P3254-R: CID - William Pollie (SAP), Deposition Transcript

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Government Exhibit P3254-R [Non-designated testimony redacted]
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3          VIDEOGRAPHER: The Court Reporter today is
4Dawn M. Hart of LegaLink San Francisco. I will now
5swear in the witness.
6   Thereupon ---
7          WILLIAM POLLIE
8having been duly sworn, testified as follows:
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11   Q Good morning, Mr. Pollie.
12   A Good morning, Mr. Yates.
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18   Q And when you left Integral Systems in
19approximately '91 or '92 where did you go?
20   A I went to a company called SAP.
21   Q And for how long were you with SAP?
22   A Through September 2001.
23   Q And what positions did you hold at SAP?
24   A Variety of positions in product management,
25   direct sales, global sales, strategic account
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1management, and management positions; Vice-President
2of Field Operations for SAP.
3   Q Your last position was Vice President of
4Field Operations for SAP?
5   A Yes.
6   Q And what did you do as the Vice President of
7Field Operations for SAP?
8   A I ran a particular industry sector for SAP
9in the field and operation which had consulting,
10presales, sales targeted at an industry sector that we
11were growing.
12   Q And what sector was that?
13   A Financial services and insurance, brokerage.
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16   Q So in approximately September of 2001 SAP
17did not have a fully developed CRM product; is that
18your understanding?
19   A It was fairly new, yes.
20   Q And what about today, do you have an
21understanding of SAP's CRM product offering today?
22   A Not in detail, no.
23   Q And you left SAP in approximately September
24of 2001?
25   A Yes.
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1   Q And who did you join?
2   A Microsoft Business Solutions-Great Plains.
3At the time it was called Microsoft Great Plains
4Business Solutions.
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17   Q Sure. At or about the time you joined
18Microsoft Business Solutions, did Microsoft Business
19Solutions have a direct sales force?
20   A Not to my understanding, no.
21   Q What kind of sales force did it have?
22   A All of Microsoft Business Solutions
23activities were delivered through a partner
24organization.
25   Q But your title was U.S. Sale -- Vice
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1President of U.S. Sales?
2   A Yes.
3   Q What were your duties and responsibilities
4   in or about September of 2001?
5   A To manage a, a group of Microsoft employees
6that assisted our partners in providing software
7services and product to, to customers.
8   Q And how would the Microsoft salespeople
9assist the partners in that role?
10   A In a variety of ways, by providing them
11assistance in pricing data and by providing them
12assistance in access to Microsoft resources that might
13provide them detailed product information that they
14needed, to help them monitor and control their
15pipeline and activities, to assist them in sales
16techniques, sales training, product training.
17   Q So is it fair to say that the partners acted
18as an extension of the Microsoft sales force?
19   A I think it's safe to say that the Microsoft
20partners were the sales force and were not necessarily
21an extension of, but the sales force for Microsoft
22Business Solutions.
23   Q Did you meet with customers of Microsoft
24Business Solutions in or about September of 2001?
25   A Yes.
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1   Q And did salespeople at Microsoft Business
2Solutions working under you meet with customers in
3approximately September of 2001?
4   A Microsoft Business Solution employees met
5with customers. They weren't necessarily called
6salespeople. They're called partner account managers,
7they're called business development managers. So from
8a clarification point of view, yes, my staff did meet
9with customers, but they were not called salespeople.
10   Q And what position do you hold with Microsoft
11Business Solutions today?
12   A I'm a General Manager within Microsoft
13working in the enterprise business sector.
14   Q What is the enterprise business sector?
15   A The enterprise business sector are -- is
16comprised of Microsoft's corporate account customers,
17as well as some of the larger, more strategic
18customers in Microsoft as well.
19   Q What are corporate account customers?
20   A Corporate account customers are, are
21Microsoft -- is Microsoft's description of the way
22they tier the number of accounts for coverage
23purposes. So that these representatives in the
24classic Microsoft point of view are provided certain
25coverage models to make sure that these customers are,
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1maintain a high level of satisfaction with their
2partners and with the performance of the products.
3   Q And is there -- you said they're tiered in
4some way. Is there any kind of threshold in terms of
5numbers of PCs, or annual revenue, or number of
6employees that's used in order to obtain a space
7within the corporate account space within Microsoft?
8   A I know that there is a way for them to
9determine the number of accounts and the coverage, but
10I'm not intimate with the detail on the actual
11specific requirements on what makes somebody a
12corporate account and what makes someone -- I think it
13does vary and there are some exceptions made based on
14opportunity or high profile of accounts, level of,
15level of business revenue, those kinds of things.
16   Q Can you give me some examples of exceptions
17that have been made for high profile accounts?
18   A I think if there's a particular account
19that's, has a very high PC count let's say, but isn't
20necessarily a high revenue account, the customer may,
21may require further service capabilities, in which
22case they provide a higher coverage model for that
23account. That could be one example.
24   Q And what kinds of companies are you involved
25with within the enterprise business sector?
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1   A Just as clarification purpose, myself person
2personally?
3   Q Yes.
4   A Accounts that are asking for executive
5representation of Microsoft Business Solutions from a
6strategic point of view, how Microsoft views their
7acquisition of the Great Plains in the division
8organizations, and how we, we provide services to our
9partners and support to our partners to make them
10successful.
11   Q Can you give me some examples of the kinds
12of companies that you're involved with on that basis?
13   A Certainly. Companies like Ingersoll-Rand,
14companies like Home Bank Corporation, United Missouri
15Bank, Merial Corporation, Bound, Bound Global, Chanel,
16as examples.
17   Q In -- what is, what -- what is your
18involvement, for example, with Ingestible-Rand? What
19do you do with them?
20   A What do I do with them?
21   Q Yes.
22   A I have a -- fairly regular communications
23with their global CIO regarding their relationship
24with Microsoft Business Solutions and the partners
25that are servicing their accounts; work with them on
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1putting programs together for executive briefings,
2making sure they're aware of our current state of
3product, as well as our investment in particular
4product that could be of interest to them for the
5future, keeping them up-to-date on relationships we're
6forming with other partners and other products that
7are out in the marketplace that they might find
8interesting.
9   Q And has Ingestible-Rand purchased any
10Microsoft Business Solutions software products?
11   A Yes.
12   Q What have they purchased?
13   A They've purchased a product called Navision.
14   Q And what is Navision?
15   A Navision is an accounting and core back
16office accounting system that's being used, that's
17available on a global basis.
18   Q And how is Ingestible-Rand using it to your
19knowledge?
20   A Ingestible-Rand has a project by which
21they're implementing the Navision product at their
22bobcat dealers. So they're very small, five- to
23six-user type of operations, but it's a way for them
24to standardize the back office among the various
25bobcat dealerships around the world.
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19   Q What about Bound Global, what's your
20understanding of what products from -- they have
21purchased from Microsoft Business Solutions?
22   A Bound Global has purchased our Axapta
23product.
24   Q Do you know where that product has been
25implemented?
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1   A The implementation resides in the New York/
2New Jersey area.
3   Q Is that Bound Global's headquarters?
4   A Bound Global is part of Bound. And for
5Bound Global, yes, that is their headquarters.
6   Q What is Bound Global's business, if you
7know?
8   A Bound Global's business is to provide
9translation services. They are a Microsoft supplier
10in that they do a lot of the translation services for
11a number of Microsoft products around the world, and
12provide those kinds of services to other companies as
13well.
14   Q And you say that the Microsoft Axapta
15product has been implemented in the New York/New
16Jersey area by Bound Global?
17   A It resides there, yes.
18   Q Does it service other Bound Global locations
19throughout the United States?
20   A Yes. I believe there's seven different
21countries running on that instance today.
22   Q When you say there's seven countries running
23on that instance, what do you mean?
24   A They're providing service, financial
25accounting, application software functionality to, I
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1believe it's six or more countries around the world
2from their facility in New York covering approximately
335 to 40 users.
4   Q And how, how do the users in other countries
5obtain access to the Axapta application?
6   A I believe through a dial-in network,
7although I'm not sure.
8   Q What's your understanding of which countries
9are being serviced by the Axapta application in the
10New York/New Jersey area?
11   A I'm not sure of the details.
12   Q What is Axapta?
13   A Axapta is a - an application software
14package that was acquired as part of the Microsoft
15acquisition of Navision in Cope - out of Denmark, and
16it is a, another application edition of products that
17Microsoft Business Solution sells and markets through
18its partner organizations.
19   Q What's the target market of Axapta if you
20know?
21   A Axapta fits very well in markets where
22customers have international requirements, and it is
23also targeted at locations in the manufacturing sector
24because of its functionality versus other editions of
25Microsoft Business Solutions. It's -- it has a more
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1robust manufacturing functionality.
2   Q When you say it has a more robust
3manufacturing functionality, what do you mean?
4   A The Axapta product, through the acquisition,
5provided Microsoft Business Solutions a product which
6has some of the functionality associated with
7production planning, manufacturing, bill of material
8management, inventory management, most of the discreet
9type of manufacturing, very simple bill of material,
10assembly-type of work that many companies require in
11the market in the manufacturing sector.
12   Q And when you say that Axapta is -- fits
13well, or has international capabilities, what do you
14mean?
15   A Axapta is a product that is available and
16supported in many countries around the world. And in
17comparison to our Great Plains product --
18          (Interruption.)
19   A In comparison with our Great Plains or
20Solomon products, it is a product that is offered in
21far more countries than currently the Solomon and
22Great Plains product are supported.
23   Q Do you know in how many countries -- let me
24withdraw the question.
25          Do you have an understanding of the, whether
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1Axapta has functionality in 30 or more countries?
2   A I have seen documentation that relates the
3availability of Axapta, implementation of Axapta in
4approximately that amount of countries, provided
5either through localized support or through direct
6Axapta support.
7   Q When you talk about localized support versus
8direct Axapta support, what do you mean?
9   A There are some countries where partners have
10taken the responsibility to localize and to provide
11functionality for local regulatory requirements for
12the Axapta product that is not Microsoft intellectual
13property or owned -- or owned by Microsoft.
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19   Q And you also mentioned Chanel. What's your
20understanding of what Microsoft Business Solutions
21product has been sold the Chanel?
22   A Chanel is using the Axapta product in a very
23decentralized approach, targeting a number of small
24remote operations that they own on a worldwide basis.
25   Q Is Axapta used by Chanel in the United
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1States?
2   A No.
3   Q Where is it used, to your knowledge?
4   A There is an implementation that's going on
5today in Europe, and one that's being planned in the
6Asia-Pacific region.
7   Q Do you know who is implementing Axapta for
8Chanel?
9   A A partner of ours is doing most of the work,
10a company by the name of Columbus IT.
11   Q And what is Columbus IT?
12   A Columbus IT is a certified Microsoft Axapta
13business partner that has implementation resources, as
14well as project people that implement Microsoft.
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5   Q Can you describe the financial management
6modules that are provided with Axapta?
7   A The Axapta financial management system
8consists much of the modules that you described;
9general ledger, accounts payable, accounts receivable,
10fixed assets, traditional accounting applications that
11are required in most small, medium, and large
12corporate account-type of structures.
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21   Q I've read in some publications that
22Microsoft Business Solutions hopes to grow its annual
23sales to approximately $10 billion a year by 2010. Is
24that true?
25   A I really can't, can't state that for the
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1record.
2   Q Have you seen a Business Week article in
3which Jeff Rakes made a statement like that?
4   A Yes, I have.
5   Q And is it your understanding that, that
6Microsoft has publicly stated that it plans to grow
7the revenues of Microsoft Business Solutions to
8approximately $10 billion a year by year 2010?
9   A I've read that article, yes.
10   Q Have you discussed those plans with anyone
11within Microsoft?
12   A Yes.
13   Q With whom?
14   A With my direct management, my team.
15   Q Who is your direct management?
16   A I work for the General Manager in charge of
17enterprise sales operations.
18   Q And who's that?
19   A Phil Sorgen.
20   Q And you mentioned your team. Who's on your
21team?
22   A I have two direct -- or one direct report
23and 17 members of a virtual team that are employed
24throughout the United States.
25   Q Who -
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1   A And when I say my team, I should clarify
2that to say my virtual team.
3   Q Your virtual team. Those are people in
4various geographic locations throughout the United
5States who report up to you?
6   A They don't report directly to me. They
7report to the local geography.
8   Q And how -- how are they part of your team if
9they report to the local geography?
10   A It's a virtual team that I helped build from
11a community point of view; common objectives, common
12goals, common job responsibilities around the
13Microsoft Business Solutions products.
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14   Q Within the enterprise group, do you focus on
15the GSM clients -- this is you personally -- or the
16CAS, the corporate accounts-based clients?
17   A I don't focus on either. I help our
18partners in specific situations where they require
19some Microsoft leadership support based on who they're
20talking to on the opportunity. I really don't focus
21on either.
22   Q So it could vary. If a partner comes to
23you --
24   A Could vary.
25   Q -- with a GSM prospect that they need you
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1your assistance with, you'll help them on that?
2   A Correct.
3   Q And if it's a corporate accounts-based
4prospect, you'll help them with that, too?
5   A Correct.
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11   Q Are you involved in selling anything other
12than Microsoft Business Solution products to these
13enterprise clients?
14   A No.
15          As a clarification --
16   Q Sure.
17   A -- when you say selling, I'm in -- I'd just
18like to clarify that that means assisting -- in our
19methodology, helping the partner sell to that account.
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19   Q And what's your involvement at Deloitte?
20   A I participated in an executive briefing with
21their global CIO who has a number of our Navision
22product installations in Europe for some of their very
23small firms that are doing some back office accounting
24work.
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12   Q Do you have any understanding concerning
13whether there's any sort of relationship between
14Deloitte and Microsoft for implementation of Microsoft
15Business Solution products? Any sort of alliance or
16anything like that?
17   A Can we clarify that; for the United States?
18   Q Yes.
19   A I'm not aware of any on Deloitte or on
20Accenture.
21   Q How about Kapp, Gemini, Ernst & Young?
22   A We have begun working with Sogetti, which I
23believe is part of CGEY. My understanding is they're
24part of CGEY.
25   Q And how about Bearing Point?
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1   A I'm not aware of the details of that
2relationship.
3   Q Do you have an understanding one way or the
4other concerning whether there is a relationship
5between Microsoft and Bearing Point concerning
6Microsoft Business Solution products?
7   A My awareness is that we're pursuing a more
8aggressive relationship with Bearing Point, but I
9don't know the details of the relationship at this
10point.
11   Q Do you know who is in charge of managing
12that relationship?
13   A I believe it's being pursued by Carla
14Heimbigner.
15   Q And who is she?
16   A She works in our partner recruiting area out
17of Redmond.
18   Q Do you have interactions with Ms.
19Heimbigner?
20   A On occasion, yes.
21   Q Have you learned anything from her about the
22relationship between Microsoft and Bearing Point for
23Microsoft Business Solution products?
24   A While it has come up in conversation, I'm
25not aware of the details behind the relationship.
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1   Q What have you learned in conversation?
2   A That she was actively pursuing Bearing Point
3to establish a practice around Microsoft Business
4Solutions.
5   Q Did she say -- did you have an understanding
6of why?
7   A Microsoft Business Solution is always
8looking for partners that have very high reputations
9in the market, that have familiarity with company
10business needs, and are able to interpret those
11business needs into business solutions through
12application software.
13   Q Is it your understanding that Ms. Heimbigner
14has met with Bearing Point about this relationship?
15   A Yes.
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4   Q And on a day-to-day basis, can you describe,
5if you can generalize, you know, how often you are
6actually meeting with clients or potential clients?
7   A On average, I probably talk to two to three
8clients per week either via phone, conference call, or
9face-to-face with a client. Probably meet with two to
10three partners per week to help them review their
11pipeline and their strategy around particular sales
12efforts in the CAS space, and the rest education,
13training.
14   Q And the -- your virtual team, are they -- do
15they report up to you in some fashion?
16   A In a dotted-line basis, correct.
17   Q And do you receive reports from them about
18whether they've met with potential clients?
19   A Yes.
20   Q And is it your understanding -- let me back
21up for a second. This virtual team, are they
22organized in any sort of vertical fashion or
23geographical fashion? Why don't you tell me how
24they're organized.
25   A Geographic fashion.
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1   Q Geographic. And are there various regions
2throughout the country?
3   A Microsoft is organized by district, and
4there are representatives in most, if not all,
5districts that focus on MBS as a solution specialty
6area.
7   Q And when you talk about MBS as a solution
8specialty area, what do you mean?
9   A The role that the Microsoft Business
10Solution people play are what's called solution sales
11specialists. Within each district, there are solution
12sales specialists that focus on Office, Windows, SQL
13Server, and Microsoft Business Solutions has its own
14solution specialists where an account manager will get
15involved in an account and has ultimate ownership. A
16solution specialist will help out with specific
17opportunities around certain product lines.
18   Q And is there any sort of vertical focus of
19the -- to the Microsoft sales force?
20   A No -- excuse me. Let me clarify that.
21Microsoft Business Solutions sales force?
22   Q Yes.
23   A There is not.
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12   Q Sure. I'm trying to figure out if -- well,
13let's back up for one second. It's your understanding
14that there are, there are salespeople who focus on
15selling what you call classic Microsoft products,
16Windows, SQL Server, things like that. There are
17salespeople who focus on particular industry
18verticals?
19   A (Nods head.)
20   Q Is that correct?
21   A That's correct.
22   Q And what I'm trying to figure out is, do you
23have an understanding one way or the other concerning
24whether those salespeople also participate in efforts
25to sell Microsoft Business Solutions products?
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1   A If there's an opportunity identified by the
2Microsoft classic vertical sales representative, they
3have the opportunity to call in the geographic sales
4specialist for Microsoft Business Solution where that
5account resides for assistance if they need help,
6providing a Microsoft Business Solutions partner, or
7helping them evaluate whether there's an opportunity
8where Microsoft Business Solution has the opportunity
9to fit.
10   Q Are these, these people who are, who are --
11who focus on a particular industry vertical, are they
12trained in any way concerning the Microsoft Business
13Solutions product offerings?
14   A At a very high level, a 101-type of context
15regarding Microsoft Business Solutions.
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22   Q How many people are there who focus on
23assisting partners in selling Microsoft Business
24Solution software products?
25   A In the enterprise sector?
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1   Q Yes.
2   A Seventeen.
3   Q And how many in the SMS&P sector?
4   A Don't know the exact head count.
5   Q Can you give me an estimate?
6   A The only estimate I have is last year, or
7the year before the reorganization, there were
8approximately 190 people that focused on assisting
9partners in selling Microsoft Business Solutions in
10the organization that I was responsible for.
11   Q This was prior to the July --
12   A Prior to the July.
13   Q -- reorganization?
14   A Yes.
15   Q And these 17 people report up to you?
16   A Dotted line.
17   Q And what about enterprise salespeople who
18focus on the classic Microsoft products, are they
19trained in the Microsoft Business Solutions products
20in any way?
21   A Some better than others that have taken the
22initiative. Most are at a level of a 101-type of
23Microsoft Business Solution level.
24   Q When you say a 101-type of level, what do
25you mean?
00053
1   A Core introduction to the products, where
2they were acquired from, how they fit from a strategic
3point of view, high level strategy documents, high
4level functionality documents.
5   Q And have you ever received an inquiry from
6any of the classic enterprise Microsoft sales force
7concerning a potential opportunity and they've asked
8you to come in as more of a specialist in the
9Microsoft Business Solutions products?
10   A Yes, I've received requests like that.
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14   Q Now have you heard the term mid market?
15   A Yes.
16   Q What's your understanding of the meaning of
17that term?
18   A It varies from, from everyone you talk to.
19There is -- my understanding of mid market is there's
20a large group of the center of the pyramid that makes
21up most of the corporations in America that everyone
22is going about discussing in terms of the underserved
23requirements and the ability for those companies to
24grow and start to now take upon themselves some of the
25benefits that only the larger corporations were able
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1to take on with some of these advanced techniques and
2functionality that were provided only by the large
3corporations in the past.
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2   Q Do you consider the corporate accounts space
3to be mid market space at all?
4   A Do I personally?
5   Q Yes.
6   A The corporate account space has many of the
7characteristics that are prevalent in many of the mid
8market accounts, yes.
9   Q And were you working with any mid market
10customers prior to July of last year?
11   A Yes.
12   Q And based upon that experience, do you have
13a sense concerning whether mid market customers are
14attempting to obtain the kinds of functionality that
15you say only used to be available to the very largest
16companies?
17   A I, I say -- I said there are some
18functionality that the mid market companies are very
19interested in adopting that were only available to
20large companies before, and the answer to that is yes.
21   Q And what kind of functionality is that?
22   A Connections through the Internet to be able,
23be able to bid and reply to bids from very large
24contract and suppliers, the ability to communicate
25electronically with your suppliers, the ability
00058
1through EDI or other techniques, the ability to do
2electronic banking and fund management -- funds of
3management for being able to deal on a more
4international basis. Those kinds of things are good
5examples of functions that were only available for
6large corporations that smaller companies now can take
7advantage of.
8   Q And how about integrating the supply chain
9with the financial aspects of the company, is that
10something that the mid market companies are more and
11more interested in?
12   A I think so, yes. I think that most of those
13companies are single location, single organization,
14and see some efficiencies in, in a software package
15that allows for visibility across the entire chain of
16order to cash.
17   Q And as the world economy becomes more
18global, are companies in the mid market increasingly
19interested in multilanguage, multicurrency
20capabilities in their software?
21   A I -- I don't know if I'm qualified to answer
22that. It would be my opinion that they would be, yes.
23   Q Have you seen that in your experience at
24Microsoft Business Solutions?
25   A I think there is a greater -- what I've seen
00059
1in my experience in Microsoft Business Solution is a
2greater awareness from the mid marketplace that there
3is a global economy out there that has potential for
4their products and services, yes.
5   Q And in your experience, are there mid market
6clients of Microsoft Business Solutions interested in
7software that provides multilanguage, multicurrency
8capabilities?
9   A More of the multicurrency situation, the
10ability to transact with companies located in other
11parts of the world, but rarely did we see
12opportunities that necessitated a multilanguage-type
13of functionality.
14   Q How about for instance Chanel, is that a mid
15market company in your view?
16   A No, I think, I think it is classified as a
17corporate account, a CAS-based account, and I think it
18has the name recognition and the brand recognition
19that entitles it to certain special treatments in
20terms of customer sat. and some other things.
21   Q It's the perfume and the high-end clothing
22manufacturer, that's the company we're talking about?
23   A Correct.
24   Q Were they interested in the multilanguage,
25multicurrency capabilities of Axapta?
00060
1   A Yes.
2   Q Is that one of the reasons you understood
3they purchased Axapta?
4   A Yes.
5   Q And Microsoft is selling Axapta globally,
6correct?
7   A Yes.
8   Q How about Bound Global, they've implemented
9Axapta here in the New York/New Jersey area of the
10United States, correct?
11   A Uh-huh.
12   Q But it's my understanding from your
13testimony that that implementation of Axapta is
14supporting five, six, seven other countries; is that
15correct?
16   A That's correct.
17   Q Were they interested to your knowledge in
18the multilanguage/multicurrency capabilities of
19Axapta?
20   A Yes.
21
22
23
24
25
00063
1
2
3
4
5   Q Was Microsoft Business Solutions successful
6in selling through partners a product to Indianapolis
7Motor Speedway?
8   A Yes.
9   Q Which product?
10   A Great Plains.
11   Q And what about sports teams? Philadelphia
12Eagles, was the Microsoft successful in selling a
13product to them through partners?
14   A Yes.
15   Q Which product?
16   A I'm not sure.
17   Q Any other sports teams that you're aware of
18in which, which have bought Microsoft Business
19Solution software products?
20   A Most of the NFL teams today use Microsoft
21Business Solutions; Great Plains, Solomon, Division.
22
23
24
25
00064
1
2
3
4
5   Q What other -- are there any other high-
6profile, larger opportunities that Mr. Malme was
7responsible for other than the sports teams and the
8Indianapolis Motor Speedway?
9   A His team was responsible for Esselte, his
10team was responsible for the initial conversations at
11Ingersoll-Rand, his team was responsible for the
12Division work we did at a division of Bound, Bound
13Global, a small division of Bound, his team was
14responsible for engagements at the Phoenix Suns, some
15of the other organizations out there.
16
17
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25
00065
1
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3
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5
6
7
8
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10
11
12
13
14
15
16   Q Mr. Pollie, we've had marked as Exhibit 1449
17a, I think a far more legible copy of the document
18bearing Bates Nos. 4144 through 4153. The power
19points are now normal sized. Do you see that?
20   A Yes.
21   Q Exhibit 1449, is that a document you
22received on or about April 22, 2003?
23   A Yes.
24   Q And you received it from Mr. Malme?
25   A Yes.
00066
1
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20
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25   Q What was the discussion within Microsoft
00067
1Business Solutions concerning corporate sales
2acceleration in or about April 2003?
3   A We were discussing the addition of head
4count that might result in increased amounts of
5revenue and positioning our products in the
6divisional/departmental solutions in the enterprise
7market.
8   Q When you're talking about positioning the
9products in the divisional -- divisional solutions in
10the enterprise market, what do you mean?
11   A The focus of our initiatives in the
12enterprise market are targeted at very targeted spoke
13type opportunities within a major corporation, much
14like the situation at Bound or Chanel or others we've
15been discussing. We are not serving as the core
16enterprise system, but much of a remote location or a
17departmental or a divisional solution where the needs
18are very much akin to a very small mid market account
19as an example.
20   Q Now, I understand that you've been involved
21with a company called       ?REDACTED
22   A Yes.
23   Q That's an eight or $9 billion advertising
24holding company?
25   A Yes.
00068
1   Q And I understand you've had discussions
2concerning an Axapta implementation at one of their
3subsidiaries called       ?REDACTED
4   A Yes.
5   Q And was the discussion concerning        thatREDACTED
6Axapta would be the business application software that
7would be run at       ?REDACTED
8   A No.
9   Q What was it?
10   A We are presenting a solution in the
11Microsoft Business Solutions offering by the name of
12Solomon. Solomon is a product that's designed to
13account for professional service needs. Many
14organizations in the construction professional service
15time and material billing environment use our Solomon
16product.
17   Q Was -- have there been any discussions with
18concerning the use of Axapta?REDACTED
19   A In the past there have been some evaluations
20of all the Microsoft Business Solution products,
21including Axapta and including the Great Plains
22product as well.
23   Q Is either Axapta or Great Plains, has either
24one of those been implemented at any        company?REDACTED
25   A        has implemented Great Plains at aREDACTED
00069
1few of their locations.
2   Q Do you know which ones?
3   A The corporate headquarters is using Great
4Plains and one of their small divisions called DOS is
5also in the midst of implementing Great Plains as
6well.
7   Q What's the corporate headquarters ofREDACTED
8using Great Plains for?
9   A Ten, fifteen users, just integrating core
10financials just at a high level. As you mentioned,
11they're a holding company so they have very limited
12production or any other kind of capabilities. So
13they're using it as a financial reporting system at
14the corporate level to consolidate some data.
15
16
17
18
19
20
21
22
23
24
25   Q So Great Plains is the corporate accounting
00070
1software that's in use at              corporateREDACTED
2headquarters?
3   A It's in use at              corporateREDACTED
4headquarters. I'm not aware of any others.
5   Q And where is              corporate headquarters?REDACTED
6   A In New York.
7   Q New York. Have you met with the Chief
8Financial Officer of       ?REDACTED
9   A Yes.
10   Q Have you discussed the Great Plains product
11with him?
12   A Yes.
13   Q Is he happy with it?
14   A Yes.
15Just from a clarification point of view,
16again, it's very small Great Plains implementation of
1715, 20 users that is being supported through a
18partner, and the partner has implemented that system
19for a number of years in a very contained environment.
20   Q And who's the partner?
21   A A company by the name of Altara.
22   Q And Altara -- what is Altara?
23   A It's a Microsoft Business Solutions partner
24based out of New Jersey, one of our leading partners
25that is in charge of reselling the Microsoft Business
00071
1Solution products and implementing those products to
2customers all around the northeast. She has also
3offices in Denver and a few other places as well.
4   Q And when's the last time you had a
5discussion with the Chief Financial Officer ofREDACTED
6concerning Great Plains software product?
7   A Within the past two months.
8   Q And what was your discussion about?
9   A The discussion was about Microsoft Business
10Solutions playing a greater role in        in termsREDACTED
11of a standard way for        to roll out accounting,REDACTED
12core accounting software. And the way that they're
13organized, they have 1400 independent agencies.
14They're very small agencies with one to two to three
15users.        is very interested in using theREDACTED
16product, or evaluating the use of the product in those
17agency and company roles where Microsoft Business
18Solution could become the standard for        acrossREDACTED
19the corporation.
20   Q And that would be across all ofREDACTED
21subsidiaries?
22   A Potentially.
23   Q Has any decision been made to your
24knowledge?
25   A No decision, no final decision has been
00072
1made, no.
2   Q But there have been discussions with the CFO
3of        about having a Microsoft Business SolutionREDACTED
4software product as the standard across all the
5             companies?REDACTED
6   A Yes.
7   Q And what's your understanding of the size of
8      , in terms of revenue or employees?REDACTED
9   A My internal briefing is much more
10surrounding the total number of users that would be
11involved in implementing a successful site atREDACTED
12which currently targets approximately two to 300 total
13users of our product, our Solomon product for core
14financial accounting systems as a spoke in theREDACTED
15wheel.
16
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25
00074
1
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20
21
22
23
24   Q Now you talked about the use of Great Plains
25in a distributed fashion. What do you mean by that?
00075
1   A The way we have consistently positioned
2Microsoft Business Solutions in the market is as a, a
3business solution for independent business units of
4major corporations, very small divisions or one-off
5business units that have a requirement for an
6accounting back office application.
7   Q And can you explain what -- I'm not sure I
8understood your answer. When you're talking about a
9distribute implementation, are you talking about
10various spoke implementations throughout a larger
11enterprise?
12   A Many organizations today have a variety of
13small business units that have a variety of systems in
14place. It's not uncommon to talk to a large
15corporation where they have 14 or 15 different general
16ledgers implemented along with their core ERP system
17which is provided by an Oracle, an SAP or a
18PeopleSoft. In many cases our target in talking to
19that account is finding a way for Microsoft Business
20Solutions to be positioned as a solution for those
21independent divisions or locations to provide back
22office accounting functionality.
23
24
25
00076
1
2
3
4   Q Going back to Exhibit 1449, Mr. Pollie,
5there's some bullet points under the power point. Do
6you see that?
7   A Which page are you on?
8   Q Excuse me, 4146.
9   A Yes.
10   Q Same page we were on earlier.
11          The first bullet point says position MBS
12solutions in GSM accounts when these solutions meet
13customer's needs. Do you see that?
14   A Uh-huh.
15   Q Do you have an understanding of what that
16means, sir?
17   A My understanding is that when a large
18corporation is looking for a mid market solution to
19service some of their remote locations and small
20division subsidiary location needs, that we would
21entertain the discussion with those GSM accounts in
22order to provide our product demonstrations through
23partners to have them evaluate it.
24
25
00079
1
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5
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20
21
22
23
24   Q Did the Microsoft U.S. corporate accounts
25space and GSM account managers have a quota for
00080
1Microsoft Business Solution products in fiscal year
2'04?
3   A No.
4   Q Do they currently?
5   A They were assigned a quota at a MS U.S. CAS
6level, which was based on a team base quota for the
7entire geography for CAS. No GSM quota was assigned.
8   Q What was the CAS quota if you recall?
9   A It -- it differed based on various
10geographies and the amount of corporate accounts that
11were present in, and as well as the existing accounts
12that were generating some maintenance revenues and
13some other factors.
14   Q What is a sales quota?
15   A It's an objective by which a salesperson is
16measured by.
17   Q Is it fair to say that the Microsoft U.S.
18CAS salespeople needed to sell a certain amount of
19Microsoft Business Solution products in order to meet
20their quota?
21   A The Microsoft CAS salespeople worked closely
22with the SSP and the partners within the district that
23they identified to generate opportunities and revenues
24in MBS within the geographic district. It was a
25team-based quota such that the total district was
00081
1responsible for generating a specific team-based
2number, of which the entire team participated in
3evangelizing MBS to customers and to partners and to
4just in general seminar participations and such that
5Microsoft Business Solutions had these divisional-type
6of spoke solutions for companies that were evaluating
7that kind of opportunity.
8   Q So is it fair to say that each of the 17
9geographies had a quota for Microsoft Business
10Solution software products?
11   A Yes.
12   Q And the quota would vary depending upon how
13many CAS accounts were within the particular region?
14   A Correct.
15   Q And the salespeople were measured by the
16sales of Microsoft Business Solution products to the
17CAS accounts within the region?
18   A CAS accounts and where appropriate, we would
19provide coverage to certain industry accounts and GSM
20accounts. As shareholders of the company, we wanted
21to make sure those accounts, if there was a fit that
22arose, that we were servicing those accounts from a
23satisfaction point of view. But the quotas, the
24focus, the marketing was all derived and dedicated at
25the CAS space accounts.
00082
1
2
3
4
5
6   Q Sure. I'm trying to figure out, I believe
7you said that if there was an appropriate fit within
8the GSM, within the GSM space, if some vertical
9specialist brought some sort of GSM opportunity that
10people believed was appropriate, that that would be
11pursued by the CAS salespeople?
12   A No. Let me clarify that. If as an example
13Deloitte and Touche came in and said, we have a number
14of Navision locations. We want to talk to Microsoft
15about setting up an executive briefing. The Microsoft
16Business Solution representative in the geography
17where Deloitte and Touche resides would assist the
18Microsoft GSM rep in setting up the appropriate
19resources and presentations and partners that could
20assist Deloitte in finding out the information they
21were looking for.
22
23
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25
00085
1
2
3
4
5
6
7
8
9
10   Q And Axapta, what's the target market of
11Axapta?
12   A Axapta, as I mentioned earlier, is a product
13that is targeted at manufacturing-based companies,
14companies with manufacturing functionality, and some
15of the international location from a spoke perspective
16where a company needs international divisions or
17locations that could be fulfilled by Axapta.
18   Q Is Axapta targeted at companies with up to a
19billion dollars a year in annual revenue?
20   A That's possible, depending on the complexity
21of the organization or the number of users or
22employees, or it really depends on the complexity.
23   Q Is it targeted at corporate accounts-based
24customers?
25   A If, if the requirements and the partners
00086
1believe Axapta would be a strong fit, yes.
2   Q And you mentioned earlier a company called
3Esselte?
4   A Yes.
5   Q Are you familiar with that company?
6   A Yes, a little bit.
7   Q And Axapta is being implemented in that
8company, right?
9   A Yes.
10   Q And when did that implementation start?
11   A The licensing of the Axapta product to
12Esselte took place in June of 2003.
13   Q And is Axapta currently been implemented at
14Esselte?
15   A To my knowledge it is, yes.
16   Q And is it being implemented across the
17world?
18   A To my knowledge there are international
19locations. I don't know about around the world.
20   Q What international locations are you
21familiar with at Esselte?
22   A I'm not particularly privy to any particular
23ones.
24   Q Is Axapta being implemented in the United
25States for Esselte?
00087
1   A I don't recall.
2   Q Do you know -- do you know how many
3employees Esselte has?
4   A I know that Esselte is looking at rolling
5out approximately 15 different locations, or we
6licensed the product to accommodate for up to 15
7locations of use of the Axapta product which could
8accommodate as many 3,000 users. It also -- you know,
9all across those 15 locations. It's really up to
10Esselte how they're deploying it. I'm not privy to
11how -- what the latest status is.
12   Q Can Axapta support up to over 3,000 users?
13   A Up to 15 locations I believe that there's a
14good possibility that it can support those users.
15   Q You sold it Esselte based on the fact that
16it could support that many users over that many
17locations, correct?
18    A Correct.
19   Q And --
20   A But this is a situation where Esselte is
21going to be, just as clarification point, we are not
22looking at one 3,000-user system. We're looking at 15
23systems with maybe 200 users at a maximum stretched
24out over those 15 locations.
25
00088
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9
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11
12
13
14
15
16
17
18
19   Q And it's your understanding Axapta is being
20implemented at 15 different locations across Esselte?
21   A It's my understanding that the license
22accommodated for Esselte to have the opportunity to
23implement Axapta to up to 15 locations for 3,000
24users.
25   Q And how many --
00089
1   A But I don't know how they're going to
2actually deploy the product, or if they are currently
3implementing all 15, or one at a time. I'm not privy
4to that information.
5
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00091
1
2
3
4
5   Q Do you have a recollection or an
6understanding of the amount of consulting revenue that
7Microsoft expects to receive or has received from
8Esselte?
9   A In the initial review, we were looking at
10somewhere in excess of $        in consultingREDACTED
11revenue associated with billable services to Esselte,
12but I have no information on what is actually billed
13to the client or what is the current, current status
14of that.
15   Q But the projections were for more than $REDACTED
16       in consulting revenue?REDACTED
17   A Associated with the project, that's correct.
18   Q Do you know whether Microsoft gave Esselte
19any discount off any the list price for the Axapta
20product?
21   A I believe that based on the commitments of
22our larger clients, there are discount processes that
23were set up to accommodate Esselte, which I believe
24they did qualify for, yes.
25
00092
1
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8
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12
13
14
15
16
17
18   Q I'd like you to take a look at what's
19previously been marked as Exhibit 1420.
20   A (Reviewing.)
21I'm familiar with this.
22   Q You've seen Exhibit 1420 before?
23   A Yes.
24   Q What is Exhibit 1420, sir?
25   A This Exhibit originally started out as a, as
00093
1a partner request from -- for a press release. The
2partner was asking us to provide just the approval to
3allow them to tout what, at the time and still is, the
4largest single Microsoft Business Solution sales
5opportunity, and then we took this and posted it
6actually on our web.
7   Q So Exhibit 1420 is posted on the Microsoft
8web site?
9   A From what I can see here, it is the
10Microsoft Business Solutions web site that's listed
11here.
12   Q And Exhibit 1420 concerns the sale of
13Microsoft Business Solutions Axapta to Esselte?
14   A Yes.
15   Q And it's titled Billion Dollar Manufacturer
16To Deploy Microsoft Business Solution System Across
17Four Continents. Do you see that?
18   A Yes.
19   Q And it refers to support -- Microsoft Axapta
20supporting 3,000 concurrent users in their daily work.
21Do you see that?
22   A Yes, I see that.
23   Q Is it your understanding that Microsoft
24Axapta will support 3,000 concurrent users in their
25daily work at Esselte?
00094
1   A It will not support 3,000 concurrent users
2on a single implementation or system. The
3clarification on the 3,000 concurrent users as we
4discussed is that we licensed the product to run 3,000
5users over 15 installation -- over 15 implementation
6sites with the idea that we would not exceed two to
7300 users at any particular one instance.
8   Q And do you have an understanding concerning
9whether the statement that Esselte's a billion-dollar
10manufacturer is accurate?
11   A I believe that's accurate.
12
13
14
15
16
17
18   Q And you are, you are quoted in Exhibit 1420,
19correct?
20   A My name appears here as, under this quote,
21that's correct. But I -- a partner wrote this on my
22behalf. We reviewed it, sent it to our internal
23public relations folks for draft. I did change the --
24I wrote the first sentence which states, we're excited
25to work with our partners to deliver a comprehensive
00095
1solution that truly meets the needs of Esselte's
2business. The second part of that question was not
3something I wrote, but wound up sending through the
4process for approval and it was published.
5   Q So you reviewed what the partner provided to
6you?
7   A That's correct.
8   Q And you agreed with it and approved it?
9   A I don't agree with it in the way it's worded
10here. I did pass it on for approval, but I think this
11is an example of perhaps a little overzealous reaction
12to the Esselte sale. And also, when the deal took
13place in June and when this was published, the
14organization had changed dramatically and people were
15in completely different roles in September of 2003.
16So that this one sort of got through the process
17without maybe going through some of the review it
18should have gone through. But there was a change in
19our public relations department, there was a change in
20my job, there was a change in the partner, you know,
21sort of publishing this release for -- and then our
22using it internally.
23   Q But you reviewed it and --
24   A I do recall reviewing this statement and
25passing it on to public relations for their drafting.
00096
1   Q And the statement you're referring to is
2this is a great example of how Microsoft Axapta can
3scale to meet even the most complex requirements of
4billion-dollar manufacturing businesses operating in
5multiple countries around the world?
6   A I don't believe that is a -- that could be
7interpreted as a misleading example of --
8   Q Have you asked that the Microsoft web site
9be corrected to -- so that this, this customer example
10is changed?
11   A No, I've not.
12   Q Are there any plans to change it?
13   A Yes.
14   Q When is it going to be changed?
15   A As soon as I can.
16   Q What's it going to say?
17   A I think this is a great example of how
18Microsoft Axapta can meet complex requirements. I
19mean this, this particular sentence gives the
20impression that Microsoft Business Solutions is, is
21meeting a very complex sort of large billion-dollar
22manufacturing corporation, when in effect what we're
23actually doing is licensing of a product to be used in
2415 remote locations --
25   Q But that's --
00097
1   A -- 200 users, and using very valuable
2partners to deliver on some of this complex
3functionality.
4   Q So the functionality is complex in Axapta,
5right?
6   A The complex -- the functionality that's
7being delivered to, to the Esselte account could not
8be delivered solely through Axapta.
9   Q Because partners are adding value from --
10   A Partners are adding specific products to the
11customer, as well as third-party partners have -- it's
12referenced here that Microsoft Axapta functionality
13with lean manufacturing module offered by eBECS.
14EBECS is a third party ISV product that the company is
15going to use for a majority of their manufacturing. A
16majority of their manufacturing in Esselte will not
17even be done through Axapta, nor could it be done
18through Axapta. But --
19   Q So there was a gap, and the partners are
20filling the gap, right?
21   A There is a gap, and the customer has decided
22to allow a -- to evaluate and allow a third-party
23product to do manufacturing functionality that is not
24currently present or planned to be present in the
25Axapta product.
00098
1   Q And the Deloittes and the Bearing Points of
2the would do gap analyses concerning SAP products,
3right?
4   A I would assume so, sure.
5   Q And they have to figure out ways to get from
675 or 80 percent fulfilling the client's functional
7needs to as much as the client wants, right?
8   A If they're contracted to do that. But in
9this particular case, we have a client that's in the,
10in the marketplace. Most customers would -- are
11looking for -- very complex customers would not settle
12for an Axapta product that didn't have all of the
13functionality delivered in its entirety. In this
14particular case, because we're rolling it out over 15
15or 20 locations at a very small user level, the client
16were willing and familiar to use a third-party product
17to conduct a majority of its manufacturing
18functionality.
19   Q So Esselte decided that because of its
20business structure, it could meet its needs through
21Axapta, right?
22   A Esselte determined that while Axapta -- that
23Axapta would be a fit for the divisional locations for
24the planned -- or the potential 15 rollout sites only
25if it could supplement that product through a third-
00099
1party decision that it determined it could make based
2on its organizational structure.
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5   Q If I can get you to turn back for a moment
6to what's been marked as Exhibit 1449, and still on
7Page 4151, the page we were looking at before lunch.
8And the portion of that page which is the box entitled
9MBS Positioning.
10   A Yes.
11   Q We talked about corporate, we spent a little
12bit of time talking about the corporation portion of
13that graph. And above is major, and above that is
14global and strategic. Do you see that?
15   A Yes.
16   Q And then the bubble to the right of that
17says Microsoft value delivered by hub and spoke
18integrated and distributed solutions. Do you see
19that?
20   A Yes.
21   Q Do you have an understanding of what an
22integrated solution that Microsoft Business Solutions
23might provide to the global, strategic, major space
24might be?
25   A I don't have specific definitions involved
00101
1with what an integrated solution is.
2   Q How about a distributed solution?
3   A Don't know what Mr. Malme was driving here
4as well.
5   Q Is a distributed solution a situation like
6Esselte in which Esselte is implementing, or the
7client is implementing various versions of Axapta
8around the world?
9   A It's my understanding Esselte is
10implementing various implementations of Axapta in
11individual locations around the world.
12   Q Okay. And is that a distributed solution?
13   A I don't know if it qualifies for what you
14describe as distributed.
15   Q Do you have an understanding based upon your
16years at SAP and at Microsoft concerning what a
17distributed solution business application solution is?
18   A My understanding of a centralized versus a
19distributed environment allow a customer to look at a
20central location where all processing is achieved for
21the total corporation versus one in which they may
22install one or multiple different vendor solutions at
23other locations around the world; the second one being
24distributing the systems to other locations.
25   Q And based on your experience, do some
00102
1corporations choose a distributed model as opposed to
2a centralized model?
3   A Some corporations are organized in a fashion
4that would accommodate a distributed solution,
5although I've never met a client that organizes its
6company or its software -- or organizes its company
7around a software or a business solution.
8   Q But they -- the company may be set up in a
9way that that can be addressed by a distributed
10solution?
11   A I think the company is set up prior to any,
12any solution being --
13   Q Sure.
14   A -- being brought to, to evaluate.
15   Q Absolutely. Absolutely. What I'm trying to
16figure out is, the company -- you're talking about
17companies which are organized in a certain way, and
18those kind of companies, I think you your testimony
19is, that a distributed solution might be appropriate
20for those companies?
21   A A company which is organized in such a way
22where they have small and medium size divisions,
23organizations, independent business units that they
24own and operate or are a controlling interest of in
25many cases can use our products in that environment.
00104
1
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3   A
4   Q What about a hub and spoke solution, what is
5that?
6   A A hub and spoke solution is really the, the
7focus that we've been describing where Microsoft
8Business Solutions is positioned in all of these
9sectors, corporate, major, strategic, global, as being
10a spoke in an operation that traditionally would
11communicate with a large Tier 1-type of solution at a
12main headquarters or major manufacturing facility
13where it's either not cost-effective or in certain
14situations, not technically feasible to implement a
15large complex solution in an organization which would
16be overkill in a very small division or department.
17          So in looking at these spokes, traditionally
18they're being maintained today by many different
19general ledgers and financial accounting system, many
20of those vendors being out of business for many years,
21off support, and Microsoft Business Solution is really
22looking to, to offer a standard operating solution for
23those small spokes that are out surrounding the major
24hub location for that company.
25   Q And in the corporate account space, can
00105
1Microsoft Business Solutions Axapta, for instance,
2serve as the hub ERP product?
3   A In the corporate accounts space, it is --
4depends on the complexity of the account, the number
5of users, the size of the business, the business
6processes that they're looking to implement.
7   Q How many --
8   A Traditionally we don't target the hub
9location as our business.
10   Q How many users can Axapta accommodate?
11   A I don't know the specifics on the
12benchmarking on absolute, and it would depend again on
13the particular business process that was being
14implemented at the customer that would impact the
15benchmarking of what it could and could not support.
16   Q Are you aware that Axapta has been
17benchmarked at 3900 users?
18   A I've read materials based on one particular
19business process that was, was benchmarked, although I
20don't believe the statistics based in what I've seen
21in real-life situations for some of the customers.
22   Q Are you aware of any Axapta users who have
23more than, more than 1,000 concurrent users at the
24moment?
25   A No, I'm not.
00106
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7   Q Going back to Exhibit 1420, the piece from
8the Microsoft web site entitled Billion Dollar
9Manufacturer To Deploy Microsoft Business Solution
10System Across Four Continents, and going back to your
11quote at the bottom of the first page of Exhibit 1420.
12   A Yes.
13   Q Can Axapta scale to meet the most complex
14requirements of billion-dollar manufacturing
15companies?
16   A I don't believe that statement is accurate,
17and I don't think that is neither the public, nor the
18internal intent of our target markets or where we're
19going after marketing for Axapta or supporting Axapta.
20   Q Well, I understand it may not be your target
21market, but Axapta is -- was purchased by Esselte to
22operate across four continents, right?
23   A Esselte licensed the product to operate in
24up to 15 locations for 3,000 users. It was -- the
25complexity of large manufacturing accounts extends
00107
1beyond numbers of users or business process. We are
2not really geared from a product functionality point
3of view to handle tremendously complex manufacturing.
4As I stated earlier for the record, this would not be
5an account we could offer satisfaction to without
6them, Esselte, making a decision consciously to do
7most of their manufacturing through the third-party
8product eBECS. So Axapta is not scalable to meet the
9most complex business requirements.
10   Q But it is in conjunction with the eBECS
11product, right?
12   A For the Esselte situation they believe that
13it would provide the functionality that they're
14willing to accept and implement to meet their
15particular needs, which they believe are complex, the
16partner believes are complex, but in general, I --
17I -- again to answer your question, the Axapta product
18as it stands is not geared to meet complex business
19requirements of complex manufacturing.
20   Q There are a variety of independent software
21vendors who sell products that are complimentary with
22Axapta, right? Like the eBECS solution?
23   A Yes, there's a variety of ISVs that work
24with our products, with Oracle, with SAP, with
25PeopleSoft, correct.
00108
1   Q And the eBECS product, that works with
2Axapta?
3   A The eBECS product is a niche manufacturing
4for lean software that works in conjunction with our
5Axapta product, yes.
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00112
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22   Q Now, can you tell me, what is Convergence?
23   A Convergence is Microsoft Business
24Solutions's annual user conference held for the past
25few years in Orlando, Florida. It's a session by
00113
1which users can exchange ideas and set up networking
2with each other. It's an educational session where
3executives and leaders from Microsoft and Microsoft
4Business Solutions present strategy, visioning,
5individual meetings with customers to thank them for
6business and to understand their strategy as a
7business, see where Microsoft can help.
8   Q Now, is this a Microsoft conference or
9Microsoft Business Solutions conference?
10   A It's traditionally been a Microsoft Business
11Solution conference. This year there was more of a
12presence of some of the Microsoft Technology, as well
13as the Microsoft Business Solutions. It's targeted at
14Microsoft Business Solution clients.
15   Q And it took place in this March in Orlando?
16   A March 2004 in Orlando.
17   Q And did you meet any corporate account space
18or GSM customers at Convergence?
19   A Yes.
20   Q Do you recall who you -- with whom you met?
21   A I'm trying to think.
22          I met with        which is a CASREDACTED
23customer; I met with Bound Global, I met with Chanel,
24I met with        -- they're not a CAS customer, but
25I think -- those are the ones I can recall offhand.REDACTED
00118
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19   Q And you recall meeting withREDACTED
20Corporation at Convergence in March of this year?
21   A Yes. We had a dinner meeting where I had
22the opportunity to interact with them and a brief
23offline conversation for five or ten minutes with the
24gentleman that attended.
25
00120
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18   Q Do you have an understanding that Miss
19Tudela was attempting to sell        CorporationREDACTED
20Axapta for use in Mexico, Australia and Honduras?
21   A There were, there were three separate
22evaluations going on with two separate partners in
23Honduras, Mexico and Australia, and the company asked
24for us to get involved and tell us more about the
25product offering because three of their divisions were
00121
1reporting in that it was a very attractive product for
2their independent business units. And those are the
3three I believe Miss Tudela was really focusing on as
4part of this visit by the client.
5   Q And is -- does Axapta have functionality to
6support operations in Mexico, Australia and Honduras?
7   A We have partners in each of those areas
8that, that are able -- that have the ability to
9implement the Axapta product in those three locations,
10that's correct.
11   Q And the -- either the Axapta product or
12through partners has the localizations necessary for
13Mexico, Australia and Honduras?
14   A I'm not positive how that's, how that's
15attained.
16   Q Miss Tudela says that she's hoping to widen
17the scope worldwide. Do you see that?
18   A Yes.
19   Q And then she says, this is the objective?
20   A Yes.
21   Q Do you have an understanding concerning
22whether Miss Tudela wanted to sell Axapta toREDACTED
23Corporation on a worldwide basis?
24   A After the briefing document and
25conversations with Miss Tudela, we discussed that
00122
1there are many locations that have a common separation
2that is exhibited in Honduras, Mexico and Australia
3that would also be potential opportunities for the
4future should we be successful in these other remote
5locations. It was her intent to prove that through
6successful implementations of those, that we could
7have the opportunity to be evaluated for those other
8locations as well.
9   Q What other locations was she referring to?
10   A I don't have specific knowledge of where,
11where and how many there are.
12   Q Locations inside the United States?
13   A There are some locations in the United
14States, yes.
15   Q And your understanding isREDACTED
16Corporation is headquartered in Alabama?
17   A Yes.
18   Q If you rum to Page 8748 of Exhibit 1450,
19sir.
20is a page entitledREDACTED
21Participant Profile, correct?
22   A Yes.
23   Q And it says current scope ERP Axapta
24opportunity for Mexico, Australia and Honduras?
25   A Yes.
00123
1   Q That's consistent from your understanding
2your discussions with Miss Tudela?
3   A Yes.
4   Q And also with        Corporation?REDACTED
5   A From conversations with        Corporation,REDACTED
6that's correct, Mexico, Australia and Honduras
7locations.
8   Q And potential scope includes ERP Axapta
9worldwide to include U.S. subsidiaries?
10   A Potential scope is an optimistic
11representation of what the total opportunity would be
12on a worldwide, multilocation basis shouldREDACTED
13Corporation say, we want all of our remote locations
14to install the Axapta product line.
15   Q And it's 2000 to 2500 users is the potential
16scope?
17   A It appears that that's the estimate that's
18currently in this document listed out over multiple --
19five different divisions, and I'm unsure -- five
20different lines of business, five different divisions,
21and I'm not sure exactly how many locations that would
22represent on a worldwide basis. There are five
23separate business divisions that operate autonomously.
24   Q Inside       ?REDACTED
25   A Yes.
00124
1   Q So this is another company that's organized
2in sort of a distributed fashion?
3   A It would be             , theREDACTED
4ones that are listed here,          ,REDACTED
5          being the one that's probably theREDACTED
6most well-known.
7   Q And according to Miss Tudela's summary
8report to you on              in advance of Convergence,REDACTED
9          has over a billion dollars in annual sales?REDACTED
10   A That's what appears here.
11   Q And more than 15,000 employees worldwide?
12   A That's what appears here as well.
13   Q And did you have any discussions with
14about --           Corporation aboutREDACTED
15implementing Axapta ERP on a worldwide basis?
16   A We certainly -- actually           had broughtREDACTED
17up to us that they would like to find a way to get
18their other divisions up with a more standard sort of
19solution offering potentially with Microsoft, but
20they're also evaluating many different other vendors
21as well.
22   Q What other vendors?
23   A They're looking at, I believe it's J.D.
24Edwards, they're looking at -- other than J.D. Edwards
25I'm not sure exactly all the different vendors they're
00125
1looking at.
2   Q J.D. Edwards has been acquired by
3PeopleSoft?
4   A That's right.
5   Q So they're looking at PeopleSoft; is that
6fair?
7   A It's fair to say that, yes.
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00126
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8   Q And do you have an understanding from your
9conversations with where they were interestedREDACTED
10in potentially implementing Axapta, Axapta in the long
11term?
12   A We focused on Mexico, Australia and
13Honduras.
14   Q Did you have any discussions about
15implementing it worldwide, including the U.S.
16subsidiaries?
17   A It was mentioned in their system overview of
18their organization structure that there would be other
19remote opportunities that are running older
20Legacy-based systems that were not supported anymore.
21   Q When you say remote opportunities what do
22you mean?
23   A Distributed divisions of one of these five
24business units, independent operating sort of
25remote -- more of the spoke examples we mentioned
00127
1earlier where they have a plant or a factory in a
2remote location that provides either strictly
3manufacturing or strictly distribution or strictly
4warehousing to service some of these particular
5business units.
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20   Q Now, the estimated value of the           saleREDACTED
21to the MBS ecosystem is listed at        to $REDACTED
22Axapta worldwide, right?
23   A That's what I read here, yes.
24
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18   Q Did you have any discussions withREDACTED
19about deploying a hub and spoke system in which
20everything was going to be Axapta?
21   A At the spoke level we have been having
22conversations about having an Axapta spokes around a
23centralized hub.
24   Q And did you have any discussions with
25that -- concerning having Axapta as theREDACTED
00133
1centralized hub?
2   A No, we've not.
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00134
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13   Q So at Indianapolis Motor Speedway they've
14implemented Great Plains as the hub?
15   A They have one location, one operation, so --
16there are no real spokes. So it's one implementation.
17
18
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20
21
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23
24   Q What did you tell           Corporation aboutREDACTED
25the Axapta product when you met with them?
00135
1   A They were, they were interested in our
2investment strategy around Axapta, where we were
3positioning the Axapta product, how it was working in
4the hub and spoke model, what divisions of
5international companies had deployed Axapta
6successfully in remote operations operating in a
7spoke-type environment. We talked about partner
8selection and how Microsoft supports its partners in
9delivering those solutions, how we were working
10closely with their two partners that they had been
11engaged with so far.
12
13
14
15
16
17
18
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20
21
22   Q Do you recall what sort of functionality
23          Corporation was interested in in Axapta?REDACTED
24   A Core financial systems operating in Mexico,
25Australia, and Honduras.
00136
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17   Q What do you recall about the business
18processes at the various locations?
19   A Pretty straightforward single location
20processes, core financial functionality added to some
21basic inventory and storage-type requirements.
22   Q How was the information going to be
23transmitted from Honduras, Australia and Mexico to
24Alabama?
25   A I don't have specific knowledge of that.
00137
1          And just as a point of clarity, the hundred
2users that were allocated for Honduras, Mexico and
3Australia were split among those three locations.
4   Q So 33 users or so each?
5   A Approximately, yes, at the most.
6          And nothing has been finalized withREDACTED
7as a corporation, so they are not a current MBS user.
8   Q They're still a prospective client?
9   A Correct.
10   Q And what about the 2,000 to 2500 users
11that's in the potential scope according to Miss
12Tudela, how are those distributed, do you know?
13   A Don't know specifics.
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00142
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11   Q Do you have an understanding of why Mr.
12Wagner wanted to brief you on the prospects that he
13was entertaining at dinner at the Convergence
14conference?
15   A Peter and I discussed using the Microsoft
16Business Solution event at Convergence as a way by
17which he can introduce some of his largest clients
18within the region to what Microsoft Business Solutions
19is, what the products are, what the strategies are,
20chance to listen to keynote executives. In many cases
21we bring key clients that have never heard of
22Microsoft Business Solutions to these kind of events
23for information purpose so they can gather data about
24who we are and what we do. In this particular case,
25I've not heard, met, or seen anything further about
00143
1          that I can recall since the original E-mailREDACTED
2came out.
3   Q Mr. Wagner's E-mail says that        is aREDACTED
4global leading textile manufacturer with 15,000
5employees, right?
6   A That's what it says yes.
7   Q Plus 1,000 consecutive user Axapta
8opportunity?
9   A I believe that stands for concurrent.
10   Q So over 1,000 concurrent users Axapta
11opportunities is what           represents to Mr.REDACTED
12Wagner at least?
13   A I'm not specifically sure how many
14locations, how many divisions, how many departments,
15how many separate subsidiaries or independent business
16units could be made up within       , but he isREDACTED
17stating here from his estimating purposes that's the
18kind of opportunity that he presents.
19   Q And you've never had any discussions with
20Mr. Wagner about the        opportunity?REDACTED
21   A It has not risen to my attention as an
22account that he has asked me to participate in
23personally.
24
25
00145
1
2   Q How about          , are you familiarREDACTED
3with them?
4   A I've, I've heard the name, and I've met them
5in a previous meeting.
6   Q And where was this previous meeting?
7   A In Chicago, at a Microsoft Business Solution
8event. It was a seminar that was held.
9   Q In January of 2003?
10   A It was at a particular event where Steve
11Ballmer came into Chicago for meetings with some of
12our key partners and key clients in the Chicago area.
13If that's what you're referring to --
14   Q That is.
15   A -- that is the meeting, yes.
16   Q And Mr. Burgum was also there?
17   A Yes.
18   Q Did you meet with           at thatREDACTED
19meeting in Chicago?
20   A I met with them individually over coffee,
21but did not have a formal meeting withREDACTED
22   Q Did Mr. Ballmer meet with them?
23   A I don't recall.
24   Q What did you learn aboutREDACTED
25software needs at the meeting in Chicago?
00146
1   A          , for the conversations I had,REDACTED
2was looking to find a way to simplify they business,
3to reduce the number of business processes, to look at
4ways by which they could standardized around an
5easier-to-use, simpler system on some of their
6locations and divisions around the United States and
7around the world.
8   Q Now,              now, I think, an eight orREDACTED
9$9 billion a year company?
10   A I think we were talking to a very -- a much
11smaller piece of that that specialized in some of the
12exhausts and brakes and some of the other things I
13think that they do in aftermarket.
14   Q Is that             ?REDACTED
15   A It says that here, although I can't
16specifically verify that.
17   Q You're referring to Exhibit 1451?
18   A Yes, I am.
19   Q And according to Exhibit 1451,REDACTED
20is a $1 billion division of          ?REDACTED
21   A That's what it says here as well.
22   Q And that's Mr. Wagner's report to you?
23   A Yes.
24   Q And do you know if           hasREDACTED
25bought Axapta for implementation at any locations?
00147
1   A I do not have a specific recollection that
2it has.
3   Q Is              an example of a spokeREDACTED
4in a hub and spoke situation?
5   A           is an example of a division ofREDACTED
6a large corporation which in itself is made up of
7multiple, multiple business units which in turn have
8multiple, multiple spokes on top of that, whereas we
9get further down from the division level to the
10subdivision level to the spoke level present
11opportunities for a mid market solution that is easy
12to implement and very simple for some of the remote
13distribution and locations that they might have in
14their organization structure.
15
16
17
18
19
20
21
22   Q But the target market of Axapta is up to a
23billion dollars a year in annual revenue, correct?
24          MS. BLIZZARD: Objection. Misstates the
25testimony.
00148
1   A Yeah, the target market for Axapta is based
2on customer requirements and fit, not necessarily on
3dollar values. I think we find that most of the --
4   Q Go ahead.
5   A -- most of the organizations can't be
6recognized for complexity based on mere dollar values.
7   Q Why not?
8   A It -- my opinion, there could be a very,
9very complex very small account, or very, very large
10dollar volume account that could be very simple in
11nature as well.
12   Q Tell me about the very small complex
13account.
14   A There are some accounts that we're not a
15good fit for and that require multiple solutions
16outside of our core product for some unique business
17requirements that they may choose to implement within
18their organizations.
19   Q Give me some examples.
20   A A small community bank that is looking for a
21system that does direct deposit accounting and complex
22banking transactions or treasury transactions. Very
23small dollar volume account that we could not service
24because of the specific vertical function or banking
25functions that they have that are not part of any of
00149
1our products.
2   Q What software could serve them?
3   A I think there are, there are -- I can't
4speculate to which ones that are prevalent, but there
5are a lot of software packages that specialize in
6banks.
7   Q What -- Name some.
8   A I don't know any specifically.
9   Q I'm not sure I understand the example, then.
10If you can't tell me what would serve them, I just
11don't understand how you could --
12   A I know that I don't -- I know that I don't
13serve them. I'm not necessarily looking at the
14companies that do.
15   Q How do you know you couldn't serve them if
16you don't know what can serve them?
17   A My products don't do the functions that they
18require.
19   Q And what's the dollar revenue of the kind of
20examples you're thinking of?
21   A Could be $100 million regional bank.
22   Q So there are $100 million regional banks
23that can't be served by Axapta or any Microsoft
24Business Solution product?
25   A Correct.
00150
1   Q And are there $3 million companies with, as
2you call it, simple processes that could be served by
3Axapta?
4   A Three million dollar?
5   Q Three billion.
6   A Potentially could be, but I can't speculate
7that dollar values are necessarily a symbol of
8complexity.
9   Q What else is a symbol of complexity to you?
10   A The products we have are not designed to, to
11allow for global visibility of inventory, or supply
12chain, or as we discussed earlier, the ability to look
13across an organization for factory optimization or
14product optimization.
15   Q How about -- let's just focus -- you're
16talking about supply chain and other things. Let's
17talk about core financials. What in core financials
18does Axapta not have in terms of complex
19functionality?
20   A Treasury management, hedging, companies that
21deal in multiple strategies regarding foreign
22exchange, conversion rates and dealings with very
23sophisticated treasury management functionality; cash
24projections, investment strategies, things that large
25corporate hubs traditionally require that are dealing
00151
1with large volumes of money on a daily basis.
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13   Q Do you recall seeing any documents stating
14that the target market for Axapta is up to $1 billion?
15   A I've heard that number mentioned in
16conversations, in briefings and conversations in the
17past as being one of many characteristics that are,
18that are being listed about a target market.
19   Q What are the other characteristics of the
20target market for Axapta?
21   A Locations of large corporations that have
22simplistic business needs that are accommodated by the
23Axapta product, manufacturing locations that are
24single location in nature, some of the international
25remote divisions that we've discussed in our earlier
00152
1testimony as being the targets.
2   Q And does Esselte fall outside of the target
3market of Axapta?
4   A I can't speculate on whether it does.
5   Q Do you know whether or not it has simple or
6complex needs for financial management software?
7          MS. BLIZZARD: Objection. Vague.
8   A Don't know specifically.
9   Q When you talk about simplistic needs, what
10do you mean?
11   A Companies that don't require the, the large
12scale manufacturing or supply chain or international
13treasury or specific vertical functionality that's
14associated with a lot of the larger Tier 1 solutions
15that, that we typically refer those clients to.
16   Q Now, the vertical functionality, Microsoft
17partners with ISVs who provide vertical functionality
18as a bolt-on to its products, right.
19   A That's true, but in a situation in dealing
20in large corporations, a large -- most of our partners
21are very, very small partners with very, very limited
22product depth and scope. Most large companies that
23I've dealt with, getting back to your question about
24complexity, do not want to deal with multiple points
25of failure in dealing with multiple solutions,
00153
1multiple partners, multiple vendors, especially in the
2situations where large businesses do not want to rely
3on very small ISV partners as part of an overall
4corporate solution or a hub solution. They want the
5support and product to be delivered by one publisher
6in most cases.
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00156
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6   Q Do you recall whether Mr. Ballmer met with
7          at the meeting in Chicago?REDACTED
8   A Yes, he did.
9   Q If you look at specific outcomes that will
10occur if the meeting is successful -- do you see that
11heading?
12   A Yes, I do.
13   Q To the right it says, No. 1,REDACTED
14will make Axapta its ERP choice for its U.S.
15locations. Do you see that?
16   A Yes, I do.
17   Q Did you have an understanding before the
18meeting in Chicago that one of the goals of the
19meeting was to have        make Axapta its ERPREDACTED
20choice for its U.S. locations?
21   A I received this briefing document prior to
22the meeting in Chicago so I recall reading the
23document and understanding that that was the
24conversation that we were hoping to leadREDACTED
25to.
00157
1   Q And you received Exhibit 1452 in advance of
2the meeting on January 21, 2003?
3   A Yes.
4   Q And you read it at that time?
5   A Yes.
6   Q And is it fair to say that Microsoft
7Business Solutions is still having discussions with
8          about Axapta product -- the AxaptaREDACTED
9product?
10   A Not as formal, but yes, we are having
11discussions withREDACTED
12   Q So is it fair to say that the sales puree,
13at least with          , has been an extended one,REDACTED
14over a year's time?
15   A Yes. Not much has changed if anything since
16this meeting and prior to today.
17   Q Do you have an understanding concerning
18whether           has bought any Axapta productsREDACTED
19for any of its locations?
20   A Other than what I've read here, I have no
21specific understanding of what they have done other
22than a pilot location in Italy which is represented
23here.
24   Q And Item 3 in specific outcomes that will
25occur if the meeting is successful isREDACTED
00158
1will implement Axapta in its worldwide locations also
2known as One World System. Do you see that?
3   A I see that, yes.
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23   Q If I can ask you to turn briefly to Page
243640. There's a reference there to CDI Corporation.
25Do you see that?
00159
1   A If I could have just a moment to review.
2   Q Certainly.
3   A (Reviewing.)
4          Okay.
5   Q All right. Have you ever met with any
6representatives of CDI Corporation?
7   A Yes, I have.
8   Q On how many occasions?
9   A Six to eight different occasions.
10   Q Were you involved in the sale of Microsoft
11Business Solutions software products to CDI
12corporation?
13   A I was involved in supporting partner
14meetings and presentations, as well as executive
15presentations at CDI Corporation.
16   Q And based on those meetings, did you have an
17understanding that CDI had, had attempted to implement
18an SAP ERP system?
19   A Yes, I have.
20   Q And that they were unable to implement the
21SAP ERP system?
22   A Yes.
23   Q And that instead they decided to purchase
24Microsoft Great Plains?
25   A That's correct.
00160
1   Q And do you have an understanding one way or
2the other concerning CDI's annual revenues?
3   A It states here that it's approximately $1.4
4billion.
5   Q Do you know if that's correct?
6   A I don't know if specifically that's correct.
7   Q Do you know approximately how many employees
8CDI has?
9   A Not specifically. Other than what I read
10here.
11   Q And in Exhibit 1452 it says 24,000?
12   A That's correct.
13          Again, just from a point of clarification,
14the SAP implementation was discontinued. The Great
15Plains product was not replacing all of the locations
16where SAP had, had focused its implementation efforts.
17Great Plains was implemented in a small division of
18CDI. The other divisions returned to the systems
19prior to their -- that they used prior to attempting
20to implement SAP.
21   Q Was Great Plains installed, or implemented
22at CDI's corporate headquarters?
23   A I'm not sure.
24   Q Do you know where CDI is headquartered?
25   A Philadelphia.
00161
1   Q Do you know how CDI is organized in terms of
2whether it has many subsidiaries or if it's a highly
3centralized company?
4   A It's an organization with many different
5business units focusing on different parts of the
6staffing business; technical -- technical consulting
7staffing, engineering, and construction staffing for
8assistance in building cable towers and lines for
9telecom communications companies; Management
10Recruiters, which is a recruiting agency, and Today's
11Staffing, which is a similar, we had mentioned one
12earlier Kelly Services, a typical staffing company
13for temporary help.
14   Q But this is a professional services staffing
15company for, for engineers and people like that?
16   A They're different divisions that specialize
17in -- one division would have technical consulting,
18one would have very -- there's at least six different
19business units that I'm aware of that are separate and
20distinct parts of CDI Corporation.
21   Q And what's your understanding of where Great
22Plains was implemented at CDI?
23   A We discussed the core financial applications
24of CDI and how Great Plains could match with those
25core back office financial systems.
00162
1   Q And was Great Plains installed as the core
2back office financial software for CDI?
3   A For a small portion of CDI that
4implementation was successful.
5   Q And was there an attempt to install Great
6Plains more broadly?
7Not that I'm aware of.
8And it's your understanding -- do you have
9an understanding concerning whether CDI is using Great
10Plains as its core financial system for the entire
11corporation?
12   A No, I do not have specific knowledge of
13whether they're doing that.
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00170
1   Q If you turn the page, Page 172 of Exhibit
21453, sir. Are you familiar with the implementation
3of Microsoft-Great Plains at Six Flags?
4   A Not in detail, not in intimate detail, no.
5   Q What's your understanding?
6   A I have met with, with executives from Six
7Flags that touted the implementation as being a very
8successful use of the financial systems at, at Six
9Flags.
10   Q And is it your understanding that Microsoft-
11Great Plains is the core financial system in use at
12Six Flags?
13   A I can't specifically state that.
14   Q Do you have an understanding concerning
15where Microsoft-Great Plains is in use at Six Flags?
16   A No personal specific knowledge, no.
17   Q Who at Six Flags have you met with?
18   A One of the controllers who attended one of
19our Microsoft briefings in Redmond as part of a summit
20where we had a chance to have lunch.
21   Q Were you involved in any way in the, in the
22sale, in the effort to help the partners sell the
23Microsoft-Great Plains to Six Flags?
24   A No.
25
00172
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14   Q Did you have any discussions withREDACTED
15about rolling out Microsoft Business Solutions
16products on a worldwide basis?
17   A At any time?
18   Q Yes.
19   A Yes, I have.
20   Q And what has your discussion been, sir?
21   A Microsoft has met with           regarding aREDACTED
22traditional hub and spoke-type environment in that
23          is made up in actuality 1400 differentREDACTED
24agencies, very small in nature.     as aREDACTED
25corporation is a holding company for the revenue
00173
1streams associated with those          . TheyREDACTED
2believe that the Microsoft Business Solutions products
3in the nature of being a Tier 2-type of product line
4would allow for them to roll these out in the various
5divisions around, and locations around the country in
6a very simple and easy-to-use way.
7   Q Would the plan as you understand it be to
8use Microsoft Business Solution products at all of
9       various subsidiaries and agencies?REDACTED
10   A has shared with us in meetings thatREDACTED
11they would like to get as much standardization across
12their various agencies and locations as possible, but
13they have not stated any, or are they in a position in
14many cases to offer a mandate to all of their
15locations to implement.
16   Q There's a reference to a, or a corporate
17communication within        that the only ERPREDACTED
18solutions to be considered are Microsoft Business
19Solution ERP solutions?
20   A Yes.
21   Q Are you aware that the CFO of        orREDACTED
22someone else has sent out such a communication?
23   A I was aware that a communication was
24discussed. I have no specific knowledge of that
25communication itself.
00174
1   Q What did you learn about the communication?
2   A That the global CFO was endorsing the
3Microsoft Business Solution product as a choice of the
4corporation at the high level as a product that should
5be evaluated by anyone considering a move to a
6different back office financial accounting system.
7   Q And are you aware of discussions concerning
8the potential use of a Microsoft Business Solution ERP
9product at the -- at           subsidiary called     ?REDACTED
10   A I am aware that discovery and presentations
11are planned at     through our tower.REDACTED
12   Q And what's your, what's your understanding
13of the progress of those discussions? Are they
14preliminary or are they more advanced?
15   A I believe that     will be evaluatingREDACTED
16PeopleSoft, Oracle and Microsoft Business Solution in
17a series of presentations that are due to occur in the
18next 30 to 60 days.
19   Q And it's your understanding -- what's your
20understanding concerning what Microsoft Business
21Solutions software product will be evaluated by    ?REDACTED
22   A My understanding from conversations with the
23partner is that Microsoft Business Solutions will be
24representing its Solomon product for professional
25services.
00176
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18   Q Have you learned anything from either of
19those individuals about the number of locations over
20which     operates?REDACTED
21   A No, I've not.
22   Q Do you have any understanding?
23   A I have a core understanding that the Solomon
24product has been asked to support somewhere between
25three to 400 total back office financial users for
00177
1as part of this evaluation process.REDACTED
2   Q And do you have an understanding concerning
3whether the Solomon product can support between three
4and 400 back office users?
5   A We have put the necessary MBS resources in
6place to do the evaluation, and plan to let them know
7whether or not we believe that that product can reach
8the levels given the particular transactions thatREDACTED
9plans to process with us.
10   Q And what kinds of transactions is it do you
11understand     wants to process?REDACTED
12   A Core financial transactions and a variety of
13time entry-type of transactions, hours charged to
14specific creative projects and very, very simple sort
15of three hours on this project, two hours on this
16project, four hours on that project.
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00178
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8   Q To your understanding there's going to be no
9discussion of, or potential use by        of MBSREDACTED
10products on a corporate-wide basis for all 57,000
11employees?
12   A Oh, no, no. The discussions are not around
1357,000 Microsoft Business Solution users in any way,
14shape or form. The discussions with             , even inREDACTED
15high-level discussions on a worldwide basis have
16estimates ranging from 2500 to 3,000 total users over
17approximately 350 different locations;           being theREDACTED
18largest single user of the product in a particular
19location. And if you do some quick math of looking at
202500 to 3,000, subtracting two or 300, and then
21spreading the rest over 350 locations, you get a sense
22for the size of maybe ten users, five to ten users per
23location based on the requirements for core
24financials.
25   Q Is this an -- is        another example ofREDACTED
00179
1a distributed company that can be served by Microsoft
2Business Solutions software products?
3   A I don't tend to like the term distributed.
4I think        is an example of a highlyREDACTED
5decentralized organization that has run their business
6with, with 1400 separate small companies, each of
7which compete with each other in many cases for the
8same piece of advertising business. They have set up
9the organization in such a way that they track and
10monitor each of the progress financially of 1400
11agencies that roll up into 350 or so separate business
12units, that roll up into six to seven major business
13towers that they focus on as a business entity, and
14have a very highly decentralized approach to running
15their business.
16   Q Have you heard of a company called Helmeric
17& Payne?
18   A Yes, I have.
19   Q And are they using a Microsoft Business
20Solution software product?
21   A Yes, they are -- they have signed to license
22the Axapta product line.
23
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00181
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14   Q And what is your understanding, if you have
15one, of how Helmeric & Payne's business?
16   A In the opportunities I've had to meet with
17personnel from Helmeric & Payne, we have an
18organization that is a very remote oil rig operation
19management task on their hands where they actually
20have very remote oil rigs that are set up on various
21oceans and seas of which they are running financial
22and project software-type of requirements.
23   Q And where have you met with these people
24from Helmeric & Payne?
25   A At Convergence, at a Customer Appreciation
00182
1event in New Orleans, and most recently had the chance
2to, to talk to one of the personnel at an initial
3meeting of the Axapta user group meeting.
4   Q And do you have an understanding from those
5interactions where they're using Axapta?
6   A Other than what I've shared with you in
7terms of their business being this remote oil rig
8drilling operations, very decentralized operations, I
9have no specific knowledge of their implementation.
10   Q Do you have any knowledge concerning whether
11they have implemented Axapta at their corporate
12headquarters in Texas?
13   A No, I do not.
14   Q The E-mail from Mr. Bender that's on Pages
159339 over to 9340 talks about the relationship between
16Microsoft and PeopleSoft. Do you see that?
17   A Yes, I do.
18   Q And are you aware of anyone at PeopleSoft
19raising any issues in terms of competition between
20PeopleSoft and Microsoft?
21   A No, I've not.
22   Q You never heard that PeopleSoft was upset
23that Microsoft had taken business away from it at
24Helmeric & Payne?
25   A I was not directly informed of any, any of
00183
1that from PeopleSoft at all.
2   Q And there's a note, focus on anti Oracle.
3Is there an anti Oracle focus at Microsoft Business
4Solutions?
5   A No, there's not.
6   Q Would Microsoft Business Solutions prefer to
7see a customer buy Microsoft SQL Server over Oracle's
8database?
9   A As a shareholder, I think that each employee
10would, would prefer to have Microsoft technologies be
11the platform of choice by its clients.
12   Q There's a reference to, Mr. Bender says, we
13were very honest about the fact that MBS would move
14upstream. You see that?
15   A Yes, I do.
16   Q Have you heard anyone at Microsoft talk
17about Microsoft Business Solutions moving upstream?
18   A Not in those words, no.
19   Q Have you heard it in other words?
20   A I've heard that Microsoft is providing
21greater visibility to its corporate accounts, that
22these products have a place, as most Tier 2 vendors
23have a place in larger corporations that have remote
24or decentralized organizations, whereby many of these
25corporations had never heard of Great Plains or
00184
1Microsoft Business Solutions in the past.
2   Q You refer to Tier 2 vendors. Who are you
3talking about?
4   A Traditionally in the market Tier 1 vendors
5and Tier 2 vendors, Tier 2 vendors specifically in
6most of the analyst reports refer to Microsoft
7Business Solutions, a J.D. Edwards, a Sage, a Mapics,
8pPics-type of product line as being more of a Tier 2
9solution.
10   Q And Tier 1?
11   A Being more to an SAP, Oracle, PeopleSoft,
12Siebel.
13   Q I2?
14   A In the past, perhaps.
15   Q Manugistics?
16   A Probably not.
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00186
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16   Q Exhibit 1456 indicates that Esselte has
173,000 professional users?
18   A I see that, yes.
19   Q Is that consistent with your understanding?
20   A Yes, it is.
21   Q And has 15 instances of the application?
22   A I see that as well.
23   Q Is that consistent with your understanding?
24   A Yes, it is.
25   Q And has total net revenue before maintenance
00187
1of support to Microsoft of $       .Do you seeREDACTED
2that?
3   A I, I don't understand what that means, and
4nor is it a number that I've seen in any kind of net
5revenue numbers for Microsoft.
6   Q Do you have an understanding of the net
7revenue to Microsoft from Esselte?
8   A Not specific.
9   Q Can you give me a ballpark?
10   A a little over aREDACTED
11dollars.REDACTED
12   Q And that's just license revenue you're
13talking about?
14   A Correct.
15   Q And there's also going to be support and
16maintenance?
17   A Yes.
18   Q And what's the projection for those?
19   A Don't know specifically.
20   Q And we talked earlier about some
21professional consulting fees?
22   A Yes. Microsoft is providing some assistance
23to our partners there, yes.
24   Q And what's the projected amount of
25professional consulting fees to Microsoft?
00188
1   A We discussed earlier on the record that we
2were projecting in the early estimates somewhere
3around $           over the course of the project.REDACTED
4   Q And this notes that the Esselte deal is at
an overall discount. Do you see that?REDACTED
6   A Yes, I do see that.
7   Q Do you have an understanding one way or the
8other whether that is accurate?
9   A No understanding whether it's accurate.
10   Q Do you have any understanding of --
11concerning the discount that was given to Esselte?
12   A I understand that Microsoft pricing is from,
13from pricing, in terms of a customer that's looking
14for a broad-reaching agreement with Microsoft, is
15primarily priced in a way that is very different than
16the traditional marketplace prices by user.
17   Q What do you mean by that?
18   A Most ERP companies are pricing by users,
19where Microsoft Business Solutions has a -- an
20instance charge which tends to draw dramatic increases
21in price for companies that are looking to install
22more instances over their organization versus a
23traditional single site implementation that we
24traditionally deal with on a regular basis.
25
00191
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10   Q Setting aside any conversations you may have
11had with counsel for Microsoft, have you had any
12communications with anyone else at Microsoft
13concerning testimony given by Microsoft in the United
14States versus Oracle case?
15   A No, I've not.
16          As a point of clarification, I have
17responded to questions raised by the field in the
18classic Microsoft organization, as well as our field
19organization regarding a blurb in USA Today which
20quoted Doug Burgum regarding this case.
21   Q And what did that say?
22   A I don't know the specifics as it -- to
23paraphrase it was stating that Microsoft -- his
24position was Microsoft was not entering the enterprise
25space and did not see that as for a two- to
00192
1three-year-type of window, I believe is what the
2paraphrase was.
3   Q And what did you tell the field
4organization?
5   A I told them that, that we should continue on
6our track of approaching enterprises and CAS-based
7accounts based on our strategy of providing spoke-
8based solutions, to continue to evangelize the message
9of Microsoft Business Solution having a role as a Tier
102 provider in most large corporations around the world
11that have decentralized underserved locations, and
12that that was really all we were at liberty to comment
13on regarding the case. So it was business as usual,
14basically.
15
16
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19
20
21   Q Going back to Exhibit 1457, sir, this
22appears to be a discussion about proposed marketing
23messages because of concerns that Mr. Hemler has
24had -- received from prospects with respect to
25Microsoft's testimony that, quote, we aren't, we
00193
1aren't going after large enterprises. Do you see
2that?
3   A Yes, I see that.
4   Q And Miss Kloster's response to Mr. Hemler's
5E-mail says, we've always positioned our target market
6as being small mid market, as of a year ago started to
7include the corporate account space. Do you see that?
8   A Yes, I do.
9   Q Was there a change in the marketing
10philosophy of Microsoft in or about March of 2003 to
11extend the target market to include the corporate
12account space?
13   A I think in July of 2003 we made the
14commitment to bring on board these 17 CAS solution
15sales specialists to be located in the district to
16provide that marketplace a greater understanding of
17our products, our solutions and our strategy. But
18prior to that time, there was no dedicated resources
19that would allow those CAS-based customers access on a
20regular basis to Microsoft presentations or dedicated
21resources.
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00194
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6
7   Q And Ms. Kloster's E-mail is March 15, 6:03
8p.m. Mr. Hemler responds to that E-mail, and in his
9response he proposes a message which says, quote, our
10recent sworn statement to the U.S. Justice Department
11was intended to define our plans with respect to which
12customer segments we will proactively market our ERP
13solutions. It is not intended to say our products are
14not suitable for larger enterprises. To the contrary,
15Axapta had the flexibility and scalability needed to
16address enterprise ERP demands such as those,
17brackets, customer. Do you see that?
18   A Yes, I do.
19   Q Have you ever had any discussions with
20Mr. Hemler about that?
21   A Not directly. But I don't agree with his --
22I don't understand what his reference to sworn
23statements or his comments regarding the flexibility
24and scalability necessary to address enterprise scale
25ERP demands. This is not something I would write or
00195
1nor do I understand his references to any, any
2testimony or sworn statements.
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11   Q Have you ever heard any concerns expressed
12by any Microsoft Business Solution customers or
13prospective customers that, their concern that they
14might be topping out with Axapta or other Microsoft
15Business Solution product?
16   A Yes, I have.
17   Q And when have you heard those kind of
18concerns?
19   A Usually in group discussions and seminars,
20and one to many locations there's usually a question
21that has to do with, I though Microsoft-Great Plains
22was only for five-user organizations, I had thought
23Axapta was only available in Europe. There's a lot of
24people who have very, very limited knowledge of
25Microsoft Business Solution and the role we can play
00197
1in decentralized organizations.
2   Q What do you tell them?
3   A I talk to them a little bit about how we
4have been able to successfully implement some of these
5smaller decentralized hubs for organizations with
6Great Plains, with Axapta, that with we have
7successful implementations of 100, 200 users, and that
8you know, depending on the size, complexity and scope
9of the project, we'd be happy to talk to the client
10about their particular needs.
11   Q Are you aware of any Axapta implementations
12with four or 500 consecutive users?
13   A Yes, I am.
14   Q Where?
15   A A company called Old Castle.
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10   Q Is Microsoft Business Solutions selling
11through partners Axapta to organizations with up to $5
12billion a year in annual revenue?
13   A I think we have examples of a Great Plains
14implementation at              where           is a $6REDACTED
15billion company but we have a, one of the ad agencies
16that's using Microsoft Business Solutions product. So
17the answer to that is we are selling to     andREDACTED
18they're $6 billion, but we're selling to them, from a
19clarification point of view, at a very small agency
20level, five to ten, fifteen users.
21   Q Well, it's not really the agency level, is
22it? It's the headquarters level.
23   A No, we have other locations that are at the
24agencies in addition to the corporate use of the Great
25Plains product at the agency level.
00199
1   Q Do you think that Axapta has the flexibility
2and scalability to address enterprise scale at ERP
3demands?
4   A Sorry. Could you repeat the question?
5   Q Sure. I'm just essentially reading from Mr.
6Hemler's proposed statement and I'm wondering if you
7believe -- if you agree that Axapta has the
8flexibility and scalability needed to address
9enterprise scale ERP demands.
10   A Axapta -- it would depend again on the
11customer's particular functional requirements, their
12need for specific functionality, the complexity of
13their organization and the number of users that they
14are planning to implement. In the right cases, Axapta
15is a great fit for a department or division of -- or
16remote location of a decentralized company, but in no
17way is it robust enough to service the complex
18centralized locations of a large enterprise account.
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23   Q And what's the effort there, if you know?
24   A Pat is one individual in the Microsoft
25Business Solution team that's, that had taken on the
00202
1responsibility of working closely together, helping
2our, our not-for-profit teams and state and local
3Government teams identify partners that have been
4successful in marketing to that marketplace in the
5past for our -- we have a separate team in the
6vertical team that focuses on not-for-profit, state
7and local Government.
8   Q Are there other vertical teams within
9Microsoft Business Solutions?
10   A Yes, they are.
11   Q And what are those?
12   A The ones I can recall include automotive,
13financial services, health care, as examples.
14   Q Do you have an understanding of why there
15are -- why there's a public sector vertical,
16automotive vertical, health care vertical and other
17ones you can't recall?
18   A Specifically no, no definitive direction on,
19on -- maybe if you rephrase the question.
20   Q Sure. I'm just trying to figure out if you
21understand what's the strategy behind having people
22who are focused on particular segments of the market.
23   A Microsoft has set up these vertical accounts
24to provide selected vertical accounts better ratioed
25coverage with people that are understanding of their
00203
1particular business needs and -- as it pertains to
2Microsoft infrastructure, architecture, database and
3classic Microsoft requirements that are necessary to
4run their infrastructures.
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00204
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15   Q If you turn to Page 4 of the power point,
16sir. It has a Bates No. 3312. There's a reference
17this page appears to be entitled something next big
18thing. Do you see that?
19   A Barely, I can read it out, yes.
20   Q And it contains excerpts from April 2003
21Business Week article?
22   A That's what it says, yes.
23   Q And it talks about Mr. Rakes's quote that
24Microsoft will bring 10 billion in revenue from this
25emerging market by year 2010?
00205
1   A I see that.
2   Q Is that consistent with your recollection of
3the public statements made by Mr. Rakes concerning the
4growth potential for Microsoft Business Solutions?
5   A I've heard that statement before, yes.
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13   Q Let me ask a first question. The Microsoft
14fiscal year runs from when to when?
15   A From July -- approximately July through
16June.
17   Q Okay. So when you say there was a target
18for fiscal '04 that would be from July '03 to the
19following June'04?
20   A Correct.
21   Q So we're approaching the end of fiscal '04
22at this time?
23   A Yes, we are.
24   Q And fiscal '05 would start approximately
25July of this year?
00217
1   A Yes.
2   Q Okay. And I believe you testified that
3there was a team-based sales quota for the CAS space
4for fiscal year '04. Do you recall that testimony?
5   A Yes.
6   Q And I believe you also testified that there
7was not a quota for the GSM area for MBS products?
8   A That's correct.
9   Q Okay. Why was that? Why was there a sales
10quota for CAS and not for GSM?
11   A We anticipated a majority of our efforts to
12be based in, in the corporate accounts segment where
13there was teams in place that could sell along with us
14side-by-side from a coverage point of view and the
15partners were already engaged in those accounts. Our
16experience in revenue from the prior year showed that
17a majority of the revenue, once we did look at the
18segmentation, was derived from that corporate accounts
19space for Microsoft Business Solution products as a
20primary factor.
21   Q And I think you also testified that your
22targets for these CAS quotas, you were going to fall
23short in fiscal '04. Do you recall that?
24   A Yes.
25   Q Do you remember what the revenue target was?
00218
1   A Approximately       , a little over $REDACTED
2.REDACTED
3   Q And do you know what the current projected
4revenue is for fiscal '04?
5   A We are targeting somewhere in the 43,
6aggressively $    attainment in that space.REDACTED
7   Q Why do you believe Microsoft didn't make the
8CAS quota?
9   A I think, I think it was a very aggressive
10growth rate associated with that, with that -- maybe
11overestimated the market spend around our products in
12that space. We also you underestimated the amount of
13exposure and sales and marketing and confidence
14building that we would create around our products in
15those, in that space.
16   Q Could you pull out what was marked as
17Defense 1449.
18   A Okay.
19   Q I think you testified, and please correct
20me, that this was a planning document developed for
21fiscal '04 planning in around April of 2003?
22   A Yes.
23   Q Was the plan that's in here formally
24adopted?
25   A Not in specific terms, no.
00219
1   Q Okay.
2   A Some of this was used to ultimately
3determine the reporting structures and some of the
4high level resource planning around it. But this --
5this was not formally adopted in its current state.
6   Q Was the primary purpose of this document,
7then, for discussion?
8   A Yes.
9   Q Okay. Could you turn to Bates No. 4150.
10          At the chart at the top, do you see where it
11says fiscal year '04 and revenue, and it appears to
12say    , do you see that?REDACTED
13   A Yes.
14   Q Would that correspond to $       ?REDACTED
15   A In this particular, yes, it would.
16   Q And I believe you just said that the actual
17target that you ended up settling on for fiscal '04
18was a little over $       ?REDACTED
19   A Yes.
20   Q Going down that fiscal '04 column, the -- do
21you see where it says 17 MBS BSMs?
22   A Yes.
23   Q What are those?
24   A They wound up being what we have been
25discussing as solution sales specialists. Those are
00220
1the people deployed within the geographic regions or
2geographic districts within the Microsoft Enterprise
3organization that instead of being called BSMs, they
4are actually called solution sales specialist, SSPs.
5   Q And are those the 17 people on the virtual
6team that have a dotted-line reporting to you that
7we've been discussing?
8   A Yes.
9   Q The one below that MBS TSs, what are those?
10   A A TS within Microsoft is a technical
11solution presales resource whereby if a partner or an
12account needs some additional assistance in
13understanding the particular detailed functionality
14within a product, those resources are made available
15in the Microsoft classic organization. There's TSs
16for SQL, there's TSs for Windows, for Office. It was
17originally planned to have resources dedicated in that
18role in capacity for MBS in the enterprise space.
19   Q Was, was the number of 9 adopted as the plan
20for fiscal'04?
21   A The number that was actually adopted in FY
22'04 was zero.
23   Q The next line below that says Microsoft core
24GTM. What's that?
25   A It was, the initial discussion was around a
00221
1Microsoft Business Solution go to market leadership
2team that wound up being myself and one other person
3to help build the community and to oversee the hiring
4and some of the training associated with the MBS
5solution people in the field.
6   Q So was the fiscal '04 plan number there then
7two, one person plus yourself?
8   A It was originally four from a head count
9perspective. We redeployed one of those to become
10another resource in the enterprise that would be
11targeted at FY '05 technical solutions specialty, and
12one open position still remains in that organization
13structure that reports to me that hasn't been filled.
14   Q Okay. So -- and I want to make sure I'm not
15double counting here. Is -- if I take this 17 plus
16the two for Microsoft Corporate GTM and to get 19 ,
17would that represent the total number of resources
18deployed in fiscal '04 to help partners with the sales
19in the enterprise area?
20   A The total number that was actually approved
21was 21; 17plus the 4.
22   Q Okay. And of those 21, how many of those
23positions were filled?
24   A Nineteen
25   Q Nineteen, okay. In terms of the revenue
00222
1shortfall for fiscal '04, when did you first become
2aware that the group was not going to meet its revenue
3target?
4   A We probably knew fairly early in the fiscal
5year. Probably midyear we knew for sure that, that
6the revenue target was very aggressive and probably
7not going to be attained.
8   Q What steps were taken when you realized you
9weren't going to meet this target to potentially
10correct the situation?
11   A We tried to increase the, the marketing
12effort around hub and spoke targeting for cities,
13doing some direct mail, working together closely with
14partners to hold more seminars targeted at distributed
15solutions, decentralized autonomous-based
16organizations that were looking to, to replace their
17outdated or off-maintenance solutions. We early on
18were not at full strength from a head count
19perspective so we did not achieve the full17 field
20resources until the 6th of April from being at a full
21staff point of view, and a majority of those
22resources, probably 13 to 14, were with Microsoft or
23in their current role for less than six months as a
24total. So we had a very new team that was brought on
25board to help us here.
00223
1   Q So if I was trying to get a sense of the
2total number of resources deployed to help MBS
3enterprise sales through partners, the, the 21
4allocation would be very high then, because you're
5saying not all those positions were filled until late
6in the year?
7   A Yes, that's accurate.
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15   Q In the first paragraph, about oh, six or
16seven lines down, there's a sentence that says, I do
17believe a real part of the problem today, is that
18there are no boundaries, so everyone seems to believe
19we should go for a lot of things, including geo
20expansion in all big markets, multiples lines in more
21countries than we can afford, et cetera, et cetera, et
22cetera, et cetera, et cetera. Do you see that line?
23   A Yes, I do.
24   Q Do you agree with what Mr. Ayala says here,
25that this is a problem today for MBS?
00228
1          MR. YATES: Objection. Lacks foundation.
2   A My opinion is that there are very -- since
3Microsoft Business Solutions markets almost, or
4markets exclusively through partner organizations,
5there are various levels of competence within the
6partners and a variety of approaches and strategies
7that these partners take. I think that the partners
8are very excited to have a broad range of products
9that they can now resell to the marketplace. I think
10many of them still have yet to uncover all of the
11intricacies of the products in each particular country
12that we have localized or through partner offerings
13and I think that is, has caused some confusion in the
14channel in terms of how far to go in terms of talking
15to certain customers about where, where we can take
16the products. So I would agree with the statement
17that it would be very welcome in the channel and in
18the MBS support team to have specific boundaries set
19about the way we engage with customers.
20   Q What sort of confusion do you believe has
21been generated in the channel?
22   A I think for some of our channel partners,
23the CRM product line, the MBS product line in the
24Axapta division are very new to them. They're
25learning a lot of those products and functions as they
00229
1go. For some, as they get a new customer, it's a case
2of they don't know what they don't know and wind up
3encountering certain functional issues or client
4perceptions of the product that are not what they
5expected during the implementation, and it resulted
6really because it's the first time the partner has
7implemented that particular product line in a live
8situation.
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00235
1   Q What about Old Castle, have you heard of any
2problems with scalability at Old Castle?
3   A In brief discussions with Old Castle, I was
4informed that they were considering adding more users
5to their existing Axapta implementations and were in
6discussions regarding how the product would
7accommodate additional users. I don't know if that
8was concern or just conversations and evaluation.
9   Q Okay. I think you testified earlier, and
10please correct me if I'm wrong, but what I wrote down
11was concerning this benchmark that's come up several
12times for Axapta of something like over 3,000 users.
13I believe you said that you didn't believe the
14statistic represented a real world situation. Do you
15remember that testimony?
16   A Yes.
17   Q Okay. What do you mean by that?
18   A I don't believe I -- I believe what I stated
19was that benchmarks would vary depending on the kinds
20of transaction and the -- how the transaction was
21used; a user that publishes strict financial
22transactions on a debit and credit basis versus a user
23that does very sophisticated business process order to
24cash, some other processes. And I have not been privy
25to the detail behind the benchmarking statistics, but
00236
1I think I represented also that there's hardware
2considerations, database considerations, network
3considerations that would impact that as well. I -- I
4don't see Axapta customers with 3900 users, nor do I
5really believe that statistic for a real life
6situation.
7   Q Do you believe that telling that statistic
8to users is misleading?
9   A I think that in a real world situation it
10could be determined as misleading if the -- there's
11not full disclosure in terms of how the benchmark was
12conducted, in what circumstances with what
13transactions, and full disclosure in terms of the
14details that were used to calculate that benchmark.
15   Q I want to give you something that was
16previously marked as Government 169, and actually I'm
17probably going to make reference to Defense 1457, if
18you want to find that in your stack.
19          Let me state for the record that Government
20169 is Bates labeled MSOP sub 8484. It's an E-mail
21from Andrea Harrison dated March 17th, 2004, subject
22MBS in press regarding Oracle, PeopleSoft-DOJ. It's
23to Mr. Pollie among others, produced by Microsoft in
24the course of this investigation.
25A (Reviewing.)
00237
1          Okay.
2   Q Do you recall receiving this E-mail?
3   A Yes, I do.
4   Q And who's Andrea Harrison?
5   A Andrea Harrison is part of our business and
6marketing organization out of Redmond.
7   Q So who does she report to?
8   A Andrea Harrison reports to -- I'm not
9specifically sure who she reports to.
10   Q Give me a sense of what her job is.
11   A It's, as I understand it, it's a buffer
12between the business field organization as a business
13and marketing organization, and the business group,
14which is represented by Doug Burgum and the -- or the
15BG.
16   Q As you see in the first paragraph she has a
17sentence there, we want to be clear that our target
18market strategy has not changed. We remain committed
19to delivering business applications to small mid
20market and corporate businesses worldwide. Do you see
21that?
22   A Yes, I do.
23   Q What is your understanding of that sentence?
24   A That we have a strategy that targets small,
25medium and CAS-based accounts where there's a, a
00238
1reasonable fit for our product lines from a product
2functionality point of view. And I think she goes on
3to say that it's really the -- targeted at the spokes
4for highly decentralized, highly autonomous
5organizations as being the primary goal of the
6enterprise group.
7   Q And does she do that description -- in the
8next paragraph down there's three bullets. There's a
9bullet that says, divisions of large enterprises,
10typically companies with 1,000 to 5,000 employees.
11Think of this in terms of a hub and spoke model where
12Microsoft is targeting the spoke and not the hub of an
13organization. There are about 16,000 companies
14worldwide in this category. Is that what you mean?
15   A Yes.
16   Q Do you agree with the statements in this
17E-mail about the target markets for MBS products?
18   A I think it's very difficult to put a
19particular either employee count or dollar value or,
20or business, maybe, perhaps, description on -- in
21describing what specifically are good fits for the
22product. As I've testified earlier, it really is, in
23this business for our products, a very case-by-case
24basis to ensure that the client is a good fit for our
25products. And I believe that employee size doesn't
00239
1necessarily dictate whether or not the product would
2be a fit. But I think from a marketing point of view,
3I think establishing the total pool of accounts that
4a, in some way from a marketing sense so that they can
5do some analyzing of the markets and the revenue and
6the size of the ERP spend and IT spend, it's probably,
7you know, one way that a company could evaluate it.
8   Q It says at the top in bold, she's put to the
9U.S. subsidiary field, field managers who can forward
10this information to their teams per Legal and PR --
11that's probably public relations. Do you see that?
12   A Yes.
13   Q Did you do anything with this E-mail such as
14forwarding it?
15   A Yes. I forwarded it on to the 17 people in
16the field as a follow-up to a phone conversation that
17we had.
18   Q And what was discussed on that phone
19conversation?
20   A As I testified earlier, we had just a
21briefing regarding some of the press that had come out
22regarding some statements that had been made in some
23publications regarding our focus in the enterprise,
24and reassured them that it was business as usual,
25still the targets were large decentralized parts of
00240
1larger corporations and that should be the message
2that they could -- should continue to relate to the
3clients.
4   Q And we were discussing Defense 1457. Was --
5   A And just as a point of clarity, I think it
6was asked earlier if I produced any document to my
7field team that I wrote and sent out to my team
8regarding this issue.
9   Q Uh-huh.
10   A And I answered that question as no. But
11just as a point of clarity, this was forwarded on, but
12not written by me, to the field team.
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00241
1   Q Okay. When we were discussing Defense 1457,
2you were asked some questions about the sentence that
3says -- it's in the middle paragraph, to the contrary
4Axapta has the flexibility and scalability needed to
5address enterprise scale ERP demands. Do you recall
6those questions?
7   A Partially, yes.
8   Q Okay. And I believe you said in response --
9please correct me if I'm wrong -- that in, in no way
10is Axapta robust enough to serve a Fortune 50 account.
11Do you recall that testimony?
12   A I believe just from a point of clarification
13point of view, I was asked what I would define as a,
14as the largest enterprise account and I believe my
15response was from a -- at least I understood the
16question, what was an example of the largest
17enterprise account, and I believe I responded to sort
18of a Fortune 50 account would be what I would consider
19to be the largest. I -- I don't want for the record
20to say that No. 51 is something that Microsoft
21Business Solutions is targeting or can provide service
22to. I think, again, it gets back to the specific
23functionality that the company requires on whether or
24not our product would be a good fit. And I don't
25believe that, based on some of the functionality that
00242
1I've experienced in the Tier 1 market that Microsoft
2Business Solutions should either be targeted or is a
3candidate for success at a hub location of a large
4corporation.
5   Q When you say the Tier 1 market there, are
6you thinking of any demarcation between that market
7and the Tier 2 market in terms of the customer
8characteristics?
9   A I'm thinking more in terms of the amount of
10experience, infrastructure, partner training, system
11integrator support, years in providing successful
12solutions to very large corporations, and
13functionality that they've incorporated in their
14product that these large customers have worked with
15them to produce over many, many years as more of the
16demarcation. Not necessarily the size of the
17customer, but --
18   Q And that list that you just went through,
19are you saying that all of those things are things
20that the Tier 1 players possess and that the Tier 2
21players generally do not?
22   A I would say that's -- I could apply that
23specific -- I can't speak for any other Tier 2, but I
24can speak to these are things that MBS is years away,
25perhaps, from, from having that these other companies
00243
1have worked years to, to make part of their company's
2business value proposition to large corporations.
3   Q Okay. There was some discussion about what
4it meant for Microsoft to be the prime. Do you recall
5those discussions?
6   A Some of those, yes.
7   Q Okay. Do you have a sense in the past year
8of how often Microsoft has been the prime contractor
9for a deal?
10   A It's been a very rare occurrence and one
11that we discourage. Really just a handful of the
12total new customers are, or customer adds have been
13requested by clients as being a necessity for them to
14continue doing business with Microsoft in the
15conversations on, on the software solution. And it
16usually is, just as a point of clarification, involves
17a case where the customer specifically requests that
18Microsoft step in and take a lead responsibility in
19certain aspects of the project or in certain cases
20where there's multiple partners. And in some cases
21the partners that are involved have actually requested
22that Microsoft come in and assist them in coordinating
23the overall relationship between the multiple partners
24that the client is dealing with and when to -- and
25when I say partners, I mean resellers. I don't mean
00244
1ISVs or third-party programs. I just mean the core of
2Microsoft resellers. But very few.
3   Q Very few in the last year?
4   A Yes.
5   Q Do you have a sense of how many Microsoft
6intends to do in the next year?
7   A We are trying to move entirely away from
8doing any. Our going-in position based on some
9guidelines and things that we've been evaluating and
10looking into is really an offer of last resort, when
11it means the difference between winning and losing the
12business in the customer's mind, what -- will we
13consider it.
14   Q Okay. If you can pull out 1420 which is the
15Esselte printout, web page printout.
16   A Yeah, I've read that enough. I think I've
17memorized that one.
18   Q Okay. I'm going to go to the sentence
19you've probably memorized the most.
20   A Yeah, I think --
21   Q The sentence that says, this is a great
22example of how Microsoft Axapta can scale to meet even
23the most complex requirements of billion-dollar
24manufacturing businesses operating in multiple
25countries around the world. Do you recall that
00245
1sentence?
2   A Yes, I do.
3   Q I believe your prior testimony was that you
4felt that sentence could be misleading. Do you recall
5that?
6   A Yeah, it -- it's something that slipped
7through the cracks in terms of overall proofreading
8and things that should have gone on around that
9statement. I think it could be interpreted in ways
10that it was not meant to be portrayed.
11   Q And what are those ways that it could be
12interpreted that were not intended?
13   A And again, I -- I did not read this -- I did
14not write this, this full statement. I wrote the
15first sentence of the statement, and it was written by
16one of our partners who was very excited about having
17closed Esselte and wanted to get the word out to the
18marketplace.
19          Again, your question specifically was which
20part of it could be misinterpreted; is that correct?
21   Q Yes, or what would be misleading about it?
22   A I think the part that says this is a true
23cooperative effort, I think that is, that speaks for
24itself. That's fine. We're entities excited to work
25with our partners to deliver a comprehensive solution
00246
1that meets the unique need of Esselte business. I
2think that's fine. I think the third part is, the
3great example of how Microsoft-Axapta can scale to
4meet the most complex requirements of billion-dollar
5manufacturing businesses operating in multiple
6countries around the world, particularly because it
7could be misinterpreted because it doesn't reference
8the fact that it's looking at 15 separate potential
9implementation sites. It doesn't mention the fact
10that a majority of the manufacturing function that we
11reference here as being complex requirements are not
12handled by the Axapta product itself. It's a decision
13that the client made to, to actually do the majority
14of its manufacturing, its complex manufacturing with
15products that were not Microsoft. So I think that
16that leads you to believe that it's all done by the
17Axapta product when in fact it's -- it's not 3,000
18users in one location, and it's not all the
19manufacturing requirements of this account done
20through the core Axapta product line.
21   Q Is it your understanding that Esselte has,
22quote, the most complex requirements?
23   A I'm not privy to the specific requirements
24within Esselte. I can say that in the marketplace
25lean manufacturing is an advanced technique of
00247
1controlling inventory and controlling manufacturing
2that requires a very good support system underneath it
3and lots of discipline executed internally to provide
4that kind of technique of manufacturing.
5   Q And the lean manufacturing model module,
6that's the piece that would be provided by eBECS?
7   A That's correct.
8   Q And does Microsoft have any control over
9eBECS?
10   A No.
11   Q Does Microsoft own any of the intellectual
12property, if you will, of the eBECS lean manufacturing
13model?
14    Not to my understanding.
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20   Q So let's do it in terms of vendors. And I
21believe the Tier 1 vendors for financials, who would
22you say that the Tier 1 vendors are for financials?
23   A I would say that it's been described in
24market terminology from research firms and analysts
25that Tier 1 vendors traditionally are compiled of
00251
1Oracle, PeopleSoft, SAP, Siebel are the ones most
2commonly mentioned in that category.
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6   Q So if we were just looking for a financial
7management product, the Tier 1 vendors would be
8Oracle, PeopleSoft and SAP?
9   A That's the way it's described, yes.
10   Q Do you have an understanding of the lack of
11functionality that Axapta -- that those Tier 1 vendors
12have in the financial management area?
13          MR. YATES: Objection. Lacks foundation as
14to any company other than SAP in light of the
15witness's testimony.
16   A I can relate to some experience that I have
17at SAP and from a competitive positioning when I was
18competing for SAP in that marketplace. Axapta lacks a
19lot of core, for lack of terminology, let's call it
20hub functionality that a lot of those vendors would
21provide for. I think I referenced items like treasury
22management, core intercompany transactions between --
23financial postings between different companies that an
24organization may, may look to account for is not part
25of the core Axapta product. It does not have a
00252
1robust -- if you consider human resources as part of
2your question in core financial management --
3   Q Let's -- I'll ask the human resources in a
4minute. Just for financial you mentioned treasury
5management and core financial trans -- intercompany
6transaction. Are there any others that come to mind?
7   A Some sophisticated foreign trips, foreign
8currency transactions, swap rates, transactions done
9in multiple currencies, some of the more sophisticated
10financially related transactions.
11   Q I believe I wrote down when you were
12discussing this before something called cash
13projections. Would that be an area that, additional
14area that Axapta does not have, core hub
15functionality?
16   A Yeah. I think I said cash flow projections
17based on positions in various -- not just currencies,
18but those kind of sophisticated financial transactions
19that are typically handled at a corporate treasury
20type of function is the best way to describe that
21group of transactions where there's a corporate
22treasury department within a corporation.
23   Q And now turning to the core HR functions
24that Axapta lacks that would be required by these hub
25enterprises as we've defined that term, what HR
00253
1functionality do you think it lacks?
2          MR. YATES: Objection. Vague.
3          THE WITNESS: Pardon?
4          MR. YATES: You may answer if you
5understand.
6   A Just from limited exposure in the U.S.
7market, the product is not in full support compliance
8in the areas such as EEO reporting, it does not have
9an integrated payroll product as part of its offering
10for the U.S. In terms of taxing and regulatory
11support, it lacks a lot of U.S. regulatory HR
12reporting that is traditionally supplied by other
13vendors that have U.S.-based HR offerings.
14   Q Okay.
15   A And no payroll system, obviously.
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10   Q Mr. Pollie, I just a few follow-up questions
11to Ms. Blizzard's examination. You were talking about
12Esselte and I believe it's the eBECS, is that a supply
13chain piece of software?
14   A I --
15          MS. BLIZZARD: (Inaudible.)
16   A I believe it's more specific to lean
17manufacturing software requirements.
18   Q Is lean manufacturing part of a core
19financial package in your definition?
20   A No.
21   Q It's something outside of that?
22   A It's part of what I would consider to be a
23logistics offering.
24   Q And you were talking about in response to
25some of Ms. Blizzard's questions about treasury
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1manage -- management, intercompany transactions. Do
2you recall that last question and the answers?
3   A Yes.
4   Q Are you aware of any independent software
5vendors or partners that provide any treasury
6management packages?
7   A I'm not aware of any that we've, we've come
8across in our conversations with MBS.
9   Q And going back to Exhibit 1449, sir, and
10specifically the Corporate Sales Acceleration page
11which is Page 4150. Ms. Blizzard asked some questions
12and she said there was some sort of a shortfall in
13terms of meeting the projections and you answered that
14there was. It's true, is it not, though, sir, that
15Microsoft Business Solutions essentially doubled its
16sales in the Cas base from           to projectedREDACTED
17to $        in fiscal year '04?REDACTED
18   A The baseline that was calculated here was
19not the ultimate baseline that was carried forward
20into -- from a FY '03 total. The baseline that was
21carried forward from an FY '03 total actually moved
22from $        to closer to           as theREDACTED
23established baseline.
24   Q When you say the established baseline, what
25do you mean, sir?
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1   A In regards to your question about how
2revenue would progress, it was based on a $REDACTED
3total to a projection of , rather than a $REDACTED
4       total.REDACTED
5   Q So fiscal year '03 CAS sales by Microsoft
6Business Solutions were approximately       ?REDACTED
7   A Approximately          .REDACTED
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Pollie 05-26-04

Updated August 14, 2015

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