Why Remend Launched Its New Product: Third-Party Support Readiness
In case you missed it, we recently launched a game-changing product, Third-Party Support Readiness.
Third-Party Support Readiness is an innovative product that allows any enterprise, large or small, the ability to quickly uncover the true value of its annual Oracle software support payments.
But how did it come to be?
Oracle may have you believing Cloud is its present and future but DO NOT BE FOOLED!
Oracle makes decent software, but its core business is annual software support collection.
The news back in 2017 was that Oracle obscured its lagging cloud revenue by combining it with license support, the decades-long source of high-margin revenue. Its argument was that customers are applying legacy on-premise licensing to cloud environments. Fair enough.
But, lost as well in the Form 10-k from 2017 was the profit margin percentage of software license updates and product support. The year prior proudly included the following statement:
“Our software support margins during fiscal 2016 were 91% and accounted for 86% of our total margins over the same period.”
In case you missed it, Oracle profits over 90 cents on the dollar from your annual support payments. This means you are already upside-down not accounting for shelf-ware, policy-driven bloat, and poorly discounted entitlements.
There are other important dynamics not covered in detail here. Notably, Oracle software is licensed perpetually, i.e., forever. Discounts are based on volume and may seem high compared to list price. Support payments are 22% of original net licensing and locked down by policies such as license sets, re-pricing, and matching support levels.
But wait! It gets worse.
How does the following statement from Oracle’s latest Form 10-k strike you?
“We believe our license support offerings protect and enhance our customers’ investments […] because they provide proactive and personalized support services…”
Alongside our commercial analysis of support, Remend analyzes when and which updates and patches are being applied, and specifically to Oracle’s marquee database product set. We also analyze how often and why customers are accessing Oracle Support for any reason whatsoever.
The result is we routinely see customers running databases in their Limited, Extended, and/or Sustaining Support periods. The only residual value of Sustaining Support is access to upgrades. Extended Support costs more and Limited Support is, well, not quite so proactive and personalized [sic].
Even if you are patching Oracle, those patches may not be necessary. Upgrades are often driven by compatibility matrices during architecture upgrades rather than sought-after, new features. In truth, there are other, more cost-effective options, to keeping your data safe than paying Oracle exorbitant support fees.
In other words, most databases are (or perhaps could be) installed and left alone for years.
With such a clear anti-value proposition, why do customers keep paying?
The answer is a combination of complex dynamics. Mostly, customers have been told NO! by Oracle for so long that renewals are considered unnegotiable and, literally, set to auto-renew in Oracle’s renewal center portal. (Quick side notes: check if your support is set to auto-renew, disable if so, then call us for a free commercial analysis before cutting a purchase order.)
Business unit leaders often perceive aggressive negotiation tactics or going without OEM support agreements as too great a risk. Replacement strategies for enterprise software such as Oracle are akin to costly open-heart surgery that the customer fear may not be survived by the business.
Make no mistake, this is Oracle’s calculus.
It knows you are afraid to cancel support or otherwise put up the necessary fight to align payments to value. While arrogant enough to believe otherwise, Oracle is not innovating commensurate to the payments you are making. This includes its investments in Oracle Cloud Infrastructure (OCI).
The point is this: your assessment of software support should build up from $0 rather than down from the year-over-year payments being made, perhaps for decades.
Remend has a myriad of Oracle software support reduction strategies, now including Third-Party Support Readiness
They all ask and answer the same fundamental question first and foremost:
What is the value of how you’re using Oracle software today?
The third-party support market—principally Rimini Street and Spinnaker Support—argues it’s half what you are paying. Half price is of course compelling and maybe exactly accurate. But how would you know if third-party support or any other savings mechanism is attainable or even advisable?
Further, any savings strategy should be considered a chess move within a larger strategy, not a final destination. You are likely to keep using Oracle for many years to come just as you have been for decades.
Thus, it’s best to map out a long-term plan rather than a short-sighted strategy that resurfaces as less flexibility in subsequent years.
The answer is to engage Remend for a value-based assessment that brings scientific reporting on the matter.