10 Oracle Negotiation Myths – Part 2

 

10 Oracle Negotiation Myths – Part 2

Myth “A widely held but false belief or idea.”

In the Oracle eco-system a number of myths and misconceptions have grown up around purchasing from Oracle.  We share 10 myths we have heard from talking to customers regularly.  Perhaps you also know a few more you would like to share.

Here are our top 10 Myths:

 

  1. My company is too small to get a good discount.
  2. Oracle say their products lines are not connected and won’t give me discount across all products.
  3. Oracle say I need to buy a ULA to solve a non compliance.
  4. I am told I can’t have products on a price hold that I have not bought.
  5. I want to do an annual true up like Microsoft but told I can’t.
  6. I want to buy licences using a non standard metric.
  7. I am told if I don’t buy this quarter the discount agreed will go.
  8. If I wait to the end of the quarter I will get a better deal.
  9. If I buy through a partner I will pay more.
  10. I can’t decrease my support and maintenance below 22%.

 

See part 1 for the first 5 Myths.

 

6. I want to buy licences using a non standard metric.

The standard metric of processor and named users are common but don’t always reflect the key metrics that a customer may use to represent growth. Most customers are happy in principal with the idea that they pay more for software as they grow. Some of the applications allow Revenue metrics for example to pay for their licences. But what about paying for your licences based on number of hotel rooms, aircraft, customer transactions, widgets manufactured … well it is possible. The key thing for oracle is the ability to measure the metric at any point or agreed point in time.  If the metric can be measured in a way that Oracle is happy with and believes they are still getting good business.

 

7. I am told if I don’t buy this quarter the discount agreed will go.

Oh yes, that old chestnut!  How many times have we heard that the amazing deal on the table will only last until the end of the quarter?  This is a myth, however, the discount and approval for it will be time bound.  The Oracle Rep will have gone through a lot of effort to get your amazing discount – don’t underestimate the admin involved – they are not kidding when they say this. Officially the deal is gone if you do not sign by the time specified.  However in reality one of two things happen, firstly most approved discounts are given an extension to still hold for those that ‘slipped’ in the previous Quarter – usually a one month extension or the Rep will have to re-seek approval. This could take another 4 weeks or be as quick as days, all depends on the size of the deal and how good or bad Oracle’s quarter was before.

 

8. If I wait to the end of the quarter I will get a better deal.

For clarity let’s assume that end of quarter is the last of month of any quarter. Unless you are buying at the half year point – (November or end of year May) waiting to the end of a quarter does not mean you will get a better deal.  Approvals within Oracle are prioritised by deal value.  The larger ones will possibly be getting new approvals for contract modifications as customers enter final negotiations.  Adding a brand new approval at this late stage in any given quarter risks getting delayed unless it is in the multimillion dollar range.  A number of things need to happen in order for you the customer to buy. Firstly the approvals need to be pushed through and once they are approved, paper work also needs to be created.  Any non standard terms will need extra time to approve and possibly legal sign off.  This can take weeks, so waiting to purchase at the end of the month risks the whole deal getting through. Give plenty of warning to Oracle and tease them with your purchase.  Once approvals and paperwork are created as early as possible then you can start to negotiate for any special terms or discount.  This is generally easier for the Oracle Rep to push through.

 

9. If I buy through a partner I will pay more.

You will not pay more by purchasing through an Oracle partner.  The problem sometimes is that partners and Oracle sometimes issue quotes which have not been through a formal approval process.  So a partner may quote standard e-biz discounts (not uncommon) and then seek formal approval via Oracle.  The Oracle Rep may issue a quote and it appears to be better as they may believe or have approval already for the level of discount required.  The partner quote therefore looks worse.  Oracle have to provide the same price whether direct or indirect through a partner.  An Oracle Rep will generally try and go direct for the simple reason that the margin (typically 5%+) that is paid to the partner hits the Rep directly as it is funded by the deal individually. Usually if Oracle are aware of the partner engagement and value add this does not present a problem.  Oracle can get somewhat upset when they believed the purchase was going direct and then a partner requests to transact it.  The partner may well have been advising the customer or providing value added services such as running a pilot and the customer therefore is happy to purchase via the partner.  If approvals were requested for a direct deal they have to be re-approved but as an indirect deal, adding time and reducing the recognisable transaction to Oracle as they will fund the margin to the partner.  Nevertheless, you should not be paying more via partner.

 

10. I can’t decrease my support and maintenance below 22%.

Yes, you can decrease your support from 22% to say 20% as it is a point of approval for the Oracle Sales team. However, as you would expect you need to spend more to get this extra benefit.  Typically $5m US plus for software will need to be purchased. If your purchase is substantial it can sometimes be worth doing the maths and looking at whether buying more to get a longer term discounted support rate.  You probably need to spend circa. $10m to get 18% on Software Support and maintenance.

So that is part 2 of our favorite top 10 myths that we hear when talking to customers in the Oracle eco-system. Can you add any or do you have a different experience that you would like to share? Of course if you ever need help with purchasing and want to bench mark the art of the possible, please get in touch me (Jane McCulloch).