Should we commit to multiple years of Oracle support to cap its growth?

In-Depth Answer

Oracle has been applying an inflationary adjustment rate (IAR) to annual software support for decades. Many legacy license orders mention this as up to 4%; some leave the uplift open-ended. Large contracts (e.g., unlimited agreements) may enumerate a schedule of caps across a set of future payments, perhaps 0% in the first renewal year, 2% in the second, etc. As of 2022, Oracle began applying an 8% uplift.

Unsuspecting procurement personnel may be tempted by Oracle’s offer to remove or lower the IAR in exchange for a multi-year commit. In this case, you cut a purchase order for two or more years and then pay annually. The problem is Oracle has locked you into paying what would otherwise be cancellable each year.

Oracle cares more about being paid the renewal at all than enforcing the IAR. That is, you don’t need to lose the flexibility to cancel next year just to get the IAR waived today. Give us a call if Oracle isn’t playing ball on this one.