Industry Blog

Oracle Is Buying TikTok While Remend Strives For Oracle Cost Optimization

14th Sep 2020

Remend’s goal is ALWAYS cost optimization for customers. Period.

We must say it is an especially pertinent goal here in 2020, given the geo-political factors around a pandemic-driven unemployment crisis. In addition, major election years typically drive economic uncertainty that creates short term caution within corporate capital investments.

And now, Oracle is pursuing a $20B acquisition of TikTok that adds no value to its customer base whatsoever. Oracle is buying TikTok? Really?!

Anyone making annual support payments to Oracle should stop to consider what it means that Oracle is buying TikTok for a moment.

Oracle creates $20B in support revenue each year at an eye-watering 92+ percent profit margin. Conversely, this means customers get at best eight cents of value from each dollar they spend with Oracle.

Meanwhile, Oracle continues to struggle to be relevant in a cloud market that Gartner is just now suggesting it’s worth considering as a competitor. Wouldn’t Oracle’s customers be better off if Oracle innovated its SaaS solutions and cloud infrastructure rather than meddle in the lives of teenage social media influencers?

Oracle has long-been tone-deaf to the majority of its customers, relying on legacy database support, technical support policies, and punitive compliance shortfalls to keep and grow revenue. But even if Oracle fired all its salespeople and abolished LMS (its audit organization), customers would still need to assess for themselves the value of the Oracle software they have been using in most cases for decades.

Oracle still doesn’t have real competition in the database market for the millions of instances already installed and running. Displacing a mature database remains risk-laden, expensive, time-consuming, etc. Most companies have given up on saving money on Oracle and simply keep paying. In most cases, customers must “sweep the floor” completely of Oracle to save money, at least according to Oracle’s re-pricing policy.

From what we can tell, Oracle is in no hurry to shift its high-profit support revenues to low-profit cloud subscriptions.

Why should they be? All Oracle needs to do is wait for customers to slowly experiment with its cloud until, eventually, living on antiquated on-premise gear is unreasonable. Oracle can ratchet up the cost of moving to AWS, Azure, and Google, and anyone else entering the readily-displaceable cloud IaaS market. In the meantime, Oracle will capitalize on the resulting incremental license and support for those not opting to run in its cloud.

The truth is that there are more strategies to optimize Oracle costs now than there have ever been.

We like to say that the 90s called and they want their fear of Oracle back. Customers ready to follow our lead and push back a bit can rightly align value with the spend, and then actually consider whether Oracle Cloud makes sense to them.

Next Steps

Discuss your Oracle cost optimization options with Remend by clicking here