-McGee have
24A   We have operations, I don't know how many
25states, but across the United States and to my
1knowledge we have operations in Brazil, Bonine,
2Morocco, Australia, China, the Netherlands,
3Germany, the UK. Those are the major ones.
2Q   So given the definitions that you've just
3given me, does the oil and gas division have
4independent authority for procurement of any ERP
6A   In my experience at Kerr-McGee, those ERP
7software decisions have been global decisions,
8not business unit specific.
9Q   And what do you mean by global decisions?
10A   We, our preferred strategy at Kerr-McGee
11is to have for each major functional area one
12global supplier of software. In financials we
13have one, in HR we have one. We have not been
14able to accomplish that yet in the supply chain
15side to my knowledge.
18Q.   (By Ms. McKinney) And how would you
19define core functionality on the financial
20management side?
21A   The general ledger, accounts payable.
22There are a variety of for us revenue or I should
23say upstream oil and gas specific accounting
24functions that would be core for us. I'm sure
25there's a variety of others that could be listed,
1but those are the ones that are main ones for us
2in my opinion.
3Q   Do you know what any of those oil and gas
4specific accounting functions are?
5A   Some.
6Q   Can you name them for me?
7A   One would be -- the two major items are
8tracking production and then tracking the revenue
9that we receive for production.
1Q.   (By Ms. McKinney) Would these
2accounting functions you've just named, tracking
3the production and tracking revenue, are those
4functions that are specific to an oil industry or
5to an oil company?
6A   That's not my area of expertise, but it
7would seem to be so because that is oil and gas
8production and oil and gas revenue.
9Q   Which software vendors offer core
10financial management functionality?
11        MR. HAMMAKER: Objection, vague and lacks
13        THE WITNESS: I don't know the complete
14list. Again, not my area of expertise or
16Q.   (By Ms. McKinney) Do you know some?
17A   Yes.
18Q   Which ones would you name?
19A   The ones I can specifically name would be
20PeopleSoft, Oracle, Lawson and SAP.
21Q   And with regard to human resources
22management core functionality, which vendors
23offer HR core functionality?
24A   Again, I don't know the complete list,
25but I would list the same four.
1Q   Any others?
2A   It's my understanding that Microsoft
3purchased Great Plains, which I believe offers in
4name at least those core functionality.
25Q   But you don't have the same level of
1knowledge about Lawson, SAP or Microsoft that you
2do about Oracle and PeopleSoft?
3A   The Oracle and PeopleSoft knowledge is
4more current than the other two because we did
5not -- or the other three. We did not have
6detailed evaluations of Microsoft and of SAP
7during our selection process. Lawson I do have a
8feel but not detailed modules or detailed
3Q   Mr. Elliott, who would you name to be the
4foremost ERP software vendors currently?
5        MR. HAMMAKER: Objection, vague, lacks
7        THE WITNESS: Based on our process and a
8review of Gartner recommendations, the same four
9I listed previously, PeopleSoft, Oracle, Lawson
10and SAP.
8Q.   (By Ms. McKinney) And in your opinion
9what factor or factors drive innovation in the
10software industry?
11A   I would list competition, business
12environment changes, customer demands, regulatory
10Q   Do you consider Kerr-McGee's ERP software
11needs to be complex?
12A   Yes.
13Q   Do you consider them to be unique?
14A   No.
23Q.   (By Ms. McKinney) Mr. Elliott, what
24core financial management software does
25Kerr-McGee use?
1A   Oracle.
2Q   And --
3A   And Energy Extensions from P2ES.
4        THE REPORTER: P2BS?
5        THE WITNESS: ES.
6Q.   (By Ms. McKinney) Do you know what
7modules it uses from Oracle on the finance side?
8A   I do not know for sure.
9Q   And what is Energy Extensions?
10A   To my knowledge that deals with all of
11the oil and gas specific revenue accounting
12including production.
13Q   Would you consider that a point solution?
17        THE WITNESS: I really could go either
18way on that. It's integrated with Oracle. I
19think, my opinion would be that it is not.
23Q   And why would it not be considered a
24point solution in your opinion?
25A   Oracle integration.
5Q   Is the Oracle financial management
6software used in both the oil and gas and the
7chemical manufacturing business units?
8A   Yes.
2Q   Are there any business units within
3Kerr-McGee that use some other financial
4management software besides Oracle?
5A   If there are I don't know.
6Q   Do you know when Oracle financial
7management software was initially purchased or
9A   Prior to the year 2000.
18Q   Do you know what languages Kerr-McGee
19operates the Oracle financial management software
21A   I do not.
22Q   And do you know what currencies are used
23on the Oracle financial management software, if
24there are any foreign currencies used?
25A   I'm sure there are, but I don't know
1specifically what we use.
17Q   We'll shift to the HR side now.
18What core HR software does Kerr-McGee
19currently use?
20A   PeopleSoft.
21Q   And is the PeopleSoft software used in
22all geographic regions where Kerr-McGee operates?
23A   Yes.
24Q   And are there any business units that do
25not use the PeopleSoft HR software?
1A   No.
2Q   And when was the PeopleSoft HR software
3initially purchased or licensed?
4A   2001.
7Q   And do you recall how much Kerr-McGee
8paid PeopleSoft?
9A   There are documents that support this. I
10believe the license fees were in the neighborhood
11of 1.5 million.
12Q   And did Kerr-McGee pay PeopleSoft any
13implementation fees?
14A   No. They were not our implementation
16Q   And does it currently pay PeopleSoft,
17does Kerr-McGee currently pay PeopleSoft any
18maintenance fees?
19A   Yes.
20Q   And how much does it pay in maintenance
22A   This year it will be approximately
23360,000,I believe, this year.
24Q   Do you know what it has been in previous
25years since the implementation?
1A   Yes.
2Q   What has it been?
3A   The first year was 300,000, succeeding
4year was around 330 and then I believe about 345.
5Q   That brings us to this year, which was
7A   Uh-huh.
8Q   What version of the PeopleSoftHR
9software does Kerr-McGee use?
10A   Is there a specific module that you're
11asking about?
12Q   I guess we should back up. Which modules
13were licensed?
14A   We have HR, we have time and attendance,
15we have licensed payroll, benefits
16administration, data warehouse. There are three
17analytic suites that we have licensed, Workforce
18Analytics, Score Card and Rewards. In case I'm
19missing any of these there's a document in our
20material that reflects all of them. Employee and
21manager self service and a variety of E modules
22such as compensation, recruiting, compensation
23manager, E pay.
10Q   In which languages does Kerr-McGee
11operate the PeopleSoft HR software?
12A   Currently English, German and Dutch.
13Q   And do you have any plans to operate it
14in any additional languages?
15A   Not at the moment.
16Q   And in which currencies, if there are any
17foreign currencies involved, does Kerr-McGee
18operate the PeopleSoft HR software?
19A   Foreign is highly dependent on where you
20are, but if you're talking non U.S. currencies --
21Q   Non U.S., yes.
22A   Yes. We -- I'm sorry, we also use
23French. For -- we use the pound in the UK, we
24use the euro, we also use the Swiss frank, we
25also have a Canadian dollar. And I believe
1that's it. I think the rest of our folks are ex
2pats, and so it would be the U.S. dollar.
3Q   Are these foreign currencies that you
4named, are those currencies in which employees
5are being paid?
6A   Yes.
8Q   Is there any other human resources
9management software that Kerr-McGee uses?
10A    No. We have one global instance.
11Q   Do you use any software from any of the
12following vendors? And I'm going to go down the
13list. Do you use any software from SAP?
14A   Kerr-McGee does not. We contract for
15payroll processing in Germany with a company who
17Q   What do you mean when you say you
18contract for payroll processing?
19A   We pay a fee each year for a company to
20produce payroll checks for us in Germany.
21Q   Is that similar to outsourcing payroll?
22A   It's outsourcing the production of
24Q   But would you consider it outsourcing of
25the payroll function?
1A   No.
2Q   Just the check process?
3A   We take care of the function, they
4produce the checks. It's not BPO.
14Q   Do you use Hyperion?
15A   I believe we do for some financial
16planning, but I am not 100 percent certain.
7Q   And do you use any software from ADP
8aside from the payroll processing in Germany?
9A   We outsource payroll, check production to
10ADP in the United States. And there is a piece
11of software that lives at our site that enables
12that to happen.
13Q   Do you outsource any other part of the
14payroll function aside from check processing?
15A   ADP handles production of checks, direct
16deposits, tax filing. Other than that we do all
17of the process work ourselves.
8Q.   (By Ms. McKinney) I'd like to ask you
9now about the process through which you selected
10PeopleSoft for HR software.
11A   Okay.
12Q   When did that process begin?
13A   The actual selection process began
14shortly after my arrival at Kerr-McGee, which
15would be June 2001.
16Q   And who was the primary person
17responsible for the selection of new HR
18management software?
19A   The lead person would have been Lynda
1Q   Is she still with Kerr-McGee?
2A   She is.
3Q   Do you know what her title is now?
4A   I do not. She's in the finance
11Q   And do you know if Ms. Garcia was the
12person who managed the project on a day to day
14A   The selection project?
15Q   Yes.
16A   She was, she was our lead person on the
17Kerr-McGee side.
18Q   Did she have any title associated with
19the selection process such as project manager or
20something similar?
21A   Not that I'm aware of.
22Q   And what was your involvement in the
23selection process?
24A   I was the I think technical lead was the
25official title.
1Q   And what did that mean in practical
3A   Practical terms, I managed our group of
4individuals from the IT side that participated in
5the selection process. I also participated in
6day to day activities such as question formation,
7reviewing demonstrations, doing research if
8Q.   (By Ms. McKinney) And what do you
9recognize this document to be? And let me just
10say for the record, this document appears to be a
11Power Point, on the front it's entitled
12Kerr-McGee HR Financial Analysis, Employee
13Service Center and HRIS dated September 2001 and
14Bates labeled Kerr-McGee 008 through 040.
15        Mr. Elliott, what do you recognize this
16document to be?
17A   This document is a summarization of the
18HR strategy that our HR organization was pursuing
19in 2001.
24Q   The first one says project consultants,
25Scott, Madden & Associates. And who was Scott,
1Madden & Associates?
2A   An HR consulting firm.
3Q   And what was their role on the HR
4software selection process?
5A   It's described well here. They were
6facilitators for the process.
7Q   And what did they do as facilitators?
8A   A facilitator, possibly coordinator is an
9equally good term. They organized the work
10products, facilitated discussions, facilitated
11planning, were responsible for not only the HRIS
12side but integrating it into the larger HR
13strategy that this document represents. And that
14was their sole involvement. As it states here,
15they do not have or at least did not have at that
16time an HRIS implementation practice.
2Q   Why did you feel it was necessary to
3engage a consultant to assist in this process?
4A   I can't answer for Lynda.
5Q   Was it Lynda who made the decision to
6engage Scott, Madden?
7A   It was the HR organization as a whole and
8Lynda was our point person.
9Q   And who was the main point person for
10working with Scott, Madden?
11A   Lynda and I were both part of the, quote
12unquote, project office, but Lynda was our point
13person on the project within.
14Q   Do you know how much Kerr-McGee paid
15Scott, Madden for its consulting services?
16A   I do not.
17Q   Would Lynda know?
18A   It's been a while. You'd have to ask
25Q.   (By Ms. McKinney) Now, next on this
1list it says HRIS project office.
2A   Uh-huh.
3Q   Do you know what that term means?
4A   I know what it means with regards to our
5selection process.
6Q   Sure. What was the HRIS project office?
7A   Would you like me to read it straight off
8the document?
9Q   No. I would like to know, you know, what
10you know. If the document helps to refresh your
11recollection, that's fine, but I'd like you to,
12you know, testify based on your knowledge.
13A   My view of the HRIS project office, the
14responsibilities again are listed here
15specifically. We as a group were responsible for
16coordinating, well, the execution of the project,
17obtaining resources, doing the visits as we
18discussed. There were a lot of discussions
19regarding what questions would be asked, what
20weighting would be assigned to each one of the
21criteria, how the RFPs or RFIs would look after
22they were issued and we were facilitators,
23coordinators on all those. My personal main task
24was to coordinate the technical resources
1Q   Were you a part of the HRIS project
3A   Yes.
4Q   Who else was a part of the HRIS project
5office, do you know who made up that group?
6A   Lynda Garcia was the main person and
7officially we included Scott, Madden as a part of
8the project office.
25Q   And then these boxes here on Page 7, you
1said these are all people who participated in the
3A   Yes.
4Q   Anda are these all groups that would be
5end users of the software?
6A   Yeah.
11Q.   (By Ms. McKinney) How were these people
12selected to participate in the selection process?
15        THE WITNESS: I don't recall the exact
16process we went through to choose the folks. The
17goal was to have people representing as many
18different areas in the HR organization as we
19could and plus involve technical people in from
20several of our major areas as well.
21Q.   (By Ms. McKinney) Who selected these
22people who were participants in the software
23selection process?
24A   I'll go back to my previous answer. I
25don't know the exact details of how we selected
1these people. As I look through here it was I
2believe my recommendations on the technical side
3to say these are the people that need to
4participate based on their areas of expertise.
5Q   And was Lynda Garcia responsible for
6selecting the other people involved here?
7A   I'll say again, I don't know the details
8of how they were selected.
9Q   But you selected the people listed in
10this box labeled technical who are here under
11your name?
12A   Yes.
13Q   And are those the people you referred to
14earlier who you were responsible for managing
15throughout the selection process?
16A   For this process, yes.
17Q   Were you responsible for managing anyone
18else on this chart?
19A   No.
20Q   Was Lynda Garcia responsible for
21coordinating the other people in these other
22boxes on this page?
23A    Yes. She served as the functional lead,
24if you will.
24Q   Can you tell me what, what the role of
25subject matter experts was in this process?
1A   As I recall, basically the document says
2input and guidance. Many of these folks would be
3consumers of, as I recall, some of the services
4within the HRIS.
12Q   Did the -- did the technical team that
13you were responsible for managing meet on a
14regular basis throughout the selection process?
15A    Yes. We had scheduled meetings plus as
16needed meetings depending on what was happening
17in the process.
18Q   Let me back up just a second. How long
19did the selection process take in total?
20A   We started this in June of 2001, the
21contract was signed I believe at the end of
22October 2001.
23Q   And how frequently did the technical team
24meet during that time?
25A   I don't think there was any standard
1number of meetings we had on a weekly basis.
2Q   So you didn't have some kind of regular
3set time for meeting?
4A   No. There was -- as I recall, there were
5group meetings where the entire group met
7Q   Would that have been the entire --
8A   Core selection team.
9Q   -- core selection team?
10Including your technical team?
11A   Yeah.
12Q   And how frequently were those meetings?
13A   I think it depended on where we were in
14the process. I can't recall the exact schedule.
15Q   Could you estimate the total number of
16times that the HRIS core selection team met over
17the course of the selection process?
18        MR. GORESEN: I'm going to object to the
19extent it calls for speculation.
20        THE WITNESS: Anything I gave you would
21be a guess.
5Q   And with regard to your technical team,
6can you estimate how many times your technical
7team met on its own throughout the entire
8selection process?
9A   As an estimate, we were visiting maybe
10not in total but at least, you know, two or more
11weekly basis. We did not have a set time where
12we got together as an entire team, only as
Q   I'm not going to ask any more questions
1on this document for a little bit.
2        What were the main responsibilities of
3your technical team in this process?
4A   To review, to the extent we could, the
5technical soundness of the proposed solutions.
23Q   Do you know if any presentation was ever
24made to the CEO or other executives regarding the
25selection of PeopleSoft?
1A   I believe there was.
2Q   And were you part of that presentation?
3A   No.
4Q   Who did that presentation?
5A   I believe Lynda did.
6Q   Do you know when that was?
7A   I do not know the exact date. My surmise
8would be either late September or early October.
9Q   Did you work with Lynda at all in
10preparing that presentation?
11A   Scott, Madden was again the main
12facilitator for producing documents, but I did
13participate with Lynda as well.
3Q   In addition to Scott, Madden, did you
4consult with any other outside resources as part
5of the selection process?
6A   One would have been Gartner.
7Q   And what was your interaction with
8Gartner Group?
9A    We asked the question who would be their
10I believe the term is magic quadrant vendors with
11regards to the HR space.
12Q   And what did they tell you?
13A   PeopleSoft, Oracle, SAP, Lawson.
13Q   And did you personally have contact with
14someone at Gartner Group?
15A   I did not.
16Q   Do you know who did?
17A   I believe Lynda.
18Q   And do you know if she met with them in
20A   I do not know for sure.
21Q   Do you know if she had personal contact
22with them at all?
23A    Yes. I know for a fact there was
24definitely a phone visit. At that time we had a
25subscription to their services, so I don't know
1if there was anything else involved.
2Q   Do you know if they provided Kerr-McGee
3with any written research report?
4A   I don't know. Ours was a fairly simple
5and straightforward question.
6Q   So you never saw some written research
7report from Gartner Group?
8A   No.
9Q   So the information that came from Gartner
10Group you got through Lynda Garcia?
11A   Yes.
24Q   At what stage did you make reference
1A   After, I believe, the field had been
2narrowed to PeopleSoft and Oracle.
3Q   So you didn't call any references for
4Lawson or SAP?
5A   None.
25Q.   (By Ms. McKinney) Do you consider
1yourself to be a sophisticated customer of EAS
3        MR. GOREEN: I'm going to ask for -- are
4you asking if Scott Elliott considers himself to
5be a sophisticated customer?
6        MS. McKINNEY: Yes.
7        THE WITNESS: When it comes to
8Kerr-McGee's needs, yes.
9Q.   (By Ms. McKinney) Could you describe
10for me the main steps in the process of selecting
11the PeopleSoft HR software, if you know?
12A    You have the documents that describe all
13of them. At a high level, again, based on
14Gartner's recommendations, we identified four
15companies that we felt like we should pursue.
16All four companies were contacted to let them
17know that we were actively engaged in a selection
18process. PeopleSoft, Oracle and Lawson
19responded. SAP did not. The request for
20information and detailed questions were
21developed, sent out and received back from those
22three vendors. We had on site demonstrations at
23Kerr-McGee from those three vendors. The RFI
24responses and the presentations were graded by
25the HRIS selection team. Lawson was eliminated
1based on that grading. PeopleSoft and Oracle
2returned for additional demonstration. Two
3visits were made, one to Oracle headquarters, one
4to a PeopleSoft executive gathering. Reference
5calls were made. The team made the
6recommendation to upper management and they
12Q   Were there any other factors that went
13into developing that list of what four vendors
14Kerr-McGee would consider?
15A   Yeah, there were two other vendors
16that -- I'm not sure, I can't remember the exact
17nature of the research we did, but Baan and J.D.
18Edwards were both considered in addition to those
19four folks. Based on what we could determine, I
20would think primarily from J.D. Edwards website,
21it looked like they lacked the international
22functionality that we thought we needed. Baan
23was in serious financial difficulty prior to
24their acquisition by SSI.
18Q   And then you mentioned that all four of
19the vendors on your list, Oracle, PeopleSoft, SAP
20and Lawson, were contacted?
21A   Correct.
22Q   In what way were they contacted by
24A   I believe Lynda Garcia phoned each one of
25them personally.
1Q   And do you know about what time frame
2this was in?
3A   It would have been in June, I believe.
4Q   And were you on any of those phonecalls
5that Lynda Garcia made?
6A   No.
7Q   Do you know the nature of the phonecalls
8or what she said to them?
9A   Back to my previous, previous answer. It
10would have been that we were actively engaged in
11an HR selection process and we were contacting
12them to solicit their participation and to also
13find out where we should send our request for
15Q   At the time that she called each of those
16four, do you know if Kerr-McGee intended to send
17each of those four vendors an RFI?
18A   I believe that was our intent.
19Q   And did she ask for any response from
20them during those phone conversations? That is,
21was she seeking any response from them prior to
22sending the RFI?
23        MR. GORESEN: I'm going to object to the
3A To the best of my knowledge it was to
4whom and where should we send the RFIs.
5Q And you said that three responded?
6A Yeah.
7Q And which three were those?
8A PeopleSoft, Oracle and Lawson.
9Q And SAP did not respond?
10A   Correct.
11Q   And what does that mean?
17Q.   (By Ms. McKinney) Does that mean -- did
18Lynda talk to anyone at SAP?
19A   I do not know specifically who she would
20have talked to. They did not provide the
21information which was who should we send the RFI
22to and to where should it be sent.
23Q   Do you know if she, if she was able to
24get anyone on the phone and speak with them?
25A   I do not know.
1Q   Do you know who she tried to call at SAP?
2A   No.
3Q   Do you know if she left a voice-mail with
4anyone at SAP?
5A   I wasn't in on the call. I don't know if
6she talked to a person or left a voice-mail.
7Q   Do you know if she ever sent any written
8communications to SAP?
9A   Not that I'm aware of.
10Q   Do you know if she made any subsequent
11attempts to contact SAP either by phone or
12through written communications?
13A   I believe there was more than one
14attempt. I don't know how many.
15Q   Do you know how long of a time period she
16spent trying to get in touch with SAP?
17A   No, I don't know exactly. The documents
18we have we don't list the dates that, you know,
19exact dates the RFIs went out or when the
20phonecalls were made or when they were contacted.
21Q   And to your knowledge did SAP ever
23A   Yes.
24Q   Do you know when they responded?
25A   I don't know the exact date.
1Q   Do you know --
2A   Our documents --
3Q   -- the approximate date?
4A   Our documents state that it was while the
5process was well underway. I believe it was
6after we had already received RFI responses from
7the other vendors.
8Q   Do you know how SAP responded at that
10A   Other than calling Lynda, no.
11Q   Do you know that they called Lynda?
12A   Yes.
13Q   And do you know -- but you don't know
14anything else about their response?
15A   No.
16Q   Do you know if they at that point were
17seeking to compete for Kerr-McGee's HR business?
18A   Yes.
19Q   And Kerr-McGee declined to entertain any
20bid from SAP?
21A   Correct. We did not send them an RFI.
22Q   Why did Kerr-McGee decline to send SAP an
24A   They did not meet our requests for
25information and we were already well underway in
1the process.
2Q   Was there any other reason that you
3didn't entertain SAP in the process?
4A   I don't know what it would have been, no.
4Q.   (By Ms. McKinney) Did you have to
5purchase any new hardware in order to install the
6PeopleSoft software?
7A    Yes, we did. We did not have the
8hardware infrastructure that would have supported
10Q   Can you describe for me what hardware you
11had to purchase?
12A   Sure. We purchased a database server,
13that's HP, we also purchased a file and print
14server, two application servers, two web servers
15as well as a load balancer and that was for our
16production environment. Let me make one slight
17change. The database server already existed but
18we purchased a significant amount of disc and
19memory to upgrade that. We also chose to
20purchase a test environment that consisted of one
21database server, one web server, one app and file
23Q   Why did you need to purchase new hardware
24in order to implement the PeopleSoft HR software?
25A   That's what the software called for.
1Q   So, the hardware you had previously would
2not have been sufficient in order for you to run
3the PeopleSoft -
4A   No.
5Q   -- software?
22Q   I guess prior to, prior to the time that
23you went forward with the selection process and
24undertook to evaluate different ERP vendors, did
25you have to develop some sort of business case to
1justify simply the decision to purchase some new
2HR --
3A   Software?
4Q   -- software?
5A   A business case I think in the strictest
6MBA sense was not required. Excuse me. We had,
7we had the situation in the United States that
8our vendor was no longer supporting our software
9and the cost had been such and the limited
10capability had been such that we knew we had to
11do something different.
12Q   Did you consider trying to upgrade your
13existing software?
14A   The vendor was no longer marketing,
15developing or doing anything with that software.
16There was not an upgrade path.
17Q   Could it have been upgraded using
18independent consultants?
19A   In what way?
20Q   Could -- even though the company was not
21continuing to support that software, could you
22have hired anyone independently to perform
23necessary upgrades on that software?
24A   I guess the answer would be yes, we could
25have, but Kerr-McGee is not into developing
1software and that's what it would have been.
2Q   Did you ever do an analysis of how much
3it would have cost to try to do that?
4A   No. It wasn't consistent with our
6Q   And did you ever consider outsourcing the
7HR functions that were involved?
8A   To my knowledge no BPO outsourcing
9consideration was ever given to HR. Currently we
10do have one piece of HR BPO'd.
11Q   What piece is that?
12A   Health and welfare administration.
13Q   And who does that?
14A   ADP.
15Q   And they handle the entire business
16process of health and welfare administration?
17A   They do. We have two people on our staff
18at Kerr-McGee that are in essence, I guess they
19manage the vendor relationship and serve as a
20third level escalation, if you will, if there are
21questions that ADP cannot handle.
22Q   And how long have you used ADP for health
23and welfare benefits?
24A   I believe a little over about 18 months
25would be my estimate. Perhaps 19 or 20.
1Q   Why was the decision made to outsource
2that portion of the human resources function to
4A   I was not a part of the selection in the
5project or the decision making on that.
6Q   Who was in charge of that?
7A   Our HR group.
8Q   Would -- I'm sorry, I've forgotten her
9name. Is it Lynda Garcia?
10A   I do not believe she was in HR at that
12Q   Had she moved to finance?
13A   I don't know where she was at that exact
14moment in time.
15Q   So, the decision to outsource health and
16welfare benefits was made after your PeopleSoft
17software had been implemented. Is that correct?
18A   Correct. We were -- yes.
19Q   And had you considered using a PeopleSoft
20module for that function?
21A   Actually, yes. We have licensed benefits
22administration. During the PeopleSoft
23implementation we had a change in HR leadership
24and in approach and the decision was made to stop
25the benefits administration implementation.
16Q   Now, did you agree with the decision to
17outsource health and welfare benefits to ADP?
18A   To be honest, I don't think I either
19agreed or disagreed. If the HR strategy was to
20perform all of our functions in-house, then the
21purchase that we made and the implementation we
22had embarked on was the correct path. But if our
23strategy was to, for whatever reason, outsource
24where appropriate, then at that time it was the
25right thing to do to stop the benefits admin
16Q   Now, in evaluating or in, you know,
17assessing the interface between the in-house
18software and the ADP outsourcing process, who was
19responsible for that?
20A   As I said, Gene Wolz.
21Q   Gene Wolz?
22A   It's not assessing, it was developing the
24Q   And did he successfully develop the
1A   Oh yeah.
2Q   Was that a problem for him at all?
3A   Actually it wasn't -- it was not him
4solely who did all the programming, but it was
5our team that did.
6Q   Did you, did you feel any need to be
7involved in the decision of whether to outsource
8this health and welfare benefits function to ADP
9versus using the PeopleSoft module that was
10purchased for that purpose?
11A   No.
12Q   Why not?
13A   The reason I'm confused, I felt no need.
14I'm not sure how to explain what doesn't exist.
15Q   Well, let me -- let me back up. I'm just
16trying to understand because you were, you were
17involved in the selection process whereby
18Kerr-McGee chose PeopleSoft for its HR management
19function. Correct?
20A   Right.
21Q   And you were responsible for leading the
22team of IT professionals who were involved in
23that process. Correct?
24A   Yeah.
25Q   And one of the modules that was purchased
1would have covered health and welfare benefits
3A   Right.
4Q   But after the PeopleSoft software was
5implemented, a decision was made to have those
6functions done through ADP outsourcing instead of
7through the PeopleSoft module?
8A   Right.
9Q   But you didn't feel that you needed to
10participate in that decision to shift those
11functions to outsourcing?
12A   No.
13Q   Did you think the decision made sense?
15        THE WITNESS: I was not a --
17        THE WITNESS: -- participant in the
19Q.   (By Ms. McKinney) Did you agree with
20the decision?
2        THE WITNESS: I've already answered that
3question previously. Would you like me to answer
4it again?
5Q.   (By Ms. McKinney) Yes.
6A   As I said before, the HR strategy, if it
7is to perform those functions in-house, then
8buying and installing benefits admin was the
9correct solution. If the strategy is to take a
10look at different places in the organization,
11different functions it could outsource, then the
12function or the strategy of using outsourcers was
14Q   Do you agree with the strategy of
15outsourcing where appropriate?
19        THE WITNESS: As I answered before, I
20said that I neither agree nor disagree because
21agreement is based upon the HR strategy, not
22business processing as a separate entity.
13Q   Do you have any opinion on whether health
14and welfare benefits should be outsourced to ADP
15or should be performed by PeopleSoft software?
16A   As I answered before, if the HR strategy
17is that those functions should be performed
18in-house, then I agree that benefit admin
19implementation and purchase is correct. If the
20strategy is such that we should look at
21outsourcing specific functions, then I agree that
22the strategy of looking at and outsourcing those
23functions is good.
24Q   So it sounds like from an IT perspective
25it doesn't make much of a difference to you which
1path is chosen.
2        MR. HAMMAKER: Objection.
3        THE WITNESS: Yes.
4Q.   (By Ms. McKinney) Either way will work?
5        MR. HAMMAKER: Objection. I don't think
6that reflects his testimony.
7        THE WITNESS: In my experience at
8Kerr-McGee, we did not complete the benefit admin
9implementation, so I cannot speak to whether or
10not it would work at Kerr-McGee because I have no
11experience. ADP health and welfare does work
12because we have been outsourcing with them for
13over a year and a half.
24Q   I'm going to ask you if the RFI describes
25some certain features, and so if you can remember
1please let me know.
2A   Okay.
3Q   Do you know if the RFI described the
4ability to integrate modules into bundles or
5suite, into a bundle or suite of associated HR
7A   I'm not sure I understand what you're
8trying to ask.
9Q   Okay. Did the RFI specify that the
10software that Kerr-McGee was going to use needed
11to be able to work as a suite of associated
13A   I believe, I believe there were questions
14along those lines, but our approach would be that
15it would be purchased as a suite. We were not
16considering purchasing part from Lawson, part
17from Oracle, part from PeopleSoft. It was one
18vendor to provide all those functions.
19Q   Did the RFI specify that the software
20needed to support foreign language requirements?
21A   Yes.
22Q   And how about foreign reporting
24A    Yes, I believe it did. I can't recall
25the exact questions.
1Q   Did it specify that the software needed
2to be able to function across multiple
4A   What's your definition of jurisdiction?
5Q   Different states within the United States
6and/or different countries?
7A   Yes, there were questions along those
9Q   Did the RFI specify that the software
10needed to function across different business
11divisions of Kerr-McGee?
12A   I would have to look.
13Q   Did it discuss at all scale and
14flexibility to support thousands of multiple
16A   I don't recall the specific questions
17there. It's been a while. We did put either in
18the RFI itself or in visiting with the vendors in
19the demonstrations that Kerr-McGee was an
20inquisitive company and that we had some number
21of thousands of users and that we expected most,
22if not all of our users, to be self service
23users. So that would address the fact there
24would be many people using it at one time.
25Scalability was also discussed when receiving
1specifications from PeopleSoft for our hardware.
2Q   Did the RFI discuss any need for
3flexibility so that the software could be matched
4to your unique administrative requirements?
5A   In my interpretation, most of what we put
6in the RFI did have to do with administration of
7the HR function across multiple pieces of the HR
9Q   Did you have any requirement of an option
10to purchase additional functional modules later?
11A   I cannot remember that being in the RFI.
12Q   Did you have any requirement of periodic
13updates to keep tax and employment laws current?
14A   Yes.
15Q   And how about ongoing maintenance and
17A   Yes.
18Q   And was 24 hour technical support
19addressed in your RFI?
20A   I don't believe it was because we didn't
21feel that that was required for us. Certainly if
22something completely broke down we would need
23help, but as a normal course of business we're
24fairly self sufficient.
25Q   Did you have a requirement that the
1software have already been successfully
2implemented by a comparable customer?
3A   I don't know if that was in the RFI, but
4that was communicated to the vendors.
5Q   And who responded to the RFI?
6A   As stated before, PeopleSoft, Oracle and
8Do you recall, do you recall if there was
9any discernible difference in the evaluation of
10Lawson's RFI response?
11A   Not specifics, only in the realm of
12international or non U.S. capabilities.
13Q   And what was the -- what was the
14distinction there in the evaluation of Lawson?
15A   They did not provide the non U.S.
16capabilities that Oracle and PeopleSoft did.
17Q   And specifically what capabilities did
18Lawson not provide?
19A   I just stated that I cannot remember what
20those specifics were.
21Q   Do you remember any further detail on --
22A   No.
23Q   -- the international issue with Lawson?
24A   None.
13Q   And which vendors performed on site
15A   As I stated before, PeopleSoft, Oracle
16and Lawson.
6Q   And then what happened after the
8A   The presentations were graded by the team
9and based on the grading and I guess I would say
10verbal feedback from the team Lawson was
11eliminated due to lack of non U.S. functionality
12and reporting.
11Q   Who made the ultimate decision to
12eliminate Lawson?
13A   The team.
14Q   And who would have communicated that
15decision to Lawson?
16A   I believe Lynda did.
17Q   In addition to the issue with
18international functionality and reporting, was
19there any other reason that Lawson was
21A   I cannot recall.
22Q   Do you know how Lynda communicated to
23Lawson the fact that they had been eliminated?
24A   I do not know.
25Q   Do you know if she told them why they had
1been eliminated?
2A   I believe she did.
3Q   Do you know if they had some response to
4her on the issue of their international
6A   I do not know.
7Q   You never had any direct contact with
8Lawson on that issue?
9A   On informing them that they were no
10longer a part of the selection process, no.
11Q   Did you ever have any direct contact with
12Lawson regarding the issue of their international
14A   Other than when they made their on site
15demonstration, no.
16Q   And did you personally evaluate whether
17Lawson had the international functionality that
18was needed to meet Kerr-McGee's requirements?
19A   Throughout most of this process Lynda and
20I neither one voted, but we viewed the
21demonstrations, asked questions.
22Q   But did you personally assess whether
23Lawson had the functionality that was required?
24A   In what format?
25Q   Did you make a decision in your mind as
1to whether Lawson could meet your requirements?
2A   I agreed with the team that they could
4Q   And in addition to viewing the
5demonstration that Lawson did, was there any
6other source of information on which you based
7the decision to agree with the team that Lawson
8couldn't meet the requirements?
9A   No. We had no further contact with them
10until the decision was made.
11Q   Were any questions posed to Lawson about
12whether it could make some accommodation to meet
13Kerr-McGee's requirements in terms of
14international functionality?
15A   Well, since it's been three years and 24
16hours worth of demos, I can't remember any
17specific questions.
18Q   Did you ever talk to any Lawson
19representative personally at any time?
20A   As I stated, during the demonstration.
7Q.   (By Ms. McKinney) Now, you mentioned
8that SAP was never sent an RFI. Did it bother
9you at all that SAP was not sent an RFI?
16A   No.
17Q   And why not?
18A   Again, you're asking me to speculate on
19that which does not exist or did not occur. We
20had two companies that provided virtually all of
21our RFE -- RFI requirements.
22Q   Oracle and PeopleSoft?
23A   Yes. Had we only had one, I don't know.
24Q   Did you feel like you were still going to
25be able to get a good price with the two vendors
2A   Yes.
14Q   Did you disclose to the vendors who
15participated in the demonstration round the
16identity of the other vendors they were competing
18A    We disclosed to PeopleSoft and Oracle
19that they were our finalists. I don't know about
20the demonstrations.
16Q   Who was in charge of negotiations with
17Oracle and PeopleSoft?
18A   Lynda Garcia was the point person as far
19as the actual final price.
8Q   Do you have any knowledge of whether
9Lynda Garcia negotiated price with Oracle or
11A   The answer has to be yes.
12Q   And did she?
13A   I mean --
14Q   I'm sorry, I thought you were answering
15whether you have knowledge.
16A   Oh, no. The answer would be yes. I
17think that would be the only reason that we would
18have lower offers.
19Q   So, did Oracle and PeopleSoft both
20discount their prices?
21A   Yes.
22Q   And do you know by how much they
23discounted their prices?
24A   I don't know what Oracle's discount would
25have been. PeopleSoft would have been in the 45
1percent range off list.
1Q   And after Oracle and PeopleSoft responded
2to the RFQ, do you know if there were further
3negotiations with them on price?
4A   Yes, there were. I don't remember the
5exact numbers that came back originally, but they
6were higher than what we ended up with.
7Q   So, both of them came down on price?
8A   Yes.
16Q   Do you have any knowledge of whether
17steps were taken to try to ensure that Kerr-McGee
18could get the best possible price on the
20A   I don't know the specific steps, no.
21Q   No. That would have been within Lynda
22Garcia's realm of responsibility?
23A   Yes.
19Q   And do you know what the reasons were for
20ultimately choosing PeopleSoft over Oracle?
21A   I don't know the exact reasons why, you
22know, one person chose PeopleSoft over another.
23What we produced was the general themes in the
24documents that we provided. One was Oracle at
25the time did not have native German language
1functionality and that was our -- actually was
2and still is our largest non U.S. location. If I
3remember right, we rated the vendors, the matrix
4included vendor viability, vendor service,
5functionality, technology and cost. And the
6functionality was pretty much a dead heat, the
7vendor viability and vendor service were both in
8favor of PeopleSoft and technology was in favor
9of Oracle. Probably the best summary statement
10other than the German functionality would be that
11there were certain modules such as recruiting
12that Oracle did not offer at the time and the --
13what people will euphemistically call the vision
14thing, the team felt PeopleSoft was farther
15advanced from a vision what HR could be, should
16be standpoint than Oracle was at that time.
3Q   And when did the implementation of the
4PeopleSoft software begin?
5A   We had our kickoff meeting in early
6January of 2002. We actually had some
7preparatory work with our implementation partner
8in December, but the official kickoff was
5Q   Which modules have been implemented so
7A   The core HR product has been implemented,
8time and attendance has been implemented, as
9stated before, the benefits administration
10implementation was halted. Payroll for the
11similar reason was also halted. Employee self
12service view, employee service update, manager
13self service, the data warehouse and the
14workforce analytics cube.
15Q   And which modules remain to be
17A   Manager self service transaction,
18obviously benefits admin and payroll, E pay, E
19comp, and the three data marks that live on top
20of the data warehouse. And those would be
21Workforce, Score Card -- when I said Workforce
22Analytics before, I should say just the Workforce
23cube because Workforce Analytics has not been
24implemented, Score Card and Rewards have not been
4Q   Is Kerr-McGee in the process of
5implementing them right now?
6A   No. We are in the process right now of
7implementing an additional module that we
8purchased, learning management. We are engaged
9in other activities right now and the strategy
10for going forward is being prepared by our HR
12Q   What happened with payroll?
13A   What happened as far as?
14Q   Well, you said that the implementation
15was halted. How is payroll being handled
17A   Okay. First question, the halting of the
18implementation of payroll was done for the same
19reasons as benefit admin, wanted to look at
20outsourcing the payroll, leaving the payroll
21production outsourced and possibly outsourcing
22the payroll function was to be reviewed.
23Q   And --
24A   The indecision is that we are in the same
25situation as before we started that with ADP
1being our payroll check producer, tax filer.
2Q   And has a conclusion been reached
3regarding whether Kerr-McGee will outsource the
4payroll business function?
5A   The decision was reached, I'm not sure
6with even a specific project at that time, but
7currently business process of payroll is not
9Q   But the PeopleSoft payroll module has not
10been implemented?
11A   That is correct.
12Q   So what software is being used for the
13payroll function currently?
14A   As I stated before, ADP produces our
15checks, files our taxes and there is a piece of
16software that lives at our site to enable that to
18Q   And that's a piece of ADP software?
19A   Yes.
20Q   Is there a name for it?
21A   Pay-For-Win. And I'm not sure how to
22spell that.
23Q   Is there any other software that's used
24for any part of the payroll function?
25A   No.
1Q   So the --
2A    Well, I mean time and labor feeds
3payroll, but for actually doing payroll, no.
4Q   So, the Pay-For-Win software that's at
5Kerr-McGee in combination with the outsourced
6check processing function is sufficient to cover
7the entire payroll business process?
8A   In the U.S.
9Q   Is there a different software that's used
10for payroll overseas?
11A   Each country has its own payroll
12provider. We chose not to implement global
13payroll processing due to really the number of
14employees we have in different countries.
15Q   And why did the number of employees cause
16you not to implement the payroll module?
17A    We did not feel it would be cost
18justified to do so.
5Q   Is there currently any future plan to
6change the way that Kerr-McGee processes payroll?
7A   Where?
8Q   Let's say first in the United States. Is
9there any future plan to change the payroll
11A   No plans at this time.
12Q   And how about overseas, is there any plan
13to change the way that Kerr-McGee uses a
14different payroll provider in each country?
15A   No.
16Q   And you said earlier that the time
17keeping function feeds into payroll?
18A   Yes.
19Q   Does that mean that the PeopleSoft time
20keeping software has to interface with the ADP
21payroll software?
22A   Yes.
23Q   And did you have to go through some
24process to make sure that those softwares could
25interface together?
1A   We prepared the interface.
14Q   Was he able to develop an effective
16A   Oh yeah.
17Q   Have there been any problems with that
19A   Not any more than, you know, any other
20piece of software, an occasional bug. But no, we
21have not had a single instance of missed payroll
22or wholesale failure.
9Q   In the countries where it has been
10implemented, is it functioning in the foreign
11languages used in those countries?
12A   We use English outside of Germany and
13Netherlands. We don't -- we have such a low
14concentration of employees in other non English
15speaking countries that it was not worthwhile to
16consider doing self service there in another
18Q   So, the only foreign languages you need
19it to operate in are German and Dutch?
20A   Currently.
21Q   Currently? Do you anticipate using it in
22other foreign languages in the future?
23A   I haven't been made privy to any
24acquisition plans yet.
25Q   And then how about the manager self
1service module, is that the same situation with
2regard to languages?
3A   Yes, waiting on approval.
4Q   So at the present time the PeopleSoft
5software is not being used in any foreign
7A   That's not what you asked earlier.
8Q   That's what I'm asking now.
9A   That's incorrect. The HR software is
10 being used in German and Netherlands.
22Q   HR core functionality is being used in
23German and Dutch?
24A   Yes.
10Q   Was the implementation completed on
12A   As I stated before, benefit admin and
13payroll, no, because we just close to discontinue
14that. The HR was actually implemented ahead of
15schedule and then we brought out, we brought up
16some non U.S. locations prior to the U.S.
7Q   And when you say you requested additional
8money, did that mean you had to exceed your
9budget for implementation?
10A   Yes.
11Q   And by how much?
12A   One point nine million.
13Q   What was the original budget?
14A   Just shy of 7 million.
15Q   And then you had to add another 1.9
16million on top of it?
17A   Yes.
18Q   And do you know why the implementation
19exceeded the original budget you had planned?
20A   My -- yeah. We had a large number of
21reporting requirements that were what I would
22call nonstandard. And as an organization we were
23not willing to do without some of them or do the
24analysis that it would take to eliminate a number
25of them. And so we spent a large quantity of
1money on developing reports.
21Q   And what customization was required?
22A   I don't have the complete list of
23customizations that we've done.
24Q   Do you know how many customizations you
25had to do?
1A   Approximately -- well, this is over the
2life of our implementation. I don't know, you
3know, depending on what point. But as we sit
4here today approximately fifty affecting twenty
5different objects.
6Q   And what do you mean by object in that
8A   An object would be a screen, a page, a
9program, some definable piece from a programming
11Q   Did you know when you made the selection
12of PeopleSoft that you would need to do that much
13customization in order to implement the software?
14A   Actually, I don't know. No.
15Q   Was that customization customization that
16you did out of necessity or was it because
17Kerr-McGee made a choice to customize?
18A   For us it's always a choice. Our first
19choice is not to. And evidently from other
20implementations, this was a fairly low number,
21fairly noninvasive.
22Q   And what would cause Kerr-McGee to make a
23choice to customize some object?
24A   Fair question. For us it's really, it's
25really a binary question. If there's something
1in the software that doesn't meet what we need,
2then it's a choice, do we change our business
3process, whatever that may be, to match the
4software or do we not. And if we make a decision
5that the time invested in the customization is
6worthwhile in our estimation, we'll go ahead and
7do it. Our preference would be to change the
8business process first though.
9Q   So the initial impetus is that the
10software won't be able to meet some need of some
11existing business process?
12A   Yes.
13Q   Is that right?
14A   Uh-huh.
9Q   Are you currently satisfied with the
10PeopleSoft modules that have already been
12A   Actually, yes.
23Q.   (By Ms. McKinney) Do you view SAP as a
24competitor to Oracle and PeopleSoft?
25A   Yes, I do.
11Q   Do you have any plans to go through any
12procurement of HR software any time in the near
14A    None whatsoever.
17Q   Have you engaged in any evaluation of HR
18software since the time of your PeopleSoft
20A   No.
21Q   So that's been put aside for now I take
23A   PeopleSoft is our system strategy.
11Q   What were your views of what the effect
12of the merger would be on you?
13A   I guess the two immediate effects would
14be, in our opinion, reduced competition, which
15would lead to reduced price and innovation
16pressure and the second piece would be some
17economic hardship should Oracle's plan be
18executed as I understand it, which would be to
19halt the marketing of PeopleSoft software.
9        MS. McKINNEY: Let me mark the next
10exhibit. I guess this is 1932?
18Q   And what is this document?
19A   My declaration given with regards to the
20Oracle proposed acquisition --
22        THE WITNESS: -- of PeopleSoft.
23Q   Now, who drafted this declaration?
24A   The declaration was initially drafted by
25Kent Brown.
1Q   And was there some --
2A   It was earlier.
3Q   -- earlier draft of this document that he
4provided to you?
5A   Yes.
6Q   And do you still have a copy of that
8A   I believe we returned it to Kent.
4        Okay. So, during that, that in person
5meeting with Mr. Brown, do you recall making any
6changes to the draft of the declaration that you
7were reviewing with him?
8A   Yes.
9Q   And do you recall what those changes
11A   Not in detail.
12Q   Do you recall the subject matter of any
13of those changes?
14A   From a tenor perspective, the document as
15it exists and as I signed was changed to reflect
16an opinion rather than facts on what would happen
17should the acquisition come through. Just my
18crystal ball doesn't work any better than anyone
20Q   So, you were changing it to reflect the
21thoughts on the merger were your opinions?
22A   The thoughts on the merger would be
23things that could possibly happen rather than
24things that absolutely would happen.
16Q   With regard to your declaration, is there
17anything in it now that you're not comfortable
19A   I read it over last night and no.
20Q   Is there anything when you read through
21it, was there anything you saw that you thought
22needed clarification?
23A   I'm probably, I'm probably -- it's like a
24programmer trying to judge whether their own
25program is good. I know what I said. No.
23Q   Do you have an opinion of the company
24Oracle Corporation?
25A   Yes.
1Q   What's your opinion?
2A   Overall my opinion is good. We use them
3worldwide for financials.
14Q   Could you please take a look at Page 5 of
15that Power Point Bates labeled Kerr-McGee 137?
16A   Yes.
17Q   Under the right hand column it says
18Oracle cons.
19A   Uh-huh.
20Q   And then there's a box that says vendor
21service and lists several items.
22A   Yes.
23Q   Were you aware of any of these issues
24that are listed here in this box?
25A   Yes, at the time we made the selection
1these items had come out.
2Q   And the first one says recent bad press
3regarding customer service. Do you know what
4that's referring to?
5A   I believe -- well, I don't know for sure.
6Q   What do you think it was?
10        THE WITNESS: The only thing I can say
11with confidence is that it regards the service of
12existing customers and their software
1Q   Was Kerr-McGee part of an Oracle user
2group at that point in time?
3A   Yes.
4Q   And had Kerr-McGee experienced Oracle
5separating itself from Kerr-McGee's user group?
6A   I believe we participated with, I don't
7know what the name was, OAUG at that time, yes.
8Q   What is OAUG?
9A   I don't know what -- I assume it's Oracle
10and I assume it's user group, but I don't know
11what the A stands for.
12Q   So Kerr-McGee was apart of that user
14A   Yes.
15Q   And Oracle separated itself from that
16user group?
20Q   How did Kerr-McGee react when that
22A   I don't recall having any specific
23conversations with what we should or should not
24do as a result of that.
24Q   You mentioned earlier that when you
25talked to the Justice Department about your
1opinion of the effects of the merger, the two
2items you mentioned were reduced competition and
3economic hardship based on Kerr-McGee's
4investment in PeopleSoft?
5A   Yeah.
9Q.   (By Ms. McKinney) With regard to the
10first item relating to competition, what is your
11view on the potential impact of the merger on
13A   Our view, as I state in my declaration,
14would be that should the merger be consummated
15that it would reduce the competition in the ERP
16HR space, particularly those companies we feel
17could possibly supply Kerr-McGee with that type
18of software.
19Q   And what's the basis for your viewpoint?
20A   Our selection process identified really
21only four people that could possibly in our view
22supply the HR software that we needed, one of
23which we did not have detailed knowledge about,
24one of which we eliminated due to functionality
25at that time, and so the largest possible pool in
1our view at the moment would be three. Should
2one of those be eliminated we would view three to
3two as a fairly substantial decrease in the
4competitive environment.
5Q   Your selection process was in 2001.
7A   That is correct.
8Q   And you testified that you haven't
9engaged in any additional analysis of software
10vendors since that time. Correct?
11A   That is correct.
12Q   And how -- do you think that the reduced
13competition you anticipate would affect
15A   Yes.
16Q   And how do you think that that would
17affect Kerr-McGee?
18A   I suppose there could be a lot of answers
19there, but our standpoint is that innovation
20within the software itself could be negatively
21affected. The development of new modules and new
22functionality could be negatively affected. The
23overall customer service environment could be
24affected. That would be my top three.
25Q   All three of those items relate to
1Kerr-McGee's use of PeopleSoft software.
3A   Those three relate to not just our use of
4PeopleSoft in particular but future development
5in the HR space.
10Q   The merger is not going to affect
11Kerr-McGee with regard to any future -- it's not
12going to affect Kerr-McGee with regard to any
13impending software procurements, is it?
14A   Hate to be obtuse. Please define what
15impending is in your mind.
16Q   Well, you testified earlier that you have
17no plans right now to look at procurement of new
18HR software. Correct?
19A   My understanding of your question is that
20a new HR software package or vendor. In that
21case that is correct. If you refer to purchasing
22perhaps additional modules, we have no plans at
23the moment but could very well see purchasing
24additional modules from existing vendors.
25        (A brief pause.)
1Q   Mr. Elliott, could you please take a look
2at your declaration? And on Page 12, if you
3could look at Paragraph 42. And in this
4paragraph you state in the second sentence, a
5merger could reduce the competitive pressure that
6now causes both firms to continue to improve
7their software.
8A   Yes.
9Q   What's your basis for this statement?
10A   My opinion is that should this
11competition not exist, there would not be the
12same level of pursuit of innovation and
13improvement in software, as a general statement
14about HR software.
15Q   And do you have any other basis for this
16statement aside from your own opinion?
17A   I do not have familiarity with Oracle's
18current or future development plans for their HR
19software. What I have seen is a large push on
20the PeopleSoft side for both new functionality,
21new modules and improved ownership experience.
22Q   And you anticipate that a merger would
23negatively impact that development?
24A   That's my opinion.
25Q   Are you aware of Oracle's public
1commitment to continue supporting PeopleSoft
2software even if a merger takes place?
3A    Yeah. I did not look up the details, but
4what I believe I'm familiar with is their
5commitment to maintain support for ten years
6should the merger occur.
7Q   And does that affect your view at all?
8A   No, not at all.
9Q   And why not?
10A   Supporting problems that crop up with
11existing software is far different than
12innovation and development and adding features
13and new modules to software.
14Q   In the next sentence in that paragraph
15you state, PeopleSoft and Oracle now compete for
16the same customers and this competition drives
17both vendors to make significant investments and
18better products.
19A   Uh-huh.
20Q   Now, what's your basis for this
22A   I could not find a document that would
23support this, but during the selection process
24both PeopleSoft and Oracle made what I would say
25an emphasis or a big deal of the amount of money
1that they both invest in R and D.
2Q   And for the part of the statement that
3says PeopleSoft and Oracle compete for the same
4customers, do you have any particular basis for
5that statement?
6A   Both the PeopleSoft sales rep and the
7Oracle sales rep both during the course of
8conversation indicated that each company was a
9frequent competitor of the other.
10Q   Now, down in Paragraph 43 in the second
11sentence you state, in my experience --
12A   Uh-huh.
13Q   Excuse me. Software vendors that
14discontinue marketing a product typically reduce
15or eliminate new development initiatives for that
16product and focus their resources on developing
17the product that continues to be marketed and on
18switching customers of the discontinued product
19to another product.
20A   Yes.
21Q   Now, what experience are you referencing
23A   I have two recent ones. Our experience
24with N Power from Integral. The same thing
25happened. They stopped marketing N Power as a
1viable product and then therefore soon after
2stopped development and then therefore soon after
3stopped support. We have a legal software
4product called E-Tech that we've experienced the
5same situation. It's no longer marketed, now
6there's no more development going on. I'm not
7sure if the support shoe has dropped yet or not.
8Q   So that contributes to your opinion that
9if Oracle were to acquire PeopleSoft the same
10thing might happen?
11A   Yes.
17Q   How much do you think Kerr-McGee has
18invested in its PeopleSoft HR software all in
20A    The out of pocket costs are the 9 million
21as stated in the documents that have been
23Q   And are there additional costs as well?
24A    Not that we've quantified. We don't --
25at least it hasn't been a practice in the past
1where we have capitalized or tracked the amount
2of internal labor. It's safe to say that it
3would be tens of thousands of hours.
8Q   If you knew that SAP was a vendor that
9would be able to meet Kerr-McGee's needs in terms
10of ERP software, would you still have concerns
11about the Oracle, PeopleSoft merger's effect,
12potential effect on competition?
15        THE WITNESS: Yes, I would still have
17Q.   (By Ms. McKinney) And why is that?
18A   Because I view three moving to two as a
19significant decrease in competition.
16Q    Mr. Elliott, you've referred in your
17testimony this afternoon to a declaration that
18you provided to the United States Department of
19Justice in this matter. Does what we have marked
20as Government Exhibit 63 appear to you to be a
21complete copy of the -- with exhibits of the
22declaration that you provided to the Department
23of Justice?
24A   It does appear.
5Q    Do you see, is that your signature at the
6bottom of Page 13?
7 A Yes, it is.
17Q    Thank you.
18        To the best of your information and
19belief, Mr. Elliott, is the declaration which has
20been marked as Government Exhibit 63 true and
22A   I'm sorry, say it again, Mike.
23Q   Is the --
24        MR. HAMMAKER: Could you read the
25question back, please?
1        (The record was read as requested.)
2        THE WITNESS: Oh, yes.

Elliot 05-20-04

Updated August 14, 2015