Why Consider an external firm for Oracle license procurement negotiations?
Many companies underestimate the costs of not managing Oracle license deployments and procurement negotiations.
We have seen firms overspend on Oracle when there is absolutely no need to do so. In fact, in a majority of the cases the value of the deals even surprises the Oracle sales teams because they would have initially estimated the value to be much lower than what is finally agreed to be paid by the customer.
The reasons for this are quite simple but not accepted or understood by the internal IT teams:
Oracle’s License to Bill
A pricing negotiation is always a matter of leverage. Negotiations are also about knowledge and influence.
- Customers start with the view that Oracle, being almost a monopoly, cannot be negotiated with. Unfortunately, customers believe they have no leverage and are expected to pay up the moneys asked for by Oracle. They literally believe that Oracle has a ‘license to bill’ !
- Customers are also not as well prepared as Oracle is. For the Oracle salesperson, negotiating Oracle license or support fees is their daily occupation. For the customer negotiating to buy a technology product is an, welcome or unwelcome, additional chore.
- Customers generally have a hierarchical view of influence, and this cause them to overlook aspects of a negotiation that can be used to their benefit.
Dunning-Kruger effect
While some customers believe in ‘Oracle’s License to Bill’ and a potential inability to obtain better terms and prices; there is another set who are more dangerous.
These are those folk in the organization who claim skills and attributes they do not possess. These skills could be about Oracle licensing, Oracle business practices or the art of negotiations. This is the Dunning-Kruger effect at play.
The funny thing about a belief of having knowledge across a wide variety of specialized skills is that it is statistically impossible to be true.
What we have found in our work is that the largest deal sizes have been because of this dangerous tribe of internal experts.
Complexity of Oracle Licensing
This aspect is true for both the types of people – those who believe they have no choice and those who believe they are experts.
- Oracle licensing is extremely complex and intricate, with various models (processor, named user, etc.) and rules that can be difficult for internal teams to fully grasp and manage.
- For example, there are more than 112 database parameters that can trigger the consumption of Oracle database option licenses. Similarly, the parameters to decide on which editions of the different middleware products being used run into hundreds.
- The licensing policy documents for Oracle database alone are more than 350 pages long for each version of the database. The middleware policies are 8900 pages long for each version.
- The licensing policies of Oracle are constantly evolving and staying current is crucial for conducting a useful license consumption analysis.
- Oracle’s license calculations spans across servers, endpoints, on-premises, cloud, virtualization & partitioning technologies, installation and environment protocols, types of processors, features used, period of usage of features, reasons for which they were used, types of users, contracting vehicles, restrictions and allowances etc. All of these makes evaluating the exact usage extremely difficult.
- Oracle ULA licensing has its own other challenges that customers are unable to decipher.
Independence
While internal folk are supposed to be working for the good of their employer and this is mostly true, sometimes there is a kind of ‘Stockholm Syndrome’ that comes into effect. This causes Oracle to get a much better deal than the value their product brings to your company.