Oracle Support Renewal Reduction – Guide
Oracle Support Renewal Reduction – Executive Summary
That organizations wants to understand if Oracle Support Renewal Reduction is possible because Oracle support costs are a common challenge for customers with on-premise licenses.
- Oracle’s matching service levels and reinstatement fee policies make it difficult for customers to reduce or take a break from support costs.
- Strategies for reducing costs include optimizing license usage, consolidating environments, leveraging third-party support providers, and negotiating with Oracle for better terms and pricing.
- Customers running older versions of Oracle software can negotiate away increases for extended support.
I. Introduction
Oracle databases are widely used by organizations worldwide to support their critical business operations. However, one major challenge that many organizations face is managing the high costs of Oracle support for their on-premise licenses.
Oracle’s licensing and support model can be complex and confusing, making it difficult for organizations to fully understand the costs associated with their Oracle deployments. Additionally, the cost of Oracle support can vary greatly depending on the size and complexity of the organization’s environment, as well as the level of support they require.
The purpose of this blog is to provide strategies for reducing Oracle support costs for on-premise licenses. By understanding the factors that contribute to Oracle support costs and implementing effective cost-saving strategies, organizations can better manage their Oracle deployments and achieve significant cost savings.
A. Overview of the problem: high Oracle support costs for on-premise licenses
The problem of high Oracle support costs for on-premise licenses refers to the significant expenses that organizations can incur when maintaining and supporting their Oracle databases that are installed and run on their own infrastructure rather than on a cloud-based service. Organizations with on-premise Oracle deployments often find that the cost of support and maintenance can be a significant portion of their overall IT budget. This can be a challenge for companies, as it takes away from the budget for other important IT projects and initiatives. Additionally, with the increasing popularity of cloud-based services, organizations may find that their support costs for on-premise Oracle deployments are becoming less justifiable.
B. Purpose of the blog: to provide strategies for reducing Oracle support costs
The purpose of this blog is to provide strategies and recommendations for organizations that are looking to reduce their Oracle support costs for on-premise licenses. The blog aims to provide an overview of the problem of high Oracle support costs, to help organizations better understand the factors that contribute to the costs, and to provide actionable steps that organizations can take to lower their support costs. The blog will provide information on best practices and techniques for managing and optimizing Oracle deployments, as well as ways to leverage Oracle’s own services and programs to lower costs. The ultimate goal of the blog is to empower organizations to make informed decisions about their Oracle deployments and to achieve significant cost savings on their support costs.
II. Understanding Oracle Support Costs
A. Explanation of Oracle’s licensing and support model
- Oracle support costs are based on a fixed percentage of 22% of the net license fees.
- Organizations that negotiate a discount on the license purchase will also receive the same percentage discount on annual support.
- Oracle’s technical support policies can contribute to increasing support costs, with annual increases of 4-8%.
- Organizations that do not upgrade their Oracle software versions will have to pay for extended support, which can be an additional 10-20% in support fees.
- Oracle’s technical support policies restrict the ability to partially terminate licenses and support, which can lead to organizations paying for maintenance on licenses they would prefer to terminate without any reduction in support fees
How Oracle makes it difficult to reduce Oracle support fees
Oracle Matching Support Level.
Reducing Oracle support costs can be difficult due to Oracle’s technical support policies. These policies prevent companies from taking a break from Oracle support, for example, by going without support for a few years after making an upgrade to Oracle software. They also prevent customers from terminating unused software licenses. One of the key policies that make this possible is the “Matching Service Levels” policy, which states that all licenses in any given license set must be supported under the same technical support service level. This means that an Oracle customer must have all of their Oracle products within the same product set, for example, all databases under support or nothing under support; this is known as an “all or nothing” approach. This policy can be found on Oracle’s official website.
Oracle Reinstatement Fee
The reinstatement Fee states that if technical support lapses or was not originally purchased with a program license, a reinstatement fee will be assessed. This fee is computed as 150% of the last annual technical support fee paid for the relevant program or 150% of the net technical support fee that would have been charged if support had been ordered originally for the relevant program, as per Oracle’s Support pricing policies in effect at the time of reinstatement. In addition to the reinstatement fee, customers must also pay the technical support fee for the support period, which could be the last annual technical support fee paid for the relevant program or the fee that would have been charged if support had been ordered originally from the relevant program. This means that if you terminate an Oracle support contract and wish to return to Oracle support, you need to pay a 150% penalty fee and support for the time you have not been paying support. This is the reason why most Oracle customers cannot take a break from Oracle support.
C. Discussion of the challenges of managing Oracle support costs
This section of the blog will explore the various challenges organizations may encounter when managing Oracle support costs, such as:
- Difficulty in understanding and interpreting Oracle’s licensing and support model can make it hard to anticipate and budget for support costs.
- The complexity of Oracle environments and the need to manage multiple licenses and support agreements can make it difficult to keep track of costs and optimize deployments.
- Difficulty in negotiating with Oracle for better terms and pricing, as the company is known for its stringent licensing and support policies.
- The need to keep up with Oracle software upgrades and maintenance can be costly and time-consuming.
- The need to balance the cost of support with the benefits of maintaining and upgrading their Oracle deployments.
By highlighting these challenges, this section of the blog aims to help organizations better understand the obstacles they may face when trying to manage and reduce their Oracle support costs and to provide strategies and recommendations for overcoming these challenges.
III. Strategies for Reducing Oracle Support Costs
A. Optimizing license usage and consolidating environments
A. Optimizing license usage and consolidating environments: One of the most effective ways to reduce Oracle support costs is by optimizing license usage and consolidating environments. This can be achieved by identifying and eliminating underutilized or redundant licenses and consolidating multiple Oracle environments into a single, more manageable deployment. By reducing the number of licenses and environments, organizations can lower their support costs and improve their ability to manage and optimize their Oracle deployments.
B. Leveraging third-party support providers
Organizations can also consider leveraging third-party support providers as an alternative to Oracle’s support services. Third-party support providers can offer a wide range of services, including technical support, software updates, and maintenance, at a fraction of the cost of Oracle’s support services. Additionally, they can offer better terms and more flexible support options. Examples are Spinnaker and Rimini Street.
C. Commiting to multi-year support agreements.
Oracle offers customers who commit to multi-year support agreements a 0% increase over three years.
D. Utilizing Oracle’s Cloud services
Oracle is offering customers who use Oracle OCI services a 25% reduction for every dollar spent on OCI. That will then reduce you’re on-premise support agreements for technology products only.
E. Negotiating with Oracle for better terms and pricing
Organizations can also negotiate with Oracle for better terms and pricing on their support agreements. However, results are difficult to obtain and it’s only a few percentages.
Oracle Support Reduction FAQ
Q: Is it possible to reduce Oracle support costs?
A: Yes, it is possible to reduce Oracle support costs, but it requires significant effort and investment of time. There is no easy way to reduce costs by 20% with just a few hours of work. It takes hard work and dedication to achieve meaningful cost reductions
Q: Can I negotiate my Oracle support renewal?
A: Yes, it is possible to negotiate Oracle support renewals. Oracle may not make it easy to negotiate, but many customers have had success negotiating away the annual increase. The key is to be well-prepared and have a good argument. Committing to 3 years or renewals can increase your chances of success, but it is also important to have flexibility. If you are not successful in negotiating, consider seeking external help or hiring better negotiators.
Q: What should I tell Oracle if I want to negotiate my support renewal?
ood arguments to use when negotiating Oracle support renewals include telling them you are considering leaving Oracle and the business might not want to continue paying for support or that you have a limited budget and it does not cover the annual increase. It is also helpful to understand the perspective of the Oracle support renewal representative and remember that your contract may be a small portion of their annual quota.
If I am not good at negotiation, what can I do?
If you are not good at negotiation, you can try terminating a single license from your contract and using Oracle’s repricing rule to your advantage. This requires paperwork, but it is an effective way to negotiate the annual increase.
Can I negotiate a large reduction, such as 30% off my support renewal?
It is unlikely to negotiate a large reduction of 30% or more on your support renewal. While it may be possible on some application licenses or support, it is uncommon for technology contracts. It is worth trying, but it is not worth putting in a lot of effort as the chances of success are low.
Can I use third-party support providers, such as Spinnaker or Rimini Street, as leverage in negotiations with Oracle?
While it is possible to use third-party support providers as leverage in negotiations with Oracle, it may not be effective in getting more than the annual increase. However, some companies have reported that Oracle has made a counteroffer after hearing about third-party support providers.
What is the most common challenge that companies face when dealing with Oracle support?
The most common challenge is companies paying support for products they don’t use. They are bound by Oracle’s “repricing” policy, which makes it difficult to terminate licenses to lower support costs if they are all part of the same contract.
Is there a way to terminate unused licenses and support to reduce costs?
Yes, it is possible to “get around” the repricing obstacle and lower support costs. One way is to ask Oracle to make a license assignment of unused licenses if the company is divesting a subsidiary. Once the licenses are assigned, the divested entity can then terminate the support contract. Another way is to investigate if a license migration can be done at no cost, such as migrating technology products from NUP/CPU to another license metric.
Are there any other ways to reduce Oracle support costs?
Yes, one possibility is to consider re-purchasing your licenses. If you can negotiate a high enough discount with Oracle, you may be able to show a return on investment after a few years. However, it is important to note that Oracle sales representatives may not be able to offer this option, so you may need to negotiate under the scenario that these licenses are not replacement licenses but licenses for something else. This is what Oracle calls “Cancel and Replace.
My company runs older versions of Oracle software, and Oracle wants to increase support by 10% for extended support – Is it possible to negotiate away this increase?
Yes, it is possible to negotiate away this increase, and we have helped clients achieve this. Some clients have also been able to negotiate a contract clause in their original contracts, which eliminates the need to spend time on negotiation later on.
