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Oracle stubborn on licence discounts

Oracle stubborn on licence discounts

Efforts to extract best price falls on deaf ears

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Despite the global recession, Oracle continues to resist any downward pressure on its licensing fees and did not offer steeper discounts than usual during the final rush of contract talks leading up to the end of its fiscal year on 31 May.

"We kind of predicted this, but didn't realise it would come to fruition so [strongly]," said Eliot Arlo Colon, president of Miro Consulting, which advises companies on Oracle negotiations. "There was no fire sale."

Conventional wisdom has it that Oracle customers should wait until the very end of the vendor's fiscal year in order to extract the best price from desperate salespeople eager to make their numbers. But in recent years, that strategy has become ineffective and even counterproductive, since in the rush to finally reach a deal, disadvantageous contract clauses can slip in, Colon said.

Also, Oracle has taken the position that at least for certain products, it has no reason to offer steep discounts because they are best-in-class, Colon said.

Moving forward, customers should start their negotiation plans earlier in the fiscal year, and develop a strategy that goes deeper than merely threatening to go to a competitor, he said.

Future contract talks could also be impacted by Oracle's pending deal to buy Sun Microsystems. Although questions remain about the fate of overlapping products post-merger, the greater combined volume of the companies' products could lead to better volume discount agreements, according to Colon.

"A lot of companies are looking to exploit this," he said.

In the meantime, users ought to determine whether they're getting support bills for "obsolete" products that Oracle has officially stopped supporting, he said. If customers run into such instances and can provide documentation, in Miro's experience, "changes will be made," Colon said.

Customers can also try to migrate unwanted licenses onto other products that might actually be useful, he said: "In and of itself, that may not reduce costs, but it will create value when you'd otherwise not have any."

It's also smart to attempt to boost your company's profile within Oracle, Colon said.

A big Oracle customer may have dozens of contacts at the vendor, spread across several sales groups, "but still feel like a very small company" when dealing with it, he said.

To gain influence, customers should first determine which Oracle technology is most important to their business, Colon said. That sales team should be tasked with "leading the charge" on talks with other Oracle representatives.

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