Taking the pulse of Oracle customers

Taking the pulse of Oracle customers

Summary: R 'Ray' Wang, Forrester analyst and often a firm buyer advocate has brought out a report suggesting that demand for Oracle applications ' The Red Stack' remains strong. From the report:Though recent survey results in Forrester’s latest Business Data Services Software Survey of 1,104 decision- makers show that 41% plan to reduce IT spending from what they spent last year, the survey’s results regarding Oracle spending buck overall trends.

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TOPICS: Banking, Oracle
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R 'Ray' Wang, Forrester analyst and often a firm buyer advocate has brought out a report suggesting that demand for Oracle applications ' The Red Stack' remains strong. From the report:

Though recent survey results in Forrester’s latest Business Data Services Software Survey of 1,104 decision- makers show that 41% plan to reduce IT spending from what they spent last year, the survey’s results regarding Oracle spending buck overall trends. In fact, only 23% of surveyed respondents plan to spend less on Oracle apps, and 67% plan to spend the same or more.

That was a surprise to me. In email conversation with Ray and Vinnie Mirchandani, Vinnie suggested that since the market data was collected in Q4, 2008, market conditions have continued to deteriorate:

Realize it takes a while to tabulate the results, but I would suggest if you did the survey today ( so 3 months later) it would be another 10 basis points of customers plan to spend less with Oracle

The economy has deteriorated further, and based on several calls I have had with incumbent Oracle customers in the last two weeks, the anger/frustration/impatience is growing by the day. It was always under the surface but it is getting more overt and Oracle sales is trying its old games - show us license demand before we go to Safra [Catz, Oracle CFO] and ask for maintenance relief.

Ray concurred. According to Forrester, this gets reflected in a higher likelihood of license audit:

Savvy sales reps often use audit threats to begin a conversation about potential overutilization to drive new license sales. Forrester has heard from at least a dozen clients this quarter about audit threats. However, Forrester data shows that only 6% of audits show compliance issues, while 21% show ownership of significant shelfware. As discussions regarding vendor-led audits begin, applications pros who have done their own audit can turn the tables and use this as an entry point for discussing reduction of shelfware.

Given the gladitorial nature of software sales and that Oracle is within two and a half months of its fiscal years end where it traditionally does a lot of business, Forrester's advice should be heeded. Searching for alternatives like saas/on-demand might seem a viable strategy  or using a third party maintenance company like Spinnaker or RiminiStreet might offer relief. But that may not be enough. Back to Vinnie who has an array of Oracle customers:

The only consistency I can report is growing angst and a fear that even if they diversify to a new SaaS or even a legacy vendor, Oracle may acquire them in a couple of years.

Fear? Is this how Oracle rules its customer ranks? It's not the first time I've heard the 'F' word used with regard to Oracle. Its customers try and be as independent as possible through the users groups. But ultimately it will be the CFO's that cut checks and the lawyers that read contracts who get to decide how much tax they are going to continue paying Oracle (and SAP for that matter.)

I continue to wonder how many more quarters of seeing Oracle posting operating margins in the 40% range before those same customers realize just how much they are contributing to Oracle's coffers in return for? Or maybe it will be simpler than that. Through a link from Eddie Awad's OraNA Oracle news aggregator, I came across this insightful post that discusses saas and cloud computing:

...business focused IT folks who understand the model and can actively suggest new approaches to rationalise cost will do well. Those that put barriers in the way will do very badly, especially if those barriers are placed their to maintain a comfortable status quo.

The key for IT is to understand the business model, understand the business services and then understand where IT adds real value and where it should simply be a utility, then plan against that utility. That means cloud and SaaS will figure largely in how you build, deploy and manage those business services because differentiation is not important.

I note that Oracle has started to get saas religion. Will this be a turning point? We'll see.

Topics: Banking, 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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3 comments
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  • Feel Dirty

    As a large IT buyer, every time I have to deal with Oracle I end up feeling dirty at the end of it. Their annual maintenance charges and the rules they put in place around those things are crazy. They are ruthless with taking products end of life just to make you take more expensive alternatives.

    Acquisitions are just a debacle - case in point, Cimmetry. They make a nice little viewer product for CAD and engineering/construction diagrams. You used to be able to buy an unlimited concurrent user license for a reasonable price, $50k or so and annual maintenance came out at $10-12k. Oracle have acquired them, eliminated the unlimited license to a degree you can't renew your maintenance and have to downgrade to 25 concurrent users. I look after in excess of 25,000 staff, at any given stage we have 500 people looking at drawings. I could stop paying maintenance, but AutoCAD the other bandit changes their file formats every year just a bit, so new drawings would stop working. Basically, Oracle have come back with a bill of something akin to $300k for an upgrade to my unlimited license to bring up to 500 users. Criminal. Good luck Primavera users, you can bet the SQL Server version of Primavera will be end of life soon enough.

    Not a problem though, I just decommissioned 8 multicore/multi-socket Oracle DB servers this year from our data center which will see my budget recover about a third of the pain they've caused on Cimmetry. I'm in talks with Salesforce.com to move our 10,000+ Siebel users which should then put me on the good side of the ledger with Oracle.

    Oracle just feast on their existing customer base, I have had enough - I've targeted every single thing in our entire global organization that links to Oracle and have mapped out a three year plan to eliminate over 80% of it. Hyperion, BEA servers, Siebel and anything else that someone else offers a superior product, preferably SaaS, I'm going their direction. I simply make the argument to management that if I can save money by not paying Oracle, then I should be able to keep some of those savings and keep people employed.
    SuperSean
    • SuperSean Is Right

      Oracle's business structure is setup to act like a giant money-sucking leech. Which, in fairness, applies to most software companies these days. As an IT manager you have to spend much too much time trying to figure out if you have purchased the correct number and type of licenses. Any time you incorporate another vendors products you have to revisit your licenses to make sure nothing has changed. And don't forgot those friendly calls from your account rep asking detailed questions about your configuration to make sure you're not keeping any money from Uncle Larry. Oracle keeps finding new ways to charge you more and more. Seriously... tell Larry Ellison to stop living like Howard Hughes and save us some money. I can't afford to support his lifestyle any longer. I can't stand dealing with Oracle and that has motivated me to use their products as little as possible.
      LetsGoDiving
  • RE: Taking the pulse of Oracle customers

    I think Vinnie made a mistake when he said "10 basis points," which would be 0.1%. He might have meant 1000 basis points or 10% absolute ...

    http://en.wikipedia.org/wiki/Basis_point
    JoeNemo