Oracle licensing: just say no

Oracle licensing: just say no

Summary: It's Oracle negotiating season once again and the advisors are out in force. Is what they're saying right or are there better approaches?

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TOPICS: Oracle
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In the last week, two reports about Oracle licensing have caught the eye. Both are aimed at the same thing: a mild pitch at negotiation in the run up to Oracle's financial year end. One from Forrester and parsed by Larry Dignan and the other from David Floyer. Both agree on one point although David goes further in providing detail:

Oracle is aggressively pursuing a bundling strategy, and those users interested in that approach can and should negotiate better deals. Despite the obvious lock-in risks, if you're going in this direction Oracle is willing to negotiate with you; especially for large deals over $5M. Virtualization is a strategic initiative for many organizations, and Oracle will be less than supportive. IT organizations need to weigh the risks of Oracle's negative posture toward non-Oracle virtualization strategies with the benefits of virtualizing systems and apps. On balance, for most mainstream applications the benefits outweigh the risks. For mission critical apps the stakes are higher and more caution is warranted.

Larry notes that:

Oracle has to upsell you because it can’t hit its revenue targets just selling new products to willing buyers. There’s a push for more licensing deals. That’s why per-core licensing exists—there’s revenue even if customer rolls shrink.

Forrester seems to take the line that once Oracle has its hooks into you then it is game over for negotiating to any reasonable extent and that the best deals are to be had by pushing forward buying decisions. I fundamentally disagree with that tactic for one simple reason: predicting the future is hard and the risk of acquiring shelfware would require an incredibly compelling business case going down the track. 30% discount now may sound great but when you're paying for something you don't need now is that such a good deal after all?

It has always been the case that for new customers, Oracle would certainly discount on the license but won't play ball on maintenance. It is the license that feeds the annuity stream - or as I prefer to think about it - the entitlement pension. So discounts should not be optional but mandatory. Even so, you have to understand what you're getting into. Unfortunately, it is almost a racing certainty that Oracle's lawyers are better than anything you can field.

But I think there is something else at play here. What Forrester, Larry and John all tacitly acknowledge is that Oracle is primarily driven by its Wall Street masters in order to prop the share price. You can argue that is what all publicly traded companies should be doing. In Oracle's case though, this has led to a highly rigid, centralised and inflexible business model. That in turn means it is vulnerable to attack. David says:

Organizations will find Oracle is much more willing to negotiate if it believes the deal to be competitive. Wikibon knows of several instances where customers have received substantially improved deals by simply initiating (in earnest) IBM DB2 or Microsoft SQL Server pilots and made Oracle aware they are prepared to walk. Caution: We also know of several instances where Oracle has not blinked and customers have been forced to either accept worse terms or migrate major systems off Oracle; a costly endeavor not for the faint of heart.

This is stating the obvious and would be true of any supplier. The problem as I see it is that Oracle has successfully created the myth that once you are even modestly dependent upon Oracle then there is no turning back. DBAs love Oracle because it often represents the perceived full employment act for these folks. Neither of these myths are true. It may initially prove costly to get away from Oracle's clutches but a good business case can usually be made. Whether you want to or need to is a separate discussion. License fees and maintenance are only modest components in an IT budget. However, this discussion would not be on the table if it was not for the pain that some companies feel. The advice here is to undertake a well thought through business needs analysis with correctly costed answers. Your CFO can be your friend here. And since he will usually be a co-signatory, getting him or her in early could reap handsome rewards.

Older versions of Oracle apps need not be maintained by Oracle. If your business is in a moderately stable and steady state then there is no reason why you should not consider a third party maintenance alternative like Rimini Street. Oracle will not like you for it and threaten to penalise you further down the track but do not be intimidated.

Remember that it won't be long before Oracle wants business to switch to Fusion. That's a decision making opportunity that might well leave today's threats looking like empty gestures. It may also leave taking that 30% discount now looking incredibly dumb when you come to review what a Fusion contract contains.

There is another altogether more aggressive approach. Just say no - and while you're at it, enlist the support of your OAUG chair. Do as SAP user groups did and force Oracle to the table rather than blindly putting up with the idea that you have to spend oodles of cash now in order to get a discount. It may not win you a lot in the long term but it will make Oracle understand that for all its market posturing, it doesn't always have to be the only winner.

As a final note, it is not so long since that Oracle positioned itself as a latter day IBM cast in the mold of Tom Watson. Those with long memories know how that ended badly for IBM in the early 1990s. Nobody wishes that of Oracle but right now it is looking dangerously like the old arrogant Big Blue that very nearly fell apart.

Topic: Oracle

Dennis Howlett

About Dennis Howlett

Dennis Howlett is a 40 year veteran in enterprise IT, working with companies large and small across many industries. He endeavors to inform buyers in a no-nonsense manner and spares no vendor that comes under his microscope.

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22 comments
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  • Hi My Name is Larry Ellison

    Do NOT listen to this man, I need every red cent. I have a new $150 million dollar house to build, want a new Ferrari and a new yacht and these suits and turtle necks don't pay for themselves. Gimmie my licensing money and give it to me NOW!

    P.S. Don't expect an invitation to Oracle World this year.

    Yours Sincerely,
    Larry
    Mr. Dee
    • RE: Oracle licensing: just say no

      @Mr. Dee - hmpph - so no Christmas card either I guess?
      dahowlett
  • Oracle is very expensive compared to the rest..

    But the question here is: Do you need the best?=>Pay Oracle or Is SQLServer good enough?=>Downgrade to MS and pay less. On my experience on real word enterprise systems, Oracle DB is a lot better on performance an machine resources than SQL, an a lot more resilient too. (I work on an Integration Firm, our system works with Oracle, SQLServer, DB2 and Sybase DBs, trust me, I know what I am talking about). Oracle vs MS is the same than Apple vs DELL. You want the best, buy Apple (and pay for it) Is barebones good enough enough for you, go to DELL.
    jsapaj
    • RE: Oracle licensing: just say no

      @jsapaj - good points in DB performance but performance isn't the only criteria. Plus there are opportunities to swap out entire Oracle stacks for MSFT (or other providers.)

      I should add that cost is not my only criteria. If you need the premium priced solutions Oracle sells then fine by me. Just make sure you've still negotiated a sensible deal.
      dahowlett
      • RE: Oracle licensing: just say no

        @dahowlett . Agreed!, just don't call me when your transaction log is eating all your storage and why your simple update query is making a full table lock and the system is slow!!!
        jsapaj
      • There is no offer from MSFT that can match Oracle

        @dahowlett You must be smoking something if you think that any product in the MSFT portfolio can match or replace the performance of an Oracle product.
        wackoae
    • RE: Oracle licensing: just say no

      @jsapaj Very good points. But I think a better search of a parallel of an oracle DB vs MS SQL (in this case), would be the, by now, mostly finished UNIX vs Windows debate. It used to be that you'd want a UNIX box instead of a Windows one because there simply was no choice. At least in terms of perception, Windows Servers were thought of as "peripheral" to the real boxes running the core business if at all. Today, Windows has crept into the core business of many companies and it performs sufficiently well to become an alternative. This doesn't mean UNIX is dead by all means, it just means that the circumstances where UNIX is the *only way to go* are much fewer than before, and Windows (and I might say, Linux too) boxes have been able to take on some of the roles and applications that were unthinkable out of UNIX before.

      Just to throw this out there, I think that at an enterprise level, the debate between having Apple machines vs. Windows machines is more a question of manageability and application compatibility and more importantly, TCO than of one being the best or not. Apple hardware is better. Mac OS is presumably more secure (it's an implicit rather than an explicit security) but that doesn't necessarily make it the best choice for large companies.
      fer.paredesb@...
    • RE: Oracle licensing: just say no

      @jsapaj
      Based on my experience Oracle is much more difficult to maintain for small to medium size databases. Simple Oracle backup is major PITA when with MS SQL server it is fast and easy. Simple DB client installation for Oracle is almost a whole day adventure when for MS SQL it is just another installation. In short if you have too much money and experts on hand then you can go with Oracle. Otherwise MS SQL is much better solution.
      paul2011
      • Oracle DB is overkill for small projects

        @paul2011 Oracle is a heavy duty DB. Using it in a small and even medium size project is an overkill and a complete waste of money.
        wackoae
    • But at what point is

      @jsapaj <br>we looked at solutions from both, and Oracle's pricing on the DB alone equaled that of the entire MSSQL <b>and</b> backoffice programming attached to it.<br>We could have gone the Oracle route, but it wouldn't have mattered, it would have cost about 40% more for the same thing in the end.
      Will Farrell
  • RE: Oracle licensing: just say no

    @dahowlett
    Right on. Not everybody needs maximum performance all the time. There are a lot of factors which include TCO, management, ease of deployment, compatibility, availability of 3rd party apps and support, etc. MSFT has successfully leveraged this and provided a LOT of products that aren't the best, but are good enough and put together (e.g. the whole Office stack - Outlook, Office, UC, Sharepoint) actually add more value than one vendor's single, best-of-breed product.
    fer.paredesb@...
    • RE: Oracle licensing: just say no

      @fer.paredesb@...

      [b]MSFT has successfully leveraged this and provided a LOT of products that aren't the best, but are good enough and put together (e.g. the whole Office stack - Outlook, Office, UC, Sharepoint) actually add more value than one vendor's single, best-of-breed product.[/b]

      None of those applications are worth it.

      Outlook is a POS, same as Exchagne.
      Office - about the only shining star is Excel.
      UC - More junk
      SharePont - WASTE OF MONEY FOR ANYONE THAT GOES DOWN THAT PATH!!!!
      itguy08
      • RE: Oracle licensing: just say no

        @itguy08
        You sound like one angry Oracle admin :)
        paul2011
      • I think I'll quit using all those products

        @itguy08 Just because you made such a compelling argument.
        happyharry_z
      • RE: Oracle licensing: just say no

        @itguy08 : Name the better choices. Lotus Notes? UC works very well.
        Regulator1956
      • You mean the pieces of S* you allways brag about using?

        @itguy08
        I can see why you're unemployed. If I were to recomend the POS stuff you claim to use I would have been fired the following week once it failed, too!!

        Sorry, you're opinions on these things are unimportant at best. You are so uninformed it's pathetic. Get a life.
        Will Farrell
      • RE: Oracle licensing: just say no

        @itguy08 But you can't deny the fact that for most applications a company can get the same outcome running MS SQL as well as Oracle and keeping the cost difference to themselves. You can say all you want about Oracle being the best, but it all about the tool needed to get the job done. There are billions of dollars approved by CIOs all over the world that end up going to Microsoft for SQL licenses. I am sure you are smart enough to tell that those decisions are educated ones.
        mikies
  • Lockin - just say NO

    If you are a start-up, or an established business starting a new project, or a multi-national undertaking research, invest in non-proprietary standards based solutions. Avoiding lock-in must be a strategic objective now that the standards movement is shaking off the monopolistic intruder. You can still use one of the (now) competing proprietary suppliers for your standards based systems - but avoid the seductive non-standard (sometimes called exclusive benefits) lock-in offerings.
    Stick to standards based systems, standards based staff training, and standards based purchasing. You know it makes sense.
    PassingWind
  • 2 words

    SQL Azure...

    Onsite DB's running on physical servers is so 2002 and Oracle's is grasping at straws to maintain their overbloated licensing costs when other cheaper, more efficient solutions exist. Yes, you may have to port your applications, but in the long run, your cost savings of moving to the SQL Azure model (MS is hte only real solution out there for platform as a services) will be huge!
    omdguy
    • RE: Oracle licensing: just say no

      @omdguy Say what you will, but Ballmer has really grown the enterprise side of the business big time!
      MSFTWorshipper