Missteps in Oracle Licensing Lead to Serious Cumulative Costs
Remend often reminds companies that perpetual means forever. Despite an industry-wide push to cloud, most Oracle software remains perpetually licensed and has customers locked into paying annual support year over year, decade over decade. Oracle must protect this high-margin business while transitioning its customers to cloud. Mark Hurd himself said Oracle intends to quadruple this for each customer by, in turn, providing infra/platform services. Therefore, taking the long-term view is prudent, especially from a financial perspective.
The dynamic of long-term spending–both planned and unplanned–is vital to consider. Remend routinely advises customers with Oracle license orders originating in the 1990s, i.e., decades ago. In most cases, spend on Oracle is an ever-increasing line from then to now and beyond. Missteps along the way (i.e., over-spending) live in perpetuity.
There are many reasons this can happen:
- An audit was mismanaged, resulting in a punitive settlement.
- A zealous technologist espoused an over-engineered solution.
- An inexperienced procurement analyst struck a particularly bad deal.
Whatever the case, the following chart exemplifies how such missteps are amplified over time:
The effect of mismanaging your investment in Oracle is nearly double when considered from the perspective of cumulative spend. In the chart, 2015 and 2018 represent situations that could have been avoided. Of course, most companies do not manage their vendor relationships perfectly every time. But with Oracle, the long-term effects are uniquely damaging.
For these reasons, Remend advises our customers from the perspective of long-term analysis. In fact, our first conversation with prospects (i.e., future customers) is analysis of existing spend. We offer complimentary analysis of annual support because reverse engineering it exposes opportunities to optimize.