Spend Matters welcomes another guest post from Jeff Muscarella of NPI, a spend management consultancy, focused on eliminating overspending on IT, telecom and shipping.
Oracle is well known for its open and consistent pricing practices, a welcome reprieve from the pricing behavior of some other enterprise software vendors. Unfortunately, this transparency also has a dark side. Assuming that a fair price equals the right deal, some companies have become complacent about optimizing their Oracle purchases and renewals.
The problem is that Oracle’s battlefield for revenue isn’t just about price. They strive just as fiercely for revenue through contract language and terms. Here are four examples of Oracle terms and practices that can result in customer overspending:
Dynamic contract language. Oracle’s support and licensing definitions change more often than many customers realize. Unless they are proactive about staying on top of this, many companies are uninformed about the timing, cost and compliance implications of these changes.
“Scoping down” of licensing rights. Oracle’s sales channel is well versed at eroding customers’ licensing rights via “subtle” constraints during new purchase and renewal negotiations. In reality, these constraints can have a substantial cost impact over the term of the contract.
Penalizing customers that choose not to upgrade. Oracle frequently enforces a 10 percent cost penalty on customers that forego upgrades and advance through later stages of the support lifecycle. This is a double blow for customers that are already paying Oracle for premium support services, including annual rate increases.
ULA lock-in. NPI’s research indicates that over 75 percent of Oracle ULA customers would pay less over the term of their contract if they purchased “a la carte.” ULAs aren’t for everyone and often impede customer’s IT flexibility.
Companies looking to renew or purchase with Oracle must have absolute clarity on contract terms and conditions, stay up to date with dynamic contract language, and understand the long-term flexibility and cost impacts of their licensing and support choices. Without this knowledge, companies can’t assume they’re getting the optimal deal when in fact, it would be safe to assume the opposite.