Along with Oracle itself, a myriad of resellers and systems integrators are eager for your license business, many of which have the sales engineering experience to ensure your bill of materials will benefit THEIR bottom line. Therefore, question whether they are primarily motivated to help Oracle sell you more software and whether or not you need it.
Once you initiate an annual support stream to Oracle, you’ll be making that payment for many years. Given that it is immeasurably harder to spend less with Oracle (as opposed to more), the following questions should be answered before proceeding with any new license order.
1. Do Your Annual Support Fees Reflect Business Value?
Despite Oracle’s increasing focus on selling cloud subscriptions, the majority of its business remains with perpetual licenses and associated support, which obligates executives to budget for operational and support expenses well into the future. Thus, it is common for customers to make support payments on license agreements that were executed as far back as the 1990s. The result is a frustrating disconnect between what you are spending on Oracle and the value you get from the software.
Oracle’s solution is to roll legacy software rights into new agreements that modernize and expand your entitlement. While this may seem advantageous, customers must understand that Oracle’s primary goal is to further secure support revenue. In doing so, the gap between spend and value grows, and the flexibility to optimize erodes to the point of no return. In short, before you license more Oracle, ensure that what you are already spending is properly scrutinized.
2. Is There a Better Way to Spend the Same Money?
Budgeted capital projects are rare and are typically ear-marked far in advance. Oracle often learns of both the project need and the budget level, virtually ensuring that it will secure incremental license revenue. As mentioned earlier, Oracle will seek further support revenue and is not motivated to present flexible options that may ultimately lower your total spend.
But the time to optimize and save is when you have money on hand. Oracle is most eager to negotiate when a new license deal is on the table. Unfortunately, most customers seek to negotiate with Oracle on existing software support when the renewal is due. This is when Oracle is the least accommodating and is paying closest attention to its high-margin software support business.
3. Are You 'Feeding the Beast'?
Oracle often relies on complex policies rather than practical requirements to inflate the commercial outcome of an audit. One of these policies dictates that expired or cancelled support may be reinstated with a 50% uplift to the lapsed period’s unpaid total. The consequence is that Oracle reserves the right to reinstate legacy entitlements on software that you cancelled but inadvertently need. Because of this, customers not only continue paying support on shelfware, but also implement a “feed the beast” strategy of buying incremental licenses with the hope of avoiding additional audits.
A better strategy is to know with confidence what an audit may expose and then take the necessary steps to remedy the issues on your terms and timeline. An accurate analysis of compliance is the foundation for saving money, because an Oracle audit can undo hard fought efforts to optimize.
4. Where Do You Get Advice Regarding Oracle?
Ultimately, the question is where you get advice for Oracle, and how is that organization motivated. While Oracle’s motivations are clear, it may be less clear just how your reseller, systems integrator, strategy consulting firm and even your internal personnel are motivated.
If your “trusted advisor” isn’t asking you these questions and helping you answer them, then it may be time to contact our advisory team.
IBM is rapidly transforming after the acquisition of Red Hat. In 2020 IBM announced a drastic revision of its pricing structure for legacy single-product licenses. This significantly impacts you as an IBM customer.