10 Oracle Negotiation Myths – Part 1

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10 Oracle Negotiation Myths – Part 1

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. These are myths I’ve heard from talking to customers regularly.  Perhaps you also know a few you can share.

Here are 5 of our top 10 Negotiation 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.

1. My company is too small to get a good discount.

It’s not about the size, what is too small anyway?  Discount is based on a volume and total revenue figure.  This figure is then applied against the e-biz discount schedule to calculate the default discountOffering to be a reference customer especially for a newer product or release will help the case for the Oracle Rep when they come to writing an approval.

However some products will warrant greater discounts, for example the Business Intelligence products or some of the newer less well established products in the security portfolio.  So it is quite possible that a small to mid-sized organisation can get a substantial discount (e.g. > 68%. ).

2. Oracle say their product lines are not connected and won’t give me discount across all products.

There is some truth in this myth in that the different lines of business are not really connected.  This can be frustrating if, for example you are purchasing JD Edward for Finance and some Oracle database to underpin another and expect to get the same level of discounts for both products. Discounts for each product line have to be requested through Oracle’s approval process via different approval channels. However, Oracle would prefer you purchase more products across lines of business than not.  So it is absolutely possible to get some benefit and extra discount for buying multiple products across product lines.  The challenge is getting someone to support you and be your advocate.  Each Oracle Rep gains nothing from representing the other product line.  In my experience it is usually the Rep that is leading the larger element in cost terms that will act as the advocate and help justify the extra discount.  If you have other non oracle alternatives then it helps to get a quote from the respective vendor.

3. Oracle say I need to buy an Unlimited Licence Agreement to solve a non-compliance.

Yes, this is a total myth. You do not need to purchase an Unlimited Licence Agreement (ULA) to resolve a non-compliance.  If you are unfortunate enough to find yourself with a substantial non-compliance ( i.e. multimillion dollars), then Oracle may present a ULA as a sweeter option in that it allows for a period of time, the opportunity to deploy as much as you want for the named products.  Remember though the downside it that you generally end up agreeing to buy more than you really need (at least to resolve the non-compliance) and you are then locked into single support CSI, as your previous support contracts will be consumed into the contract.  A ULA may be appropriate if it is believed too hard a challenge to do a full licence review across a very large Oracle estate or if the client does not want to spend months doing the review.  In my experience it is generally better to negotiate a large discount on a non ULA.  Contrary to what Oracle will say about only giving e-biz discount, you can negotiate better.

4. I am told I can’t have products on a price hold that I have not bought

Yes, you can have products on a price hold even if you have not purchased them in the original order that the PH is attached too.  However, it is not easy and you need to work with the Oracle Rep to put a decent justification together.  For example you might be able to justify some options or hardware on the basis that you don’t need them right now, but you do have a defined project in the near future.  Oracle will time bound the price hold to encourage you to make those future purchases.

5. I want to do an annual true up like Microsoft but told I can’t

It’s a tough one this.  Many clients do an annual true up with say Microsoft and want to do the same with Oracle.  Oracle’s general response is no and will try and sell you a ULA.  Why? because they want the revenue now, not in a years time.  There is an alternative contract type, the Pool of Funds that gives some flexibility in that for an agreed annual fixed spend you can choose from a variety of products in a Pool.  There is another way though but still involves an initial purchase.  If you make an initial purchase and then agree contractually to allow LMS to do a review annually and build in a tiered price hold, you may get the flexibility you are after.

So that is the first 5 of my top 10 negotiation myths that I hear when talking to customers in the Oracle eco-system. Keep an eye out for part 2 when I’ll run through 5 further myths.  If you would like to add more or if you have a different experience that you would like to share, please feel free to add a comment below.  Of course if you ever need help with purchasing and want to bench mark the art of the possible, please get in touch with me (Jane McCulloch).

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