One of the most common risk gaps during the lifecycle of Oracle at the enterprise is a lack of alignment. Legacy systems or architectural systems may cost extra in support year after year, but a simple change to the architecture may reduce your support costs. To give you an example, if you have older servers with single core processors and you move to a multi-core environment, you can usually save significant money in your licensing and your annual support costs. Let’s assume a server that had four single-core processors on it licensed singularly, roughly $47,500 for a single CPU license that would be $190,000 ($47,500 X 4 processors). Add 3-years of annual support for another $125,400. So, roughly, your cost of ownership would be $315,400. If on the other hand, you had employed a multi-core environment and used Intel CPUs, there is a factor that is applied in the Oracle licensing which is one-half, so you only need to buy half the licenses for the total number of cores that you have. For the same number of cores, you would be paying exactly half as much. In a three year period, you would save roughly $157,700 which may very well justify going to a different architecture. 

Auto renewal on your maintenance and support agreements need to be closely monitored. It is better that you leave the auto-renewal alone, so that you are in a better position to renegotiate each year. It’s at this point that the lack of a central repository or tracking mechanism may become really obvious because without knowing throughout the year when the renewals are coming in, it becomes difficult to budget and it can get you into trouble. It’s important to note that within agreements of Oracle, support renewals may contain their own Terms and Conditions which may alter some of the Terms and Conditions that you fought so hard to negotiate within the original ordering document. It’s really important that you factor in these support renewals and the support costs during the procurement process and scrutinize those during the support renewals. You could end up thinking that this is just a purchasing exercise of support renewal year to year when you actually may be devaluing that big investment you made.

Procurement is a tough job from any perspective. You have multiple requests at once for some kind of technology investment, which must be run through various channels, negotiated (if at all) and then implemented. We find in many cases that the job is made more difficult by a lack of policies in place. Policies are, in many cases, either not in place, not well implemented, or not being communicated.  Managing procurement with vendors like Microsoft and Oracle, in some cases, will require its own dedicated person within the organization. This function requires somebody with a lot of specialty to keep up with the frequent changes within Oracle.

One easy improvement that can be made within a procurement process is to have a system in place for analyzing software and hardware contracts as they arrive. Standardized processes are also extremely helpful. In the case of companies that are the product of consolidations or mergers, each company will have different processes which are badly in need of consolidation.  It is important to have a real compliance management process with definite policies and enforcement in place. To help with your internal compliance, you need to have some means of doing an internal audit on a relatively frequent basis. If you can’t manage this process internally, outsource it.

With software and hardware vendors, timing is everything in terms of negotiation. With a strict set of policies and procedures in place, your procurement department will be better prepared to respond in a timely fashion and take advantage of quarter and year-end concessions and discounts. Planning and forecasting your needs is also a vital part of this process, but a lack of policy is the most common issue with procurement, a flaw that can end up costing organizations a lot of money.

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Why not put your existing Oracle assets to work without having to commit to a large upfront investment?

License rebalancing^TM is the art of taking existing licensing - such as Concurrent, Named User, application specific and/or CPU-based licensing - and converting them to generate a new license that is more value to your organization, while creating cost efficiencies. It is possible and very probable that the initial act of rebalancing your Oracle licenses will result in an initial 5-10% savings. Over time, the savings will increase exponentially due to the initial insured lower support cost (which was right-sized due to the license rebalancing acts).

It may seem like you’re only trading in your licensing for something of equal value, but the reality is that you get a greater value by gaining flexibility in your licensing (especially during times of corporate growth or change), same or better Terms & Conditions, and possibly lower annual support costs.

The name of the game is to increase the license value to your organization while possibly reducing your annual support payment without sacrificing benefits. You want to ensure that you have the best value - not just in terms of dollars and cents - which can often turn from short-term savings to long-term pain of having to spend more and more on new licensing every year because the initial purchase/re-up didn’t allow for flexibility for growth.

Boy, oh, boy! That’s a mouthful. I thought it would be more useful to make a short video out of this topic.

Today, mergers and acquisitions are as common as marriages or people setting up households together, and may present unfounded opportunities for lowering your Oracle support stream and uncovering more favorable terms and conditions.

Reinstating terminated support. When a company takes on an acquisition or makes a divestiture, the hard assets - furniture, equipment, electronics, etc. - are easily categorized or sold off, but it’s easy to overlook “soft” assets such as software, licensing and support. In both scenarios (M&A or divestiture), you likely have access and/or rights to reinstate a more favorable prior support stream, creating a more advantageous environment including pricing. Please note: Terminated licenses cannot be reinstated as we accidentally and incorrectly mentioned in this morning’s newsletter.

Don’t forget about support renewals. Many of your older software vendor contracts probably have some sweet Terms & Conditions that you don’t want to lose. Remember that you are responsible for the annual support renewals (and not your Oracle rep). Every time you allow a renewal to lapse, you lose those advantageous T&Cs and licensing goes up between 15 to 25%.

The initial questions to ask yourself are:

The name of the game with any software licensing agreement is to get the best deal, but most executives equate this to discount. And, while we love discount, you always have to look at the longer term pitfalls or benefits. Much of the time, a sales rep offering you a discount – say 20% - on a large enterprise agreement negotiation, it sounds great. But, when you look at how software licensing works, the changing dynamics and business goals of a company and the upcoming changes (and, boy, are there a lot of those at companies today), that 20% discount may save you in the short-term, but in the longer term, you’ll end up spending more because you haven’t planned for the long game and there is little or no flexibility in your software license agreement (SLA).

So, what should “getting the best deal” from your software vendor mean? Yes, sometimes it does mean getting the best price. That’s definitely a factor, but you also have to look at:

If you pay attention to all of the above, you will get the best deal – from best pricing to best value.

Most companies have a wait and see approach when a new operating system is launched. Where Windows 7 is concerned, we are not surprised to hear CIOs doing just that - with many of them saying clearly that they are going to wait 12 to 24 months before looking at an upgrade. They want to let the early adopters be the guinea pigs, so to speak. But, Microsoft is putting an end to support for XP - which many companies are holding on to for dear life because of its superior performance and stability. If Windows 7 lives up to its promise, an improved version of Vista without its bugs, companies will likely jump on board, especially if support for XP will no longer exist. But, if Windows 7 turns out to be as disappointing as Vista, Microsoft may be feeling some pressure to extend its support for XP.

Are you going to upgrade? We would love to hear about those of you who have and what your opinions of Windows 7 are…