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cloud computingThere is a strange irony to Oracle’s push into the cloud.  Business are moving to the cloud to simplify things.  They want to streamline their internal structures and move out non-core functions to other companies that are experts in managing such services.  (e.g. we make cars, why do we need a data center?  Move that to a data center company.). Businesses want to lower their costs.  Businesses want to create simpler contractual arrangements and avoid the pitfalls of non-compliance with on premise license agreements.

Moving to Oracle’s cloud may indeed help you move some IT services to Oracle.  However, it will definitely not help you cut your costs.  More importantly, it will increase your risks and complexity managing your Oracle contracts and licenses.  Let me explain:

First, remember that Oracle cloud customers are most certainly existing Oracle customers who give that vendor money every year for support and/or new licenses.  Oracle is not building out their cloud services and spending all that money on new infrastructure so you can give Oracle less money.  Oracle wants more money from you, not less money.  The rationale is that you are paying a certain amount for your on premise contracts, you will get value by moving to or adding Oracle cloud services, so you should pay Oracle more money for that value.  It’s a perfectly rationale way to look at this.  So when you hear “you can save money by moving to the Oracle cloud”, you should be very, very, very skeptical.

Second, Oracle customers have been buying licenses from Oracle for 40 years now.  They have invested billions and billions of dollars in software licenses, support, consulting customizations, hardware, facilities, and personnel.  These customers are not going to throw all this away to move to Oracle’s cloud.  Most Oracle customers who acquire Oracle cloud services will be in a hybrid environment where they are managing on premise infrastructure as well as internal cloud and public (Oracle) cloud.   Once upon a time an Oracle customer just had to stay in compliance with their on premise licenses (and that in itself can be a herculean task), now these same organizations must stay in compliance with on premise and cloud contracts.  Going out of compliance on either one can have serious financial impacts on both sides of the house.  Oracle Audit (LMS) and sales will look for any slip-up, in any environment, to get you to give Oracle more money.  Moving to Oracle’s cloud will increase your Oracle compliance work.

I want to make one thing clear: I am not advising you to stay away from Oracle’s cloud services. If Oracle’s product is the best fit that meets your needs and your budget, then by all means, you should sign up for it.   However, what I am telling you is that their cloud won’t necessarily cut your audit costs or make your contracts and compliance issues any easier.  Oracle cloud contracts will just add to your complexities in this area.

What you need to do is understand what your specific risks and opportunities are.  These risks and opportunities vary based on your company goals, market position, Oracle license contract purchase history, your compliance position, etc.  Once you have a handle on all of that, then you can negotiate the best cloud deal with Oracle that meets your needs and fits into your contract and license management obligations.   You may even be able to save money.  And yes, I mean give Oracle less money, not more money.

(This is where I give the Palisade plug!)   At Palisade we’ve been helping Oracle customers with their Oracle contracts for 5 years.  Before founding Palisade, I ran Oracle’s Global Contracts teams.  Anything you bought from Oracle, anywhere around the world,  went through my organization.  Palisade has assembled a team of Oracle experts, like myself, whose only focus is helping Oracle customers achieve success, save money, and reduce risks.   We’ve helped many clients with their Oracle cloud contracting.  Please contact us and find out how we can help you.

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