Ideally, whenever you make a purchase, you want to have a well-designed plan that will cover your immediate needs, as well as your longer-term needs. In reality, that is not always the case and you might be faced with situations where you actually have to look for ways to optimize your environment. Buying software licenses is no different than any other purchase. It can, however, come with different options and other aspects you need to keep in mind.
Take Oracle for example:
When you’re entering into a on-premise license contract with Oracle, you’re not only paying for the licenses, but also for support. The support fees are calculated at 22% of the net license fee. For example: you’re buying licenses for $1M. In this case the support fees equal $220K. As per Oracle’s standard support policies, that amount is going up 4% every year. The first year you’re paying $220K, the year after is $220K + 4% and so on. Your support fee goes up year-over-year, even if your demands don’t change. In addition, you do not receive any additional benefits for this uplift.
At the same time, you can find yourself in the situation where your needs do change over time. Perhaps initially you thought that you would use functionality ABC in quantity XYZ, but as time went on, your requirements changed. In this scenario, you might be faced with the situation where you’re putting licenses on the shelf (licenses that you’re not using). However, because you bought all licenses in a single order (identified in one CSI), the moment you want to terminate the unused licenses, you are confronted with Oracle’s repricing policy. The result is that you’ll pay the same fees for the subset of licenses you would like to keep under support, compared to the fees you would pay if you renewed the support for all of these licenses as part of this order. Conclusion: you continue to pay the same fees, year-over-year.
You definitely want to take this into account before entering into a long-term contract and make sure that you’re purchasing the right amounts for your current and future needs. But what if you’re already in a contract with Oracle? In this case, you can look at how you can optimize your current Oracle usage and spend.