2020 has so far been quite the cruel mistress and, although software companies have been relatively spared when compared to other industries, that hasn’t stopped Oracle from being dealt a heavy blow, as detailed in their Q4 report for 2020. Traditionally, May has been Oracle’s most lucrative month, but this year it was a month of tight lockdowns and a sweeping pandemic, so things did not go well. Now, Oracle customers are wondering if now is the time to start negotiating an Oracle contract renewal. But Oracle is known for being one of the toughest software vendors to hash out a contract with, their arrangements may be unwavering regarding their software, databases, and middleware, but if you want that wonderful Oracle software, then you’re going to have to find some happy middle ground. At MetrixData 360, we have dealt with Oracle on many different occasions and we have seen what it takes to get the deals that our clients are looking for, so when you’re getting ready for your contract negotiation with Oracle, here are a few things that you can expect.
Expect Oracle to Take their Sweet Time
This may be a byproduct of Oracle’s sheer size, as each new request triggers a bureaucratic process, but that doesn’t stop this drawn out process from being frustrating at the best of times. If you are used to dealing with smaller software companies, it may seem like Oracle is dragging out their process unnecessarily. This will be especially true since Oracle has recently reshuffled its sales team structure. The old Oracle sale structure had their whole sales force focused on selling on-prem license and cloud services, with a 1% cut of the contract value of each transaction for on-prem licenses and 5%-10% on cloud service contracts.
However, their focus has now shifted to only 25% of the sales force working exclusively on on-prem licensing with no compensation for selling cloud services, and the rest being exclusively put on the task of selling cloud services. This means if you want to cut a deal with a sales rep for on-prem licenses, they might be extremely busy and overworked. Despite the pressure they might be under, make sure that you take the time necessary to understand your current and projected usage so that you can secure a deal that serves your best interest and ensures you don’t get swept up in the whirlwind of licensing jargon.
Cloud Services are No Longer a Get Out of Jail Free Card
In the old model of Oracle, cloud services would often come up at the end of audits in exchange for a lower overall cost when compared to the compliance gap. Even if you had no intention of using it, the sales reps were happy since it meant they got their 5%-10% cut. However, Oracle’s new sales model now has sales reps only receiving compensation for the transaction if the customer uses it. On the one hand, this means that you no longer have to spend money on a cloud solution that you were never planning on using in the first place, but offering to simply buy a cloud solution no longer makes the sales rep’s eyes sparkle with interest – not unless you’re going to back up your claim with the actual intent to use the products.
Exiting Your ULA will be Difficult at Best
If your contract negotiation involves redefining the terms of Oracle’s Unlimited License Agreement (ULA), then you might be facing an uphill battle. The ULA has often proved to be quite troublesome, as they are expected to be the target of Oracle’s new audit wave after the release of their 2020 Q4 report. It can also be the target of an audit if you’d like to exit out of your ULA, as one common surprise Oracle likes to give as a going away present when you’ve decided to leave your ULA is an audit of your scripts to compare it to your usage. If you are thinking about exiting your existing ULA, you may find yourself being pushed towards renewing it anyway for a variety of scenarios Perhaps you’ve mistakenly deployed Oracle software not covered by your ULA, or perhaps you have lost track of what has been deployed in your software environment and now have no idea what you would owe if you left your ULA . You may have also deployed your ULA software onto non-Oracle cloud platforms, like Azure or AWS, which will require you to purchase missing licenses.
Know Your Data Inside and Out
This is true of any negotiation, not just with an Oracle contract renewal. Having strong visibility into your data regarding your software spending and usage will give you the information you need to do more than just guesswork when it comes to your anticipated usage. Data will also give you the ability to plan, instead of simply buying for what you are currently using, you can purchase to accommodate for future growth. Oracle products are also known to be quite lenient – they will often allow you to install and use products without checking your licenses, expecting you to simply know what you are and are not licensed to use. Understanding the ways in which your company intends to or is currently using Oracle will allow you to pick out any changes in use that might occur over time, whether that is intentionally or (more alarmingly) unintentional usage. Knowing your data regarding Oracle will prevent any compliance issues that may arise, even if you are perfectly in control of your Oracle usage.
