Eye on Oracle

Feb 4 2009   10:51AM GMT

Should Oracle negotiate its nonnegotiable maintenance fee?

Shayna Garlick Shayna Garlick Profile: Shayna Garlick

Oracle software purchases carry with them a host of options and choices for buyers — cloud computing and SaaS, choosing between multiple applications that serve the same purpose, and a never-ending list of updates and upgrades. 

There is, however, one thing that never changes.

That is Oracle’s 22% annual maintenance fee, a nonnegotiable fee that Oracle president Charles Phillips describes the company as being “sticklers” on in this Information Week article.

But is it time for Oracle to rethink its policy?

That’s what some experts are thinking, especially as the economy continues to fall and more organizations are trying to save money and  turning to third-party support.  One such expert is Information Week’s Bob Evans, who wrote an “open letter” to Oracle CEO Larry Ellison explaining why Oracle needs to change its ways. 

Evans made some interesting points in his plea to Ellison. First, he says that even if Oracle doesn’t change the fee structure, it should at least change its name, since Oracle has admitted that the fees are actually used for product development rather than maintenance. 

He also asks Ellison to move away from his traditional, rigid maintenance fee system in these changing times — because if not, it will hurt Oracle in the future:

“The longer you dig in and tell CIOs that you’re not interested in the wicked expense challenges they’re facing, the longer they’re going to remember that when the current recessionary climate fades and new alternatives gain strength,” Evans writes.

At such a high price, how does Oracle maintenance even rate among its customers? One user quoted in the Information Week article, the CIO of Santa Fe Natural Tobacco, complains of poor and slow service from Oracle’s global support center. But just a couple of months ago, Oracle support received high marks in a UK Oracle Users Group survey.

Oracle isn’t the only company with high maintenance fees. SAP recently announced that it will increase the fees for SAP Basic Support customers — who currently pay 17% of net licensing fees – to 22% by 2012, right in line with Oracle. But according to Forrester analyst Ray Wang, with SAP you’ll actually be getting more when paying more, unlike its competitors.

Are you getting what you pay for from Oracle maintenance fees?

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