Oracle Negotiations - Take Back Control
From evaluations to compliance, renewals and contract negotiations, we can help you reduce your Oracle costs and risks and better manage your entire Oracle contract relationship.
Negotiating with Oracle - overview
Oracle negotiations can be one of the most frustrating events that a procurement, legal, or IT professional can experience. They are often rushed, filled with tension, and littered with threats from aggressive sales and Oracle auditing personnel. Simply put, when you think of all the things you love about your job, negotiating with Oracle is probably not on your list.
Clients come to us all the time with the same problem. Whether they are buying cloud, on-premise licenses, support services, or hardware, they have lost control of their negotiations and their Oracle relationship. They feel they are marching to the beat of the Oracle drum when they should be following a path they choose to meet their business needs.
While negotiating with Oracle may be daunting, it’s not impossible. The good news is there is a right way to conduct these negotiations and significantly lower your costs to acquire Oracle products and services, while at the same time winning more advantageous contract terms and conditions.
4 Oracle negotiation tactics
Below are just a few of the tactics you can use to get the most out of your position when you’re negotiating with Oracle. There are literally dozens of ways to navigate the Oracle landscape, especially if you try to anticipate Oracle’s fiscal year. Your corporate goals and timelines will dictate exactly how to proceed and the tactics you can employ.
1. Put Oracle on the clock
Key point: Oracle will try to use the clock when they’re up against the wall. Creating urgency “early” preempts their “we don’t have time to get the approvals” excuses later.
The first thing to do is give Oracle deadlines and make sure you let Oracle know what happens if the date is missed. Have a schedule that runs from now until 25 May, for example. Don’t be unreasonable. Ask for input. For instance, set a date three days out to get the first draft of the contract. Ask Oracle to agree and then make sure they agree in writing. If they miss the deadline, then follow through with your stated action. So, if it took Oracle two extra days to get you the contract, your close date moves from 25 May to 27 May. You see where this is going? Eventually, you will push up against 31 May (their fiscal year end) and you can use that as leverage as far back as today. Following through is critical.
Remember, if you don’t give Oracle a schedule, then they will give you one. Oracle likes a frenetic pace where contracts are reviewed and dialogues happen under the constant pressure of Oracle’s quarter closes. This artificial time constraint lends an urgency to these negotiations and will often push a client over the edge to sign a deal prematurely, leaving valuable terms unresolved and giving Oracle way too much money. A power vacuum wants to be filled. Take control and map it out for Oracle.
2. Force Oracle to negotiate up
Key point: Don’t wait for Oracle to tell you what they think you can afford, tell them what you think the value is from the get go.
This one goes against everything you’ve learned in negotiation school. Our advice is to go first into the pricing conversations. This is true for licenses, cloud, ULAs, enterprise agreements, etc. Rather than let Oracle go first and try to negotiate down, you should offer up a price you are willing to pay for the software or cloud services and force Oracle to negotiate up from there. Every additional dollar you concede to Oracle should equate to an additional concession you receive on terms and conditions. Better price, better terms.
Remember, Oracle’s pricing is completely made up and subject to change. Oracle uses artificially high list prices to protect their support revenue stream. Their pricing is certainly not built on how much it costs to develop the software or cloud services. Letting Oracle set the first price in these negotiations puts you at an immediate disadvantage.
How do you determine a price in the negotiation process? What is the value of the software or cloud service to your business? Do you have an alternative? What would it cost you not to buy Oracle’s products? These are all good starting points to determine a price. The key is that you pick a pricing methodology that is both defensible and to your advantage.
3. Get everything in writing in MS Word
Don’t accept contracts in PDF format, or worse, as click-wrap “I accept” agreements. You are spending lots of money on Oracle’s cloud services. The least they can do is provide you with editable documents you can use to change as required. Ultimately, this is the most effective use of your time. You can update the document directly rather than request to have a document changed. Oracle may not be happy with this request, but you are not in this to make them happy during the negotiation process. You are in this to get the best deal.
Oracle continues to make changes to their contracts to make them even more favorable to Oracle. They’ve tried to make the audit language more onerous, limited your ability to use their products in the cloud, and tried to increase the cost of running in non-Oracle environments. Guess how Oracle is getting you to agree to this change? That’s right, the click-wrap agreement! Oracle buyer, beware.
4. Draft your own contract with Oracle
Plenty of companies use their own paper to engage vendors. For some reason people are hesitant to do this with Oracle. Why? Oracle wants to start from their one-sided terms and negotiate from there. Why not start with your terms and negotiate from that position for your Oracle software? If you can execute on this, then you will come out in a much better position. We’re not saying it’s easy, we’re saying it can be a successful Oracle negotiation tactic. What if you start with your paper and then only send Oracle PDF copies of the contracts? That might show them what it’s like to have that done. We’ve helped customers take an Oracle PDF, convert it to Word, and then change everything. Whatever you need to do to get the terms you require is OK. None of this fuss would be necessary if Oracle made their contracts more customer friendly.
Do you have a complete picture of your Oracle contract estate?
Astonishingly, 72% of Oracle customers do not have a complete, accurate picture of all their Oracle contracts. That’s a concerning number, considering these agreements are at the center of your business relationship with Oracle. How can your ITAM team or tool provide accurate counts if it doesn’t have an accurate understanding of your entitlements?
As Oracle expands its business the complexity of their contracts increases as well. It can be nearly impossible to manage your Oracle contracts. The typical Oracle customer has more than 17 separate Oracle contracts while many companies have over 100. Even those with Unlimited License Agreements may not have copies of all amendments.
A simple Oracle database contract has more than 200 pages of terms and conditions that apply to the licenses. Coupled with Oracle’s 3-tier contract strategy, this can create a black hole regarding the risks and opportunities contained in your Oracle contracts.
Almost all Oracle customers are out of compliance with their contracts in some way, big or small, and Oracle’s audit team knows it. Oracle uses that information to take control of their customer base.
To help you with these challenges, Palisade Compliance has developed a unique set of services covering all phases of Oracle contract management and negotiations. Here’s our Founder and President, Craig Guarente:
We're Oracle negotiation experts
We have assisted our clients in Oracle contract negotiations worth more than 1 billion dollars. Our proprietary contract negotiation strategy will enable you to obtain the best terms and conditions at the lowest price, while ensuring maximum flexibility for you as new technologies are brought into the market.
Oracle standard contracts are designed to lock you in. Oracle contracts negotiated by Palisade Compliance are built to unlock your potential and free up your teams. Our negotiated contracts typically cost 24% less and have approximately 11 more negotiated terms than customer-negotiated contracts.
Oracle contract opportunity and risk evaluation
To help companies unlock the hidden value contained in the contracts they already have, and to avoid the pitfalls that hit the unprepared, Palisade Compliance has developed the Contract Opportunity and Risk Evaluation (CORE) service. This service is designed to give you:
- a deep understanding of all your Oracle license agreements,
- knowledge of how Oracle will try to leverage and exploit those agreements to their advantage,
- and guidance on what you can do to get the most of your Oracle software investments.
CORE engagements are led by former Oracle contracts professionals on our team, with an average of 20 years Oracle contracting experience.
Palisade Compliance has led hundreds of negotiations with Oracle. We have a practice designed to help you get the best deal at the best price. We guarantee we can get a better deal than you can get on your own.
Case study
New Oracle contract for financial services company
Oracle solutions play an important role at a leading multinational financial services company. The company relies on their database to store 62 petabytes of online data.
While the company had no intention of eliminating Oracle from its infrastructure, the leader of the global data architecture team knew something had to be done when Oracle maintenance costs began eating into the company’s gross revenue.
The team faced a three-pronged challenge: maintaining the organization’s 50% net operating margin while returning value to shareholders and expanding to meet the needs of the expanding e-commerce platform.
Less than three months from when the existing Unlimited Licensing Agreement was due to run out, the team recognized an opportunity to reduce the company’s TCO with Oracle.
They were confident the company was compliant with all of its software license terms but didn’t know what the final price point was.
The team wanted to be in a strong position during negotiations with Oracle and wanted to implement a containment strategy to avoid increasing maintenance costs in the future.
We develop a solution
The financial services company worked with us to get an edge in its Oracle negotiations and develop alternative solutions to the expensive ULA renewal that Oracle was pushing.
First, we conducted an independent license audit to confirm what software the company was running and how to optimize it under the current agreement. This license position enabled the company to negotiate with Oracle from a position of strength.
We then reviewed all the company’s contracts and provided a detailed analysis including a timeline and recommendations on what the company should ask for during its negotiations with Oracle. This was critical for gaining leverage with Oracle and moving the needle in negotiations.
How did it all work out?
Our audit, advisory, and negotiation services enabled our client to successfully negotiate a new Oracle contract that aligned with their financial goals and technology roadmap. In addition to the new contract, we provided the company with insight into their licensing and usage that was previously unavailable. This knowledge will enable the company to maintain their leverage with Oracle as the two companies continue to work with each other.
The end result of this engagement was that the financial services company saved millions of dollars, had a world-class license agreement, and gained insight into their Oracle licensing and usage that will continue to pay dividends for years to come.
We need to better comprehend Oracle's policies and terms!
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