cloud at customer

How to Negotiate Oracle Cloud at Customer

cloud at customer

How to Negotiate Oracle Cloud at Customer

How to negotiate Oracle Cloud at Customer

In the ever-evolving world of cloud services, Oracle Cloud at Customer is a product that Oracle is positioning to most large customers.

However, effective negotiation is paramount to harness its full potential without overspending.

As an Oracle Cloud expert with extensive negotiation experience, I’ll guide you through the intricacies of this process, ensuring you secure the best deal for your organization.

Understanding Your Leverage

Conducting Your Own Analysis: Understanding your needs is the cornerstone of successful negotiation. If you rely solely on Oracle’s analysis:

  • You risk negotiating blind, potentially agreeing to hardware and cloud services that exceed your requirements.
  • You may have an oversized server and excessive cloud services, leading to unnecessary costs.

Key Negotiation Points

  1. Oracle HW Costs (Fixed): While these costs are typically non-negotiable, understanding market rates for similar specifications can provide context.
  2. Oracle Provisioning (ACS) pertains to the services Oracle provides to set up and configure your cloud environment.
  3. Oracle Cloud Services (PaaS), aka Universal Cloud Credits:
    • This is where the bulk of your expenditure will lie.
    • Available on PAYG (Pay As You Go) or Annual-commit (UCCs).
    • No discounts on PAYG, only on annual-commit.
    • The risk with annual-commit: Unused commitments expire after 12 months, leading to potential losses.

Oracle’s Discount Structure

Oracle’s discounting strategy is volume-based:

  • 10% discount for commitments of $500k annually.
  • 15% discount for commitments of $1m annually.
  • If you exceed your commitment, the discount remains unchanged for the additional amount. For instance, if you commit to $505k and consume $700k, the entire amount still attracts a 10% discount.

Oracle’s Perspective

  • Oracle inclines to oversize your hardware.
  • They aim to inflate your Oracle cloud requirements.
  • Oracle prefers 4-year cloud agreements. (annual commit) but you don’t need to commit to 4-years.

Your Strategy

Key Questions to Consider:

  • What are our exact hardware requirements?
  • How much Oracle Cloud Services do we genuinely need?
  • When do we anticipate going live and initiating cloud service consumption? (Remember, hardware delivery alone can take up to 2 months, and actual consumption might take longer.) A hint is to commit far less in Yr1 as you may not consume the total amount in Year 1.

Recommendations

  • Seek Independent Analysis: Engage a third party to assess your hardware and cloud service needs. This ensures an unbiased perspective, free from vendor influence.
  • Realistic Migration Plans: Collaborate with experts with experience with Oracle Cloud to Customer migrations. They can provide a realistic migration timeline, helping you avoid unforeseen delays.
  • Risk vs. Discount: With a clear understanding of your needs, negotiate with Oracle by weighing potential risks against the offer discounts.

FAQs

Why is it essential to conduct an independent analysis?

To avoid overspending and ensure you only pay for what you genuinely need.

How does Oracle's discount structure work?

Oracle offers volume-based discounts, with higher commitments attracting more significant discounts.

What's the risk with Oracle's annual commitment?

Any unused commitment expires after 12 months, which means you could lose money if you overcommit.

Why should we consider an independent party for analysis and migration plans?

An independent party offers an unbiased perspective, ensuring that your interests are prioritized over vendor preferences.

Conclusion

Negotiating Oracle Cloud at Customer requires a blend of preparation, understanding, and strategic thinking.

Following the guidelines and recommendations above can ensure a favorable deal that aligns with your organization’s needs and budget. Remember, in the world of negotiation, knowledge is your most potent weapon.

Considering Cloud at Customer? Don’t navigate this complex journey alone. Let Redress Compliance be your trusted partner.

Our expertise help you rightsize your requirements and negotiate a cost-effective and tailored agreement to your needs. Reach out to us today and ensure your transition to the cloud is seamless, optimal, and in your best interest.

Author

  • Fredrik Filipsson

    Fredrik Filipsson brings two decades of Oracle license management experience, including a nine-year tenure at Oracle and 11 years in Oracle license consulting. His expertise extends across leading IT corporations like IBM, enriching his profile with a broad spectrum of software and cloud projects. Filipsson's proficiency encompasses IBM, SAP, Microsoft, and Salesforce platforms, alongside significant involvement in Microsoft Copilot and AI initiatives, improving organizational efficiency.

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