This past May marked my 20th Oracle Q4, the end of Oracle’s financial year and the time when they have historically been most willing to be flexible to close business. The first 16 Q4s were spent at Oracle during my 16 years there. The last 4 were at Palisade Compliance where we are helping our clients take back control of their Oracle contracting, licensing, and overall business relationships.
This last Oracle Q4 was a milestone not just for me personally, but for Oracle as well. The widely-reported earnings miss is indicative of a transition within Oracle to catch up with other “cloud” computing companies.
I am not one of those people who think the earnings miss shows weakness for Oracle. In my two decades doing this, I have seen Oracle go through some major transitions, and they have the knack for coming out stronger in the end. I would not be surprised if that happened here as well. There are plenty of smart, focused, and dedicated people at Oracle to weather this storm.
The transition Oracle faces, and the resulting changes to their organizational structure and ways of doing business, brings additional risks and opportunities for Oracle customers. Here are some things to know as you are working through your Oracle contracting and licensing strategy.
- Oracle is harder to do business with than it was a year ago. Please read that again, it was not a typo. You should plan more time to get through your negotiations with Oracle and make sure you Oracle Negotiation Support. Whether it is getting Oracle to agree to concessions, change terms, or even just give you a contract for review, it is taking longer and longer.
- Oracle will be even more difficult to do business with next year. If you think it is bad now, wait until we get further into their new fiscal year. In addition to the market transition, Oracle is making internal changes to the teams that produce their contracts. I can only assume it is ongoing efforts to cut cost as some of the more experienced people have fled to other teams internally, left the company, or even been laid off.
- Oracle is getting more aggressive with license audits. I blogged earlier in the year how we’ve seen more legal escalations in the Oracle audit space. That is only a sign of how Oracle is using audits to bridge the revenue gap made by the impact of cloud. In addition to this, we’ve seen customer after customer hit with audit “red lines that won’t be crossed” or “zero tolerance” threats if they fail to accept certain non-contractual demands. Oracle customers, and even some staff, have expressed concern about this stance.
- Oracle is losing experienced people and that can benefit the savvy client. The loss of experience within Oracle can be quite frustrating for Oracle customers. While Oracle sales is trying to close business, they can be met with an internal firewall that delays contract drafting or turnaround times. More important, things that should be easy requests are now being met with “we can’t do that” or “that’s not our policy” or even worse, they go into a black hole from which they never emerge. While this can be frustrating, it can also be a gold mine for the savvy client. Many are starting to use Oracle personnel’s inexperience as a way to get concessions and clarifications that can be used later to execute on a long term cost reduction or license optimization plan (think support reductions or Oracle ULA negotiations). This is really true in the audit space, where historically customers have had very little knowledge of Oracle’s policies, creating a substantial information gap between auditor and audited. As Oracle brings in new license auditors with little or no experience, these new auditors can box themselves into a corner, thus creating a more level audit playing field. Even one that has a customer advantage rather than an Oracle advantage.
- Oracle license and contract expertise is even more important for companies that work with Oracle. Because Oracle is getting more complicated, more difficult to work with, and more aggressive, it is more important than ever for businesses to have Oracle expertise either on staff or contracted with an independent third party like Palisade Compliance. There are lots of people out there who will help your company spend more on Oracle. What you need is someone who will help you execute on your business strategy, someone who has your best interests in mind. Companies that don’t have a certain level of Oracle expertise and think they can work with Oracle like they work with all vendors are going to be in for a rude awakening. Oracle is really, really, really good at making money. There is a reason why and a lot has to do with their contracts, licensing policies, and audit tactics.
Next year I would like to write a piece detailing how I was wrong. How Oracle became a kinder and gentler vendor. How they took their foot off the audit gas pedal, clarified their licensing policies, and pulled their lawyers off the front lines of compliance and contracting. How customers rushed to Oracle’s cloud services not because of audits and compliance but because of how well the services perform and how affordable the product is. I really want that client who says “Oracle’s cloud is the best and I have to have it now!!” I’ll let you know if we get them.
For now we will keep an eye on Oracle’s behavior in the market and continually refine our approaches to get the most benefit for our clients.