Taking time to thoroughly review your Oracle support renewal and evaluate how well it meets the needs of your business should be standard practice for any Oracle software customer.
Not only will it provide assurance that the renewal reflects the best deal from Oracle for your organization, but also uncover opportunities to negotiate a reduction in your on-going technical support fees. In this article we outline the main areas to consider.
Overview – what is an Oracle support renewal?
Firstly, a recap of what an Oracle support renewal is. Oracle provides technical support services for their software products including updates, enhancements and technical assistance. Typically, a support period is 12 months with support fees payable in advance. Continuity of support services is maintained through an annual renewal and the delivery of these services is governed by the Oracle Software Technical Support Policies. More information on Oracle support renewals can be found here.
Depending on the scale and complexity of your organization, a thorough review and evaluation could take between 1 and 3 months, therefore we recommend starting the process well before your renewal is due. Even if you have not received your renewal documentation at this point, time can be spent establishing your effective license position (ELP) in preparation. Note: As Oracle’s fiscal year ends in May a high proportion of contract closures, and therefore annual renewals, occur in this month. If you are likely to require external specialists such as ITAA to support the process, be mindful that demand could be higher at this time of year and plan ahead.
The pros and cons of auto-renewing annual support
Many companies have set their annual support to auto-renew. Whilst this mechanism ensures continuity of support services and removes a yearly administrative burden it also removes the trigger to sense-check the renewal and evaluate the on-going Oracle support fees. Letting your annual support fees renew automatically could mean missing an opportunity to negotiate reduced costs.
Key areas to review
There are 3 key areas to review and evaluate in relation to your Oracle support renewal:
1. Benchmarking support fees against industry standards
It is important to understand if what you are paying in support fees is comparable with typical costs across the industry. This is one area where the experience of external specialists can be especially valuable. At ITAA, by analyzing your existing support fees against industry standards, we can assess and explain by order-line if your current support costs align with commercial standards.
2. Identifying under-utilization or non-utilization of supported Oracle products
We often find that IT infrastructures have been setup without considering the cost of licenses or the associated support, for example:
- Which products are installed where
- How many resources are available to them
- How have licenses been assigned
Very often, changing one of these elements can put you in a better position to reduce your support costs for Oracle programs.
3. Quantifying current and future product requirements
It is important to consider the actual and future product requirements of your company as it would be counterproductive to cancel support for quantities or products that your company needs now or in the near future.
It is also important to understand which products you really need. Often, clients are sold the most expensive product version, or even a bundled Suite product. However, with many Oracle products – including Business Intelligence, Oracle Applications and Oracle Database – organizations could easily downgrade to a less expensive version without a significant loss of functionality. For example, only the minority of all Database deployments truly require an Enterprise Edition version. Many could switch to Standard versions, often reducing the license and support costs by over 80%.
What are the challenges for organizations trying to reduce their support fees?
Addressing your annual Oracle support costs can be difficult and many companies that try and negotiate a better deal will be unsuccessful in effectively reducing their spend. Understanding Oracle’s position and their negotiating tactics can bring some perspective:
- Technical support fees provide a significant revenue stream for Oracle therefore negotiating a reduction is likely to be strongly resisted.
- The primary objective of Oracle’s support agreements and contract renewal team is to ensure organizations renew their contracts. They are not there to help Oracle customers reduce their annual spend.
- The “Oracle Software Technical Support Policies” document contains numerous clauses which restrict the potential to reduce support costs. Organizations wishing to negotiate will often be directed to these. The relevant sections include:
- License Set
- Matching Service Levels
- Re-instatement of Oracle Technical Support
- Pricing Following Reduction of Licenses or Support Level
Help with your Oracle support renewal
When building a case to negotiate reduced support fees it helps to understand how the Oracle support division functions within the rest of the Oracle company. Through our knowledge and experience of Oracle’s internal organization we can often overcome the challenges presented and help you to optimize your Oracle support renewal. With most of our clients we start by having an obligation-free conversation, or undertaking a high-level assessment to judge potential scope. More information on our Oracle support services can be found here. Please feel free to contact us for more information.