Larry Goldman | Senior Director, Product Marketing
If you have contracts with Oracle, you already know the tech behemoth is a master of making you feel powerless. Whether you’re contending with contract changes, renewals, or an audit process, leverage with Oracle always seems to be in short supply.
Meanwhile, serious dollars are at stake for your company. Third-party support can be an excellent opportunity to save your company money. But Oracle uses support fees to practically fund the company’s existence, and its contracts were written to all but ensure you require Oracle’s support in perpetuity.
While Oracle would have you believe there’s no path to a third-party provider, it’s simply not true. Thousands of organizations have already made the switch. Your challenge is often timing: Many support contract renewals are set for May 31, the end of Oracle’s fiscal year. This means now is the time to fully understand your contractual and operational situation.
Knowing Your Contractual Rights and What Oracle Might Do
Oracle contracts are designed to lock you in, maximize your spending, and open the door for penalties. So how can you use your contractual rights to your advantage when dealing with Oracle? To answer this, we reached out to Evan Boyd, vice president of business development at Software Licensing Consultants (SLC), a Spinnaker Support partner that specializes in all-things Oracle licensing.
“It’s a great question but a complex one because no company has the same products or contracts,” Boyd said. “For each SLC client, we go deep into very specific strategic licensing plans and defense. At the same time, we work to educate Oracle customers on what to do and expect during the renewal period.”
Boyd offered these six insights:
- Know your contract, usage, and rights.
Before you utter a word to your rep (if you even do that) you need to know your agreements forward and backward. Oracle certainly does. If you’re trying to move toward a third-party relationship, read the contract, know your rights, and ensure your organization is compliant. Otherwise, your good intentions could further trap you in your current circumstances. “Oracle will instruct you on issues not actually represented in your contract and even give you misleading or false information about what’s allowed,” Boyd said. “Never take Oracle’s word for it.” - Different contract end dates aren’t showstoppers.
If you have multiple Oracle contracts with various end dates and a product you want to dump, that product may be tangled up in more than one agreement. Your Oracle rep would have you believe that, because of this, you can’t drop anything. That just isn’t true, but you need to know how to navigate the contracts. - Matching service level agreements can be confusing.
A “license set” means all products related to each other via code base (e.g., Oracle Database), and “matching service levels” refers to Oracle’s policy that prohibits the canceling of support of a subset of products from within a license set. So, if you want to leave support for some versions of Oracle Database but not others, you will violate the contract. This can get complicated, so you must understand which products are on which contracts. Oracle will use this to insist you can’t move to third-party support. However, you can negotiate with them or move everything to third-party support and avoid these technicalities. - Pay for what you use, not what you own.
When you’re getting support from Oracle, you pay support for everything within a support contract. It doesn’t matter what you use or don’t. If you prefer to pay for coverage on what you use rather than all the Oracle products you own, then a move to third-party support makes sense. - Don’t fear the audit.
Many companies want to save money by moving to third-party support but freeze up in fear of a possible audit, where penalties often range well into the millions. Regardless of what your Oracle rep may say, this is not an audit situation. “Audits generally arise when your rep suspects there is reason for an audit that will bring them significant revenue,” Boyd said. “When you move to third-party support, you should always have a license assessment done to know your true license position based on how Oracle would audit.” - Oracle wants you in the Cloud — don’t do it.
There has been a lot of noise in recent months about Oracle Executive Chairman Larry Ellison’s push to become a major player in the Cloud space, and sales reps are working hard to push customers toward Oracle Cloud Infrastructure (OCI). But with the Oracle Cloud comes forced Oracle support because, as with all Oracle support, it’s what’s best and most lucrative for Oracle. For existing customers, this Cloud push can come in the form of settling audits by forgiving penalties in exchange for coming aboard OCI, something Boyd says he’s seen frequently of late. This is also a strategy to get your on-premise licenses hosted on OCI under the guise of reducing future risk of license exposure. Once you’re on OCI, you’re required to maintain support with Oracle directly and it will be difficult to ever move to another provider.
Understand Your Operations and Preparing for a Discussion
If you have complicated contracts, it’s important to speak to an expert. At the same time, you need to move the process forward. We recommend these steps:
- Make sure you understand the basics of third-party support.
This could be through researching the solution, comparing third-party support features and benefits against Oracle (e.g., such as for EBS), referencing online reviews in trusted places like Gartner Peer Insights, and learning about the customer experience. - Make sure you allocate enough time.
The length of an evaluation process can vary, but you will always speed up this process with thoughtful preparation. Beginning with the vendor kickoff meeting, you should establish a schedule and work to understand potential bottlenecks, dependencies, and deadlines. We have seen customers transition in less than a month, but others can take multiple months if there is less consensus and a slower organizational pace. - Build your business case.
Building your internal case does not have to be time-consuming or complicated. Work with IT decision makers and focus on areas like estimated savings calculations (here’s a handy online savings calculator), how much or little you’re utilizing patches or updates and whether there’s a growing backlog of tickets. - Gather the data required for discovery.
Under a mutual nondisclosure agreement, the third-party vendor will begin the discovery process. You’ll likely be asked to complete a Product Questionnaire. The more the vendor knows about your Oracle needs, the more quickly and completely it can offer a reasonable estimate of cost and timing. - Engage your internal stakeholders early.
Who will you need to enlist for Oracle negotiations? Who will help make the decision to switch to third-party software support? In addition to IT, this could include stakeholders from legal, security and finance. Carefully think this through and assemble your team early to be able to make the Oracle contract deadline.
Hear from the Experts
Given the popularity of this topic, we reached out to industry experts who have helped Oracle customers navigate the challenging landscape of annual support contracts. The result is “6 Must-Know Oracle Tactics to Address if You’re Considering Third-Party Support,” an on-demand webinar that covers the topics above – and more.
Join Evan Boyd, Vice President of Business Development at Software Licensing Consultants, and Bob Ludlam, Vice President and General Manager – Americas at Spinnaker Support, for a practical discussion of your contractual rights under Oracle and how to get ready to discuss third-party support. This includes to recent two case studies of businesses that have recently gone through the process of switching support from Oracle. Watch it now.
Your Next Steps?
If you have any questions regarding best first steps, contract rights or building your business case, reach out to us for a brief consultation. We’re glad to advise you on whether third-party support is the right fit for you and how to move forward confidently before May 31.