Okay, that may be a little bit of an overstatement, but only a little. May 31 is the last day of Oracle’s fiscal year. Everything Oracle does until that date is geared to maximizing revenue for their fourth quarter and their fiscal year. Oracle’s fourth quarter accounts for 40% of their cloud and on-premise license revenue. Their entire year often comes down to the last two weeks of May.
Oracle will pull out all the stops to get you to sign a new deal before midnight tolls on their fiscal year. So, if you’re an Oracle customer, you’ll probably be getting a ton of pressure from Oracle to buy something. Anything, especially if that anything is cloud. Most Oracle companies have many Oracle sales people calling on them. One client of ours told us they had over 30 Oracle sales people to deal with!
Come June 1st Oracle does its traditional sales restructuring, purging, and realignment. You know those 10+ Oracle reps that are calling into your account to close a May deal? They all won’t be there come June. Even if they stay with Oracle, they may not be on your account. For the Oracle sales rep, May 31 is the end of the world. June doesn’t matter until June arrives.
Oracle customers should understand this dynamic and leverage this reality to get a better deal in May. Telling an Oracle rep that you are going to sign the deal in June is not going to inspire them to work with you. Why would they? They might not be your rep in June.
While it can be very stressful for you, the Oracle customer, dealing with all those sales reps contacting you at all hours of the day and night, it may also present amazing opportunities for companies that know how to take control of the Oracle sales teams and drive the negotiations.
Tips to help you negotiate with Oracle for the best year-end deal
I’ve been in the Oracle ecosystem now for 99 quarter closes on both the Oracle side and the customer side. I think if you can do these three things you will be in good shape:
1. Use the calendar to your advantage
While Oracle will pressure you to sign at the end of May, you should pressure them to give you the deal that is best for you. My response to Oracle’s threat of pulling the deal on May 31 is simple and it goes like this: “We’ll sign the deal that is right for us. And if that means negotiating with a new Oracle sales team in June then that is what will do.” History shows that you will eventually get the deal you want if you can wait Oracle out, despite the protests of your sales rep.
Remember that May 31 is Oracle’s fiscal year end. That’s the date Oracle needs you to sign, not the date you need to sign. This means you have all the leverage. Unless your contract says, “If you get audited you have to buy by May 31,” then you have a lot more power than Oracle wants you to have.
2. May 31 is a great time to buy from Oracle
There is much you can read on the internet about how Oracle does business at the end of the quarter. Their Q4 is the mother of all quarters for them. If you’re going to buy from Oracle, then this is perfect timing. There are ways to position yourself so you will get more leverage as you get closer to May 31. It’s not just about the clock, it’s about what you do with your time on the clock. Don’t agree to something without reviewing the contract. An Oracle sales PowerPoint is not something you should say yes or no to. A contract, however, is something you can analyze. If your Oracle rep has not given you a contract, then you need to get it now. Often the PowerPoint doesn’t match what you think is going to be in the contract.
3. Go first in the negotiation
Negotiating with Oracle often means breaking all the rules of a typical negotiation. One thing we hear all the time is to never go first in a negotiation because the person who goes first tips their hand and loses. The opposite is in fact true with Oracle. If you wait for Oracle to give you a price, then you will be negotiating down from Oracle’s ridiculously high price. Oracle can come in with a $50 million offer and then you negotiate it down to $20 million and think you’ve done a great job. Guess what? Oracle sales could have had your deal forecasted at $10 million and you just gave them double what you could have.
The better approach is to figure out what Oracle’s technology is worth to you and then come up with a price that fits your budget, based on your needs and the value Oracle brings. Following this logic, in the example above, you could go in with a $3 million offer and force Oracle to negotiate up from there. Perhaps you end up signing at $5 million. If you want to be a negotiation rock star, you can also force Oracle to make concessions in terms and conditions for every dollar you move up from your $3m offer.
4. Want the deal, don’t need the deal
This is perhaps the #1 tip that will get the cost of your Oracle deal down and get you the best terms and conditions. If you can walk away from the deal and not have to sign it then you can get almost anything you want from Oracle. This means you’re not signing it to resolve a compliance finding, and you have an alternative technology should you and Oracle not agree to terms. If you stay in compliance and keep your technology options open, you can watch the cost of the Oracle deal go down as you just say no until Oracle gives you the contract at the price that makes sense for you. If you have to sign a deal, then you can only push Oracle so far, unless you are a very good bluffer!
Remember that an 80% discount on something you don’t need is a terrible deal. It reminds me of that show Hoarders. People go shopping and come out with four pairs of pants because it was “buy one get one free” day. Turns out they don’t need any pants. In fact, the pants they bought are not the right size. They could have saved all their money by passing on the sale. The same is true with Oracle. That amazing deal you are getting from Oracle is only amazing if you need the products right now. Not because it’s on sale, or you need it in a year, or because you have an LMS audit gun to your head.
What we can help with
What if you don’t have a clear picture of your Oracle licensing and a corporate vision on how to work with Oracle? The good news is that it’s not too late. At Palisade Compliance, we can help you assess your usage and needs before you sign any new contracts under the pressure of Oracle’s fiscal year deadline. You still have time to set a new course with Oracle with a strategy based on your priorities and your schedules. And not one that hinges on Oracle’s fiscal needs. How’s that for a novel idea?
We’ve helped hundreds of Oracle customers negotiate and optimize their Oracle contracts. Our contracts team has an average of 20 years Oracle contracts experience. No other firm comes close to that level of expertise. If you are negotiating with Oracle and would like help lowering your costs and getting the terms that meet your needs, please get in touch.
We help our clients make the best possible purchases from Oracle. Our clients buy what they need when they need it. Best of all, we’re not an Oracle reseller so we’re not conflicted if you buy more or less Oracle.
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