What are the best ways to reduce Oracle Support Renewal Fees
- Third-Party Support: Consider providers like Spinnaker Support for up to 50% savings.
- Terminate Unused Licenses: Stop paying for non-utilized licenses.
- Downgrade Versions: Switch from Enterprise to Standard editions.
- License Optimization: Adjust license models for potential savings.
- Cloud Transition: Migrate to Oracle Cloud or alternatives like AWS or Azure.
- Hardware Changes: Consider platforms like IBM LPAR for cost benefits.
- Negotiate with Oracle: Engage in discussions for potential discounts.
- Stay Updated: Keep software current to avoid higher fees for outdated versions.
- Please read our latest trends for how to reduce Oracle support fees in 2024
- Oracle Support Renewal Optimization
- What is Oracle CSI?
- Understanding Oracle's Matching Service Levels Policy
- Understanding Oracle Repricing
- Why is it challenging to reduce Oracle support costs?
- Before Renewing Oracle Support: 4 Key Recommendations
- Top 10 Strategies to Reduce Oracle Support Costs
- Oracle Support Reduction – FAQ
- Oracle Support Optimization Service
This article will provide practical advice on how to build your roadmap for reducing your Oracle support renewal; if you need our help, contact us.
Oracle Support Renewal Optimization
Oracle support renewal optimization is crucial to managing your Oracle ecosystem effectively.
To achieve this, you must familiarize yourself with Oracle contracts and policies, which dictate the terms and conditions for terminating support fees.
Once you have a comprehensive understanding of these policies, you can devise a strategy to reduce Oracle support fees, ultimately leading to more efficient management of your Oracle investments.
What is Oracle CSI?
Oracle CSI is an identification number assigned to each license purchase (license agreement). The CSI number is used by Oracle Support to identify the user and troubleshoot technical issues.
It is also a license agreement identifier for your purchased licenses; you can explain it as license proof. Large Oracle customers can have hundreds of different CSIs for each Oracle contract.
Understanding Oracle’s Matching Service Levels Policy
Oracle’s Matching Service Levels policy is a support framework that maintains uniform service levels across a customer’s Oracle product licenses.
Here’s a breakdown to make it easier to understand, including an example:
The Core Concept:
- Oracle requires that all licenses owned by a customer have the same level of support. This is to avoid scenarios where some licenses are covered by support, and others are not. It’s essentially an “all or nothing” approach.
Example for Clarity:
- Imagine a company holding 100 different Oracle database licenses. According to Oracle’s policy, all 100 licenses should be under a support contract, or none should be. So, if you want to drop support, you must do it for all 100 licenses, not just a few.
- Some believe you cannot terminate support for a single contract, but this understanding is inaccurate. The policy applies to products within the same product family. Therefore, you can’t selectively drop support for one product while maintaining it for others within the same family.
Broader Application Beyond Databases:
- This rule isn’t limited to Oracle databases. It applies to Oracle products like Java SE subscriptions and applications, including WebLogic, Siebel, and EBS (Enterprise Business Suite).
Implication of the Policy:
- The Matching Service Levels strategy ensures customers maintain support contracts, potentially leading to continued investment in more expensive support options.
Understanding this policy is crucial for Oracle customers, especially during contract negotiations or considering changes to their Oracle product portfolio.
It’s always recommended to consult with an Oracle licensing expert for tailored advice specific to your situation.
Understanding Oracle Repricing
Oracle repricing is a specific process Oracle uses to adjust support costs in certain scenarios.
Here’s an explanation with an example to make it more transparent:
Basic Concept of Oracle Repricing:
- Oracle repricing occurs when products are partially terminated and tied to a Customer Support Identifier (CSI). It’s about recalculating the support costs when changes are made to the existing Oracle product licenses.
How Support Costs are Normally Calculated:
- Typically, Oracle’s annual support cost is 22% of the net license fee. Discounts are often applied to these fees based on the purchase volume.
Example to Illustrate:
- Suppose you initially purchase Oracle licenses with a 50% discount. This discount extends to your support costs as well. If you decide to terminate some of these licenses later, Oracle will recalculate the support costs for the remaining licenses. After the termination, the support costs revert to the list price, minus only the standard discounts ranging from 0-20%.
Impact of License Termination:
- This means that after terminating some licenses, the remaining licenses could incur higher support costs than before, as the original volume-based discount might no longer apply.
Oracle repricing is essential for customers planning to reduce their Oracle license footprint. Understanding how these changes can impact your overall support costs is crucial.
How much does Oracle technical support cost?
Oracle technical support costs 22% of what you paid to Oracle for your licenses. Then, the support costs increase year on year.
In 2023, Oracle announced increasing support fees by 8%. You may also need to pay more for technical support if you need extended or sustaining support for older versions of Oracle software.
What is third-party support for Oracle?
Third-party support for Oracle refers to external providers assisting users with older Oracle databases and their associated environments.
Opting for third-party support means users won’t get updates or access to future Oracle software releases.
Instead of reaching out to Oracle for technical issues, users will communicate with the third-party provider. It’s essential to remember that users can only download upgrades and patches until their original Oracle support contract concludes.
Why is it challenging to reduce Oracle support costs?
Oracle has been very successful with its technical support policies preventing companies from:
- Taking a break from Oracle support. For example, you go without support for a few years because you upgraded your Oracle Software.
- They also prevent customers from terminating unused software licenses.
This is made possible by Oracle technical support policies. You can find them here.
Oracle support policy #1 – Matching service levels
“Matching Service Levels When acquiring technical support, all licenses in any given license set must be supported under the same technical support service level (e.g., Software Update License & Support, Oracle Communications Network Premier Support, or unsupported). If you add Extended Support, you still must maintain Software Update License & Support for the entire license set; subject to availability; you must acquire Extended Support for all licenses of a particular version release of a program if you acquire Extended Support for any license in such version release. You may not support a subset of licenses within a license set; the license set must be reduced by terminating any unsupported licenses. You will be required to document license terminations via a termination letter.”
This means an Oracle customer must have all their Oracle products within the same set. For example, all databases under support or nothing under support – An “all or nothing” approach.
Oracle support policy #2 – Reinstatement fee
“Reinstatement of Oracle Technical Support If technical support lapses or was not originally purchased with a program license, a reinstatement fee will be assessed. The reinstatement fee is computed as follows: (a) if technical support lapsed, then the reinstatement fee is 150% of the last annual technical support fee you paid for the relevant program; (b) if you never acquired technical support for the relevant programs, then the reinstatement fee is 150% of the net technical support fee that would have been charged if support had been ordered originally for the relevant program per Oracle’s Support pricing policies in effect at the time of reinstatement. The reinstatement fee in (a) shall be prorated from the date technical support is ordered back to the date technical support lapsed. The reinstatement fee in (b) shall be prorated back to the original program license order date. In addition to the reinstatement fee described above, you must pay the technical support fee for the support period. This technical support fee is computed as follows: (i) if technical support lapsed, then the technical support fee for a twelve-month support period shall be the last annual technical support fee you paid for the relevant program; (ii) if you never acquired technical support for the relevant program, then the annual technical support fee shall be the fee that would have been charged if support had been ordered originally for the relevant program per Oracle’s Support pricing policies in effect at the time of reinstatement. Renewal adjustments may be applied to the annual support fee described in (i) and (ii) above.”
What this means: If you terminate the Oracle support contract and wish to return to Oracle support, you need to pay the 150% penalty fee and support for the time you have been not paying support.
This is why most Oracle customers cannot take a break from Oracle support.
Oracle Support Policy #3 – Repricing of technical support
Oracle’s Repricing of Technical Support Policy presents a significant hurdle for many customers.
Historically, customers have often had unused software licenses over the years after purchasing Oracle.
When they aim to terminate support for these unused licenses, Oracle’s policy either hinders this action or complicates the process considerably.
Price following reduction of licenses or support level
“Pricing Following Reduction of Licenses or Support Level Pricing for support is based upon the level of support and the volume of licenses for which support is ordered. If a subset of licenses on a single order is terminated or the level of support is reduced, support for the remaining licenses on that order will be priced at Oracle’s list price for support in effect at the time of termination or reduction minus the applicable standard discount. Such support price will not exceed the previous support fees paid for both the remaining licenses and the licenses being terminated or unsupported and will not be reduced below the previous support fees paid for the licenses continuing to be supported. If the license order from which licenses are being terminated establishes a price hold for additional licenses, support for all licenses ordered under the price hold will be priced at Oracle’s list price for support in effect at the time of reduction minus the applicable standard discount.”
What this means: If you purchased licenses from Oracle and initially received a 70% discount on licenses, that discount was also applied to your annual support fees.
If you years later wish to terminate 30% of the licenses in your contract, Oracle support will not be reduced by 30%. Oracle will recalculate the support cost on the remaining licenses at the list price and any standard volume discount. The result: you will not reduce any support costs.
What is Oracle Extended Support?
Oracle offers varying support tiers: Premier, Extended, and Sustained. As your Oracle software ages, you receive reduced support levels and face higher costs.
Oracle justifies the increased fees for Extended Support, which can be 10-20% more than Premier, by citing the higher costs of maintaining older software versions.
Consequently, many Oracle users upgrade their software to stay within the Premier support bracket, ensuring they benefit from all updates, bug fixes, and comprehensive support.
Before Renewing Oracle Support: 4 Key Recommendations
- Always check if you’re actively using the Oracle license. Without a pre-renewal licensing review, you might pay for unused licenses.
- Conduct yearly Oracle license optimization to reduce your licensing needs by 10-30%.
- It’s possible to bypass Oracle’s repricing rule and end unused licenses, but it demands effort.
- In Oracle support negotiations, the best you can typically achieve is waiving the annual 8% hike. Don’t anticipate other significant outcomes from these discussions.
Top 10 Strategies to Reduce Oracle Support Costs
Reducing Oracle support fees is a challenge many companies face. While negotiating with Oracle may seem like the obvious solution, it typically yields minimal savings.
Here are some effective strategies for substantial cost reductions:
- Third-Party Support:
- Switching to a third-party support provider, like Spinnaker Support, can cut Oracle support fees by at least 50%. However, you’ll lose access to Oracle’s upgrades and updates post-transition.
- Evaluate License Usage:
- Assess which licenses are actively used and eliminate support for idle ones. On average, about 30% of Oracle licenses go unused.
- Software Downgrading:
- Downgrade from higher to lower Oracle software editions, like from Enterprise to Standard, especially if Enterprise features are underutilized.
- License Model Optimization:
- Optimize by switching license models, for instance, from processor-based to named user-plus licenses, potentially halving the costs.
- Terminate Unused Licenses:
- Cautiously terminate support for unused licenses, keeping Oracle’s Technical Support Policy and repricing consequences in mind.
- Leveraging Oracle Cloud:
- Unlike perpetual licensing in on-premise setups, migrate test and development environments to Oracle Cloud, paying only for the time used.
- Migrating to AWS or Azure:
- Consider moving Oracle workloads to platforms like AWS, Azure, or Oracle BYOL for potentially more cost-effective vCPU or OCPU licensing.
- Change Hardware Platform:
- Switching the hardware, such as consolidating to IBM LPAR, may reduce Oracle licensing requirements by up to 40%.
- Complete Oracle Exit:
- Discontinue Oracle maintenance if transitioning to another solution or if Oracle technical support isn’t actively utilized.
- Negotiating with Oracle:
- Direct negotiation with Oracle often results in minimal savings, such as waiving the annual 8% uplift rather than significant fee reductions.
Adopting these strategies requires careful consideration of your organization’s specific Oracle usage and future technology plans.
In-depth analysis and strategic planning are critical to effectively reducing Oracle support costs without compromising essential services and compliance.
Oracle Support Reduction – FAQ
Are there any other possibilities for achieving Oracle support reduction?
You may consider re-purchasing your licenses. If you can get a high enough discount with Oracle, you can show a return on investment after a few years.
Oracle does not allow their sales reps to do it, so you need to negotiate with Oracle under the scenario that these licenses are not replacement licenses but licenses for something else. This is what the Oracle would call “Cancel and Replace.”
We run older versions of Oracle software, and now Oracle wants to increase support by 10% to support them. (Extended support) is it possible to negotiate away this increase?
Yes, We have helped clients achieve that, but some clients could also negotiate a contract clause in their original contracts. So, there was no need to spend time on a negotiation later.
Will Oracle be upset if we move our support contracts to a third-party support provider?
No, Oracle will happily accept your PO if you return to them next year or the year after. After two years, you can investigate re-purchasing licenses and lower support costs.
Why should I review my licensing before I move to a third-party support provider?
You want to be compliant before moving to a third-party support provider. 90-100% of all compliance issues can be remediated without new purchases.
Can we return to Oracle Support?
Yes, Oracle will never say no to your money at any time.
We have Oracle application licenses. Can’t we simply exchange them and get cloud services in return/credit?
Oracle has discontinued this for most products. This option exists but is so cost-ineffective that it makes no sense.
You are better off going to Oracle and negotiating a new cloud services agreement. You will obtain better prices, better terms, and more flexibility.
We have an Oracle ULA, but now we are out. How can we ask for Oracle support reduction?
No, zero chance. You can certify the Oracle ULA and then look at your options.
What is the repricing policy of Oracle?
Repricing is an Oracle technical support policy. If you terminate any subset of licenses, the remaining licenses will have support based on the list price.
What is the inflationary adjustment rate for Oracle?
It has been 8% since December 2022.
Oracle Support Optimization Service
- Oracle Support Optimization Service is a comprehensive service that includes a 360 review of your Oracle license contracts to identify cost savings and optimization opportunities.
- The service includes license optimization, which involves analyzing your current licenses and usage patterns to ensure you are not overpaying for licenses you don’t need.
- The strategic advisory is provided to help you align your Oracle licensing and support strategy with your business goals and objectives.
- The service provides options for reducing support costs, including strategies such as reducing the scope of support, transitioning to third-party support, or renegotiating your support contract with Oracle.
- The pros and cons of each approach are evaluated and presented to you so that you can make an informed decision based on your unique business needs and priorities.
- The service also includes information on how other organizations are reducing their Oracle support costs so that you can learn from their experiences and best practices.
Contact us today if you want our help to create a roadmap for reducing Oracle support.