Negotiations with Oracle Third-Party Support Providers
Third-party support providers for Oracle software can slash annual maintenance fees by 50% or more. However, CIOs and sourcing leaders must negotiate these deals carefully to secure the best price and quality of service.
This executive advisory outlines a proven approach to negotiating with Oracle third-party support providers – covering competitive bidding, key contract terms, and strategies to maximize value while minimizing risk.
Why Consider Third-Party Oracle Support
Oracle’s support contracts are notoriously expensive (typically 22% of license costs annually, often with annual uplifts).
By contrast, third-party support providers offer a chance to cut those maintenance fees in half. Enterprises that run stable Oracle systems or legacy versions can benefit from third-party support because they may not need Oracle’s frequent updates.
Key reasons CIOs turn to third-party Oracle support include:
- Dramatic Cost Savings: Companies report ~50% lower support fees, freeing budget for other initiatives. And unlike Oracle, third-party vendors usually avoid the 3-8% yearly fee increases, providing more predictable costs.
- Extended Support for Legacy Systems: Third-party providers will support older Oracle versions or customizations long after Oracle has ended official support, which is ideal if you’re not ready to upgrade.
- Vendor Flexibility: Using an independent support vendor reduces reliance on Oracle. This vendor independence can increase your negotiation leverage with Oracle in other areas and give you more control over support terms.
Always Engage Multiple Support Providers
When considering a switch, don’t rely on a single source for support.
Always invite multiple Oracle third-party support providers to bid – competition is your friend in these negotiations.
There are a handful of specialized firms in this space (with Rimini Street and Spinnaker Support among the leading global providers, alongside regional players).
Solicit at least two proposals so you can compare offerings and use them as leverage against each other.
Perform due diligence as you would for any critical IT vendor:
- Product Coverage & Expertise: Confirm the provider supports all the Oracle products you rely on (databases, ERP applications, etc.) and has proven expertise in each. For example, some vendors excel in Oracle E-Business Suite but may be weaker in Oracle Database – ensure the provider’s strengths match your environment.
- Track Record & References: Investigate how long the vendor has been in the Oracle support business and request client references (ideally similar-sized enterprises or in your industry). A provider with a strong track record and referenceable customers gives confidence that they deliver on their promises.
- Service Footprint: If your operations are global or 24/7, verify the vendor can cover all time zones and offer follow-the-sun support. Look for established support centers or staff in your key regions to ensure critical issues can be addressed promptly at any hour.
By evaluating multiple providers against consistent criteria, you can identify the best fit and play vendors off each other. Let each know you are comparing options – if Provider A offers a better price or SLA, ask Provider B to match it.
This competitive tension puts you in a stronger bargaining position to get the best deal.
Pricing Models and Cost Drivers
Third-party support vendors typically peg their fees to what you were paying Oracle.
A common starting point is approximately 50% of your most recent annual Oracle support bill. From there, savvy negotiation can further drive costs down. For example:
| Scenario | Oracle Support (annual) | Third-Party Support (annual) |
|---|---|---|
| Oracle licenses worth $2M (22% support fee) | ~$440,000 | ~$220,000 (initial quote at 50%) |
| Negotiated outcome (3-year commitment) | – | $180,000 (after further discount) |
In this scenario, the enterprise was paying $ 440,000 per year to Oracle. A third-party provider’s initial quote was $220K (exactly 50%).
Through negotiation – leveraging a multi-year commitment and a competing bid – the company secured a deal for $ 180,000 per year, representing nearly a 60% savings compared to Oracle.
Key cost factors to negotiate:
- Multi-Year Discounts: Vendors often offer lower annual rates for longer contracts (e.g., committing to 2-3 years can result in an extra 10–20% off). If you’re confident in the provider, locking in a multi-year term can yield big savings (and protect against fee hikes). If you need flexibility, a one-year term offers an easier exit, but it may come at a higher rate.
- Cap or Eliminate Annual Increases: Oracle’s support fees typically rise each year. Negotiate with the third-party provider to freeze pricing for the contract term or cap any annual increase to a minimal percentage (like the inflation rate). Many providers will agree to 0–3% annual cap or even a fixed fee for several years – a welcome relief versus Oracle’s automatic uplifts.
- Scope of Coverage – Pay Only for What You Use: Review your Oracle license inventory and drop support for any unused products or modules. Third-party contracts can be scoped to exclude shelfware, so you’re not paying for support on software you don’t utilize. Ensure the vendor’s quote covers all necessary components (including customizations and integrations) at no additional fee, and bundle as many as possible into the base price during negotiations.
- Upfront Payment Incentives: Discuss payment terms and conditions. Some providers offer an additional discount (2-5%) if you pay annually upfront. Weigh the benefit of a small discount for prepayment against your cash flow preferences. At a minimum, negotiate standard net-30 or net-45 payment terms to align with your procurement policies.
- Hidden Cost Check: Clarify if the quote includes items like tax, support for regulatory patches (e.g., payroll tax updates), or onboarding fees. The goal is to have a transparent, all-in price. If the vendor offers a free onboarding period or other incentives, consider factoring those into your decision. Avoid any surprises by explicitly confirming that the quoted fee is inclusive of all agreed-upon support scope.
By understanding these pricing levers, you can push for an optimal deal. Don’t hesitate to share with each vendor the targets you’re looking for (without revealing your exact Oracle spend).
For instance, you might say: “We’re expecting at least 60% cost savings and price lock for three years to make this switch worthwhile.” This signals your expectations and encourages the provider to sharpen their pencil.
Key Contract Terms to Nail Down
Negotiating with Oracle third-party support providers isn’t just about price – the contract terms will define your support experience.
Pay close attention to the following areas and ensure they are explicitly addressed in the agreement:
- Service Level Agreements (SLAs): Get commitments for response and resolution times in writing. Oracle’s standard support SLAs are minimal, so take advantage of this opportunity to secure better terms. For example, you might require a 15-minute response for critical severity issues that have a workaround or fix available within a few hours. Define what constitutes each severity level and include escalation procedures (e.g., if an issue isn’t resolved in X hours, it gets escalated to a senior engineer or management). Strong SLAs ensure the vendor stays responsive and accountable.
- Dedicated Support Contacts: Insist on a named account manager or primary support engineer for your company. Knowing there are specific individuals (or a team) familiar with your Oracle environment increases accountability and quality. Include in the contract that the provider will maintain continuity of key personnel (or notify you and provide equally qualified replacements if staff changes occur). This helps avoid the “call center shuffle” and provides you with reliable go-to contacts.
- Scope of Support & Updates: Delineate what is covered. Will the provider support all your customizations, interfaces, and any third-party integrations that were previously supported under Oracle? Make sure no critical item is excluded. If you require regulatory updates (such as tax and compliance patches for Oracle E-Business Suite), confirm that the vendor will deliver them in a timely fashion. Essentially, everything you rely on Oracle’s support for should be addressed by the third-party contract in some form. No “fine print” exceptions that leave parts of your system unsupported.
- Termination and Flexibility: Negotiate a Clear Exit Strategy. Unlike Oracle (which locks you in annually), your third-party support deal should allow some flexibility. For instance, include a clause that if the vendor consistently fails to meet SLAs or if your business strategy changes, you can terminate the contract early. Aim for a reasonable notice period (e.g., 60-90 days) for termination without hefty penalties. This safety valve ensures you’re not trapped if the service disappoints or if you decide to go back to Oracle or another provider later. Similarly, discuss provisions for adding or removing certain products from support as your needs change, and how fees would adjust in those cases.
Additionally, have your legal team review the terms related to liability and compliance. Most providers will cap liability to the fees paid; ensure that this is acceptable relative to the risk. Importantly, include an indemnification clause stating that the vendor will defend and cover you if Oracle ever takes legal action due to the support activities.
The contract should also affirm that the provider will not use Oracle’s intellectual property unlawfully (for example, they won’t apply Oracle’s official patches on your behalf, which would violate Oracle’s terms).
Top third-party providers operate within legal boundaries, so they should agree to these protections.
Getting these legal safeguards in writing protects your company and keeps the vendor accountable for delivering support in a compliant manner.
Negotiation Best Practices
Approach negotiations with third-party support vendors as a strategic, planned effort. Here are several best practices to achieve the optimal outcome:
- Start Early: Don’t wait until your Oracle support is about to expire. Begin talks 6-12 months before your Oracle renewal date. Early engagement gives you the luxury of time to solicit multiple quotes, iterate on terms, and even walk away if needed. Vendors know you have options, which puts you in control.
- Keep Your Cards Close: Avoid revealing your current Oracle support spend or budget to the vendor. If they know you pay $1M to Oracle, their offer may come in just under that. By keeping this information private, you force vendors to propose pricing based on service value and market rates, not just undercutting Oracle by a small margin.
- Leverage Competitive Bids: Let providers know you are comparing offers (which you will be, as noted). If you receive a strong proposal from Vendor A, share the key highlights (such as price or additional services) with Vendor B and ask if they can match or beat it. This back-and-forth can significantly improve the deal. Use a formal RFP or informal quote process to create a bidding atmosphere.
- Bundle and Trade-Offs: Some third-party support firms offer additional services (performance tuning, cloud migration help, license advisory, etc.). Even if you don’t need these extras, expressing interest can be a negotiation chip. You might negotiate a package deal (“We’ll consider you for that database tuning project if you reduce the support fees further”). Likewise, a willingness to extend the contract term or expand the scope can be traded for better pricing. Be creative in finding win-win trade-offs.
- Insist on Performance Guarantees: Given the critical nature of Oracle support, it’s wise to have some performance protections. For example, you could negotiate a trial period or an early exit clause after, say, six months if service levels do not meet the promised standards. You can also put a small portion of fees at risk (e.g., the vendor agrees to credit you a percentage if SLAs are missed in a quarter). Not all providers will readily agree to penalties, but raising the topic underscores that quality is as important as cost to you.
- Maintain a Partnership Mindset: Remember that the goal is a long-term support relationship. Drive a hard bargain, but remain professional and fair. Avoid combative tactics, such as “last-minute surprise demands” or constant nickel-and-diming on minor points – these can sour the vendor’s goodwill. You want a motivated partner who feels invested in your success. Building rapport during negotiation (while still holding them to task on requirements) sets the tone for a productive collaboration once the contract is signed.
By following these best practices, you can confidently navigate negotiations and secure a contract that delivers both significant savings and high-quality service.
Common Pitfalls to Avoid
Even seasoned IT procurement professionals can make mistakes when venturing into third-party support.
Steer clear of these common pitfalls:
- Insufficient Research: Entering into a deal without understanding current market rates and vendor backgrounds can result in an overpriced agreement or a suboptimal choice of provider. Always conduct thorough research on pricing benchmarks and vendor reputation.
- Engaging Only One Vendor: Treating a single quote as “good enough” means you lose the power of competition. Even if you have a preferred provider, talking to multiple vendors ensures you’re getting a competitive rate and terms. Don’t short-circuit the process by skipping this step.
- Overlooking Service Quality: An overly aggressive focus on price at the expense of service details can backfire. Ensure that in the push for cost reduction, you’re not accepting weak SLAs or scant scope that leaves your business at risk. The cheapest offer isn’t worth it if critical issues won’t be resolved promptly.
- Last-Minute Negotiations: Starting discussions a few weeks before your Oracle support expires is a recipe for a bad deal. Time crunches favor the vendor. Avoid the rush by planning well ahead, so you’re never pressured into accepting subpar terms due to a deadline.
- Burning Bridges: Hardball negotiation tactics that humiliate or alienate the vendor can lead to a strained relationship in the future. Remember, you’ll need to work with this provider closely. Driving a tough bargain is fine, but do so with respect. Aim for a deal that both sides feel is reasonable, laying the groundwork for a positive partnership.
By avoiding these mistakes, you greatly increase the chances of a smooth negotiation and a successful long-term support arrangement.
Recommendations
- Solicit multiple bids from Oracle third-party support providers and use the competition to your advantage. Compare not just pricing, but also service offerings and contract terms side by side.
- Target at least a 50% reduction in support costs and strive for more if possible. Set a clear savings goal (e.g., “50% or greater reduction from Oracle fees”) to anchor negotiations, and don’t be afraid to ask for 60%+ if you have leverage (like a multi-year commitment).
- Negotiate strong SLAs and accountability. Insist on concrete service levels for response and resolution times, and include remedies if those SLAs are missed. This ensures the vendor is accountable for providing quality support.
- Ensure full coverage of your needs. The contract should explicitly include support for all customizations, integrations, and legacy versions you use. No exclusions – you want one-stop support just as Oracle provided (or better).
- Include an exit clause. Build in flexibility by securing the right to terminate the agreement early for non-performance or changing needs. A fair “get-out” clause (for example, the ability to leave after the first year of a multi-year deal, or if SLAs are repeatedly missed) protects your interests.
- Address legal and compliance points. Have the vendor indemnify your organization against any Oracle intellectual property claims and confirm they’ll operate within Oracle’s license rules. This gives you peace of mind that switching support won’t cause legal headaches.
- Secure a dedicated support team. In negotiations, request named support contacts or a dedicated team for your account. This ensures you get experienced staff familiar with your systems, rather than random engineers for each call.
- Clarify all costs upfront. Make sure the agreed fee covers everything you expect (routine fixes, security updates, regulatory patches, etc.). Ask the provider to confirm in writing that there are no hidden or “out-of-scope” charges that will surprise you later.
- Engage your internal stakeholders. Loop in your legal, procurement, and security teams in the negotiation process. Their insights on contract language, data security, and compliance will help you craft a better agreement with the vendor.
- Plan the transition. Work with the provider to create a transition plan for when you leave Oracle support. This may include onboarding procedures, knowledge transfer, and communication with users. A well-planned cutover will ensure business continuity as the new support takes over.
Checklist: 5 Actions to Take
- Assess Your Current State: Gather details on your Oracle environment – what products you have, which are actively used, and how much you’re currently paying for support. Identify any unused licenses or modules that could be dropped. Also, note your support pain points (e.g., slow response, high cost) that you want a new vendor to address.
- Research and Shortlist Providers: Identify the leading third-party support providers for Oracle. Leverage peer recommendations, analyst reports, and initial conversations to shortlist two or three credible vendors. Ensure they have experience with your Oracle products and industry.
- Solicit Proposals and Negotiate: Issue an RFP or request detailed proposals from your shortlist. Provide your inventory and requirements (without disclosing your budget) and request pricing and service commitments. Compare the proposals closely. Engage each vendor in negotiations – discuss pricing options (multi-year, etc.), SLA guarantees, and contract terms. Use one vendor’s offer to improve another’s. Continue iterating until you’re confident that you have the best deal.
- Finalize the Contract with Legal Review: Once you have selected a provider, review the contract carefully. Involve your legal team to review clauses on termination, liability, and IP. Ensure all negotiated points (SLA metrics, scope of support, pricing, discounts, etc.) are captured in the final agreement. Address any lingering concerns, then sign the contract.
- Plan the Switch and Monitor: Coordinate with the new provider to schedule the cutover from Oracle support (typically aligned with your Oracle contract expiration). Communicate internally about how to engage the new support. During the initial few months, closely monitor the vendor’s performance against SLAs. Hold a review meeting after the first 90 days to discuss any issues and ensure the provider is meeting expectations.
Download Procurement Advisory Playbook: Transitioning from Oracle Support to Third‑Party Support.
💸 Realize Tangible Financial Benefits Beyond Just Cost Savings
- Save 50%+ annually on Oracle support fees — and avoid costly forced upgrades.
- Extend the life of stable systems without paying for software you don’t need.
- Understand the total cost reduction: license optimization + deferred hardware/software spend.
- Learn how third-party support frees up budget for innovation, not just maintenance.
FAQ
Q1: Why should we consider Oracle third-party support providers?
A1: The primary reason is cost savings. Third-party providers can reduce your Oracle support fees by up to half while still maintaining system support. Many CIOs also find that these providers offer more flexible and personalized service – for example, support for custom configurations or legacy versions that Oracle no longer fully supports. If your Oracle environment is stable and you don’t need frequent updates from Oracle, a third-party support partner can maintain your systems at a much lower cost. It’s essentially about getting the same essential support (break-fix, troubleshooting, etc.) at a far lower price, with potential side benefits like dedicated support engineers and avoiding Oracle’s one-size-fits-all policies.
Q2: How much cost savings can we expect by switching from Oracle to a third-party support vendor?
A2: Most organizations see around a 50% reduction in annual support costs right off the bat. For instance, if you pay $1 million per year to Oracle, a third-party quote might come in around $500,000. With skilled negotiation, many enterprises push savings even further – it’s not uncommon to end up paying only 35–40% of what Oracle was charging. The exact savings depend on factors such as the number of products included, contract length, and the level of competition in the bidding process. However, overall, you can expect a significant reduction in support expenses while maintaining comparable service.
Q3: What are the risks or downsides of using a third-party support provider?
A3: The biggest trade-off is that you lose access to Oracle’s official updates and patches. Once you leave Oracle support, you cannot apply new Oracle-provided patches or upgrade to new versions unless you return to Oracle (or had downloaded patches before switching). However, good third-party providers develop their fixes and workarounds for critical issues – it just won’t be Oracle’s code. Another concern some have is vendor stability and legal risk. It’s essential to select a reputable provider with a proven track record. Oracle has engaged in legal battles with third-party support firms (e.g., Rimini Street in the past), but as the customer, you’ve historically not been targeted in those disputes. To be safe, have a clause in your contract that indemnifies you if any legal issues arise. Also, be mindful that Oracle could potentially audit your licenses once you’re off their support, so ensure you remain in compliance with license rules. Overall, thousands of companies use third-party support successfully, but you should go into it aware of these considerations and pick a vendor you trust.
Q4: Who are the leading third-party support providers for Oracle, and should we talk to more than one?
A4: The third-party support market for Oracle is relatively specialized. The two largest global providers are Rimini Street and Spinnaker Support, both of which have been in this business for many years and support a wide range of Oracle products. There are also other players – for example, Support Revolution (popular in certain regions) and a few niche firms that specialize in servicing specific Oracle products or industries. It’s highly recommended to speak with at least two providers to compare prices and offerings. Even if one vendor is your top choice initially, getting a second quote will give you bargaining power and assurance that you’re getting a fair deal.
Q5: When is the best time to negotiate and switch to a third-party support provider?
A5: The timing should revolve around your Oracle support renewal cycle. Ideally, start evaluating options 6-12 months before your Oracle support contract expires or comes up for renewal. This lead time is crucial – it lets you thoroughly assess providers, negotiate a strong contract, and have the new support ready to take over as soon as Oracle’s support ends. If you initiate discussions only a month or two before expiration, you’ll be under pressure and might not secure the best terms. Also, plan the actual cutover for a logical break point (for example, end of your Oracle support period) to avoid paying for overlap. With good planning, the transition can be seamless, and you’ll immediately start saving money the moment you switch.
Read more about our Third Party Transition Service.
