In a 2018 article by Kevin McLaughlin at The Information, picked up by outlets including CNBC, Marketwatch, and Yahoo, it was reported that Amazon and Salesforce had major initiatives in place for moving off Oracle products and services. This news story became a bit of a firestorm for Oracle.
Oracle’s stock took a hit when this news broke, and Oracle’s senior vice president of investor relations, Ken Bond, sent a note to investors calling the report “stupid stuff”.
Later that year, an article came out on CNBC detailing Amazon’s move away from Oracle, and Oracle’s response – basically saying that it was never going to happen. While the article is (still) an interesting read, it completely missed the point of why customers really can’t get off Oracle.
Today, new companies have a choice in databases: open source databases, Sql Server, DB2, and others can do 95% of what Oracle’s database does. In almost all circumstances, a non-Oracle database is sufficient for a customer’s application. This is very different from 30 years ago when Oracle software was a must for any company looking to grow.
So why is Oracle database so sticky? Two reasons – applications and contracts.
Many Oracle customers use Oracle applications. These include Oracle Financials, Peoplesoft, Siebel, Hyperion, etc, etc. Oracle has made well over 100 acquisitions over the years. Pretty much all the applications they’ve acquired now have to run on an Oracle database. Even if the application can technically run on a non-Oracle database, Oracle terms and conditions require the Oracle database to be licensed as well.
It’s the applications, not the database
We’ve helped many clients analyze their Oracle database usage as they are attempting to move off Oracle. In many cases they can move everything away from Oracle except those databases “running Oracle eBusiness Suite”. If you want to move away from Oracle database, you have to move away from Oracle ERP, and that’s where there is a huge cost. It’s the applications, not the database. Many customers stop there.
Contract terms lock in customers
Oracle has also locked in customers through onerous contractual terms. Let’s say an Oracle customer can reduce their Oracle database usage from 1000 licenses to 100 licenses. You would expect that a 90% reduction in usage would result in a 90% reduction in Oracle support costs. The reality is that Oracle can use their contracts to “reprice” the cost of your remaining estate and (surprise, surprise) you end up paying the same amount.
What this means is that customers who reduce their Oracle usage will pay Oracle the same money and also incur the switching costs. Again, this is where some companies stop their migration away from Oracle.
Oracle’s acquisition strategy and contract terms are the main reasons why Oracle database customers don’t move off Oracle database. It has little to do with the Oracle database technology itself. That’s becoming a commodity, which is why Oracle is desperately trying to convert their customers to the Oracle Cloud before their customers figure out a way to get out of their database contracts.
Oracle uses license audits from their LMS team as a way to push unwilling customers to buy their cloud. Don’t believe me – read what happened to the City of Denver. Oracle sees their cloud as the ultimate lock-in tool. If Oracle controls the contracts, hardware, software, implementation, and data – then their customers will never be able to leave. This is huge for Oracle.
Are companies moving off Oracle?
Many companies do indeed have initiatives to reduce or eliminate their reliance on Oracle. This may mean a compete replacement of all Oracle, or it may simply mean a reduction in usage with a much smaller Oracle footprint left at the end.
Two things are certain. First, Oracle customers are looking to get out of those expensive Oracle contracts and spend less money. Second, Oracle will never make it easy for their customers to spend less money on Oracle. In fact, Oracle will do just about anything to prevent that from happening.
Three things you must have to move off Oracle
Some of our clients want to buy more Oracle and we help them negotiate the best deals with the most favorable terms and pricing. Other clients are desperate to move off Oracle, or at least spend less with Oracle, and we help them do that as well.
Given our experience helping companies move off Oracle, we’d like to share our observations on just what it takes to successfully extricate yourself from Oracle.
1. You need a technical solution that meets your business needs
If you’re going to stop using Oracle, then you must start using something else in its place. Despite your frustrations with how Oracle does business, you’re not going to go back to inkwells and ledger books. In fact, to make a move off an incumbent like Oracle, you generally want something that is better suited to your needs than Oracle. This may mean it costs less, or is open source, or cloud-centric, more features, etc. Only you know if a replacement is better for you.
The good news is that there are plenty of alternatives to all of Oracle’s products and services. Oracle doesn’t have the corner on any market. If you are a start-up today, you’re probably not looking at Siebel for your CRM, you’re looking at Salesforce. You’re not using Peoplesoft for HR, you want Workday. Your database is going to be open source. If you’re moving to the cloud, you can use AWS or Azure.
It’s not just Oracle products that have alternatives. Many companies are staying with Oracle products but moving their support to companies like Rimini Street. Oracle support is approximately 94% profit for Oracle and their customers are tired of paying those fees. Rimini can provide better support at a fraction of the costs. It’s an offer that’s hard to refuse.
2. You must have the ability to save money on your Oracle contracts
Why think about moving off Oracle if you can’t save money?
If you are going to completely shut off all your Oracle usage, it might be easy for you to cancel your Oracle contracts and your Oracle bills. However, if you’re only reducing your Oracle usage, and not shutting it down completely, then you might have a problem.
Oracle contracts are notoriously vague and complex. One thing that is clear in those contracts is your obligation to pay Oracle maintenance, and Oracle’s opportunity to jack up their prices if you try to use less of their products. That’s right, in some cases, if you try to turn off some licenses and reduce your Oracle spend, Oracle can actually raise your rates and you end up spending more with them! Oracle calls it “repricing”, but many of their clients call it unfair. Oracle’s claim on doing this is buried deep in a URL and not even printed in the body of the contract itself. So much for transparency.
This step is where many companies trip up. They find an alternative solution, then they get into a fight with Oracle over their remaining Oracle pricing. Oracle will not negotiate here. We’ve helped hundreds of clients in their efforts to reduce their Oracle spend. The best thing any company can do in this situation is to map out an Oracle cost reduction plan, taking into account all their Oracle agreements and obligations, and then execute on that plan. There are definitely ways to avoid the Oracle contract traps if you know where to look and how to execute. The worst thing you can do is to ask Oracle to help you spend less money with Oracle.
3. You need willpower and fortitude for moving off Oracle
Let’s face it – it’s relatively easy to write a check to Oracle. Everyone knows Oracle costs are exorbitant and increasing every year. People might not be happy about paying the huge Oracle bill, but they pay it.
To get the willpower, you’ll need the confidence of having an alternative to Oracle as well as a way to reduce those Oracle costs. All the desire in the world isn’t going move you off Oracle if there is no other technical solution available to you, or if you can’t save money. The formula is simple:
Technical Alternative + Lower Costs = Willpower and Fortitude
Oracle is actually very good at putting doubt, even fear, into their customers when those customers push back on Oracle and try to reduce their costs. How often have we seen the Oracle sales team call out the Oracle auditing team to audit a customer moving away from Oracle? Too many times.
We’re totally independent and here to help!
The good news is that Oracle customers can get help. Palisade Compliance has over 300 clients, 200 years of Oracle-related experience on staff, and is 100% independent of Oracle. We have a unique set of offerings to help customers take back control from Oracle and move in the direction of their choosing, not Oracle’s choosing. Whether you’re looking to move away from Oracle, or invest more in Oracle, we can help you.