Negotiating with Oracle can be one of the most frustrating events that a procurement, legal, or IT professional can experience. These negotiations are often rushed, filled with tension, and littered with threats from aggressive sales and Oracle LMS audit 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. They’ve lost control of their Oracle relationship, and of a particular negotiation, and they need to get it back. 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. I started writing about this topic all the way back to 2012. Unfortunately, things are not getting any easier when you’re working with Oracle.
While negotiating with Oracle may be daunting, it’s not impossible. The good news is there is a right way to conduct these negotiations. Using Palisade Compliance’s negotiation best practices, you can significantly lower your costs to acquire Oracle products and services, while at the same time winning more advantageous terms and conditions.
4 high-level tips to help you negotiate with Oracle
1. Put Oracle on the clock
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 May 25th for example. Don’t be unreasonable. Ask for input. For example, set a date three days out to get the first draft of the contract. Ask for Oracle to agree, and then make sure they agree in writing. If they miss the deadline, then follow through with your stated action. For instance, it took Oracle two extra days to get you the contract, so your close date moves from May 25th to May 27th. You see where this is going? Eventually, you will push up against May 31 (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
This one goes against everything you’ve learned in negotiation school. Our advice is to go first in the pricing conversations. 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? Well, what’s 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 with Oracle. The least they can do is provide you with editable documents that 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 sales to have a document changed. Oracle may not be happy with this request, but you are not in this to make them happy. You are in this to get the best deal.
Oracle recently made a change to their master agreements that put some onerous requirements on you should you be audited. 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
Now this one might seem a little “out there”, but bear with me. 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 from your terms and negotiate from that position? If you can execute on this, then you will come out in a much better position. I’m not saying it’s easy, I am saying it can be a very successful tactic in your negotiation. What if you start from 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 okay. All this fuss wouldn’t be needed if Oracle made their contracts more customer-friendly.
How we can help
Above are just a few of the Oracle negotiating tactics you can use to get the most out of your Oracle negotiations. 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 whether you can employ the tactics above. You would be surprised how often you can do this.
Palisade Compliance has led hundreds of Oracle contract negotiations and 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.
For more information on how Palisade Compliance can help your organization negotiate the best deal with Oracle, please get in touch.
Read more of our articles on Oracle contract negotiations, including during Oracle’s Q4.
We can help you manage and negotiate your Oracle contracts.