Oracle Support Renewal – Optimization and lower costs

Oracle support renewal is attached to every Oracle software license purchase that you make. Oracle customers face a challenge in trying to reduce their Oracle support renewals costs. But what is the Oracle support renewal? The annual renewal includes technical support and the right to download and apply software updates and upgrades to the specific software license that you have purchased. There are many Oracle technical support policies that often makes customers pay for unused software licenses, these includes Oracle repricing and Oracle matching service levels. This article will cover Oracle technical support policies such as Oracle matching service levels and repricing and then hands-on advice on how to reduce your Oracle support fees. If you want to learn about Oracle Support Rewards program and how to reduce your support by 33-25%, that is covered in a seperate article.

4 ways for how to reduce Oracle Support Renewal costs

In this video Fredrik talks about how to reduce your Oracle support costs. (Oracle)

00:00 Can you negotiate a clear cut reduction of your Oracle support?
00:24 Can you negotiate the annual uplift (4%)
00:46 Can you waiver the Oracle extended support and save 10-20%?
01:27 Can you include support renewals into a larger negotiation including licensing and cloud?
02:13 Can i remove unused software from my CSI without being impacted by repricing?

What is Oracle CSI

The Customer Support Identifier (CSI) number is an identification number assigned to each user of an Oracle Cloud product. The CSI number is used by Oracle Support to identify the user and troubleshoot technical issues. The CSI number is located in the Support Identifiers section of My Oracle Support.

CSI is the Customer Support Identifier for a support contract. Users can create a number of account records against the CSI, and administrators can add an unlimited number of users. A TAR is a Technical Assistance Request. Often, you will get a response faster than submitting a question to a forum. You can also receive an account metalink note, which contains all the details of your support account.

What is Oracle matching service levels

You’ve probably heard about the Oracle Matching Service Levels policy, but what is it and how does it work? Basically, Oracle wants you to book the same service level for all of your licenses within a license set. But that doesn’t always mean you should do that. Often, different license sets can have different support levels, and if you’re using Oracle applications in a separate environment, you might want to consider booking a different service level for the database.

ou’ve likely heard of Oracle sales reps claiming that you can’t terminate support for one contract, but that’s just not true. These sales people are misinformed. Oracle’s matching service levels policy only applies to products in the same product family. Hence, it’s impossible to terminate support for just one product. This is a common tactic used by Oracle to lock customers into expensive support contracts. This rule does apply to Java SE subscriptions as well, you need to maintain this technical support policy across all Oracle products, database, weblogic and Oracle apps such as Siebel, Primavera and EBS.

One common misconception is that this does not apply if you buy Oracle RDS from AWS. That is not true, you need to follow these rules for deployments on RDS AWS as well.

What is Oracle repricing

What is Oracle repricing? Repricing is the process of setting the price for a certain product. The price of an annual support subscription is typically 22 percent of the net license fee and is discounted based on volume. The price of a future purchase is tied together by a common CSI (cost structure indicator). This allows you to lock in a discount and avoid renegotiation each time you renew.

If you want to get more value for your Oracle purchase, you can choose a support subscription. The price of subscriptions can go up over time, and the annual support stream increases. Repricing can be a good option, especially if you only use a small subset of the products. Depending on your needs, you can also use the same account for multiple products. If you’re unsure if repricing is right for you, contact Oracle customer support.

Repricing is the process by which Oracle re-prices the licenses you’ve already purchased. You’ll typically need to de-support 64 licenses before Oracle can increase the price of your support subscriptions. After that, you’ll lose 80% of your entitlement and have to drastically decrease your Oracle usage. That’s why repricing is so important. Oracle has an effective way to protect support revenue by keeping prices as low as possible. This is the big danger or risk when signing Oracle ULA, all your support contracts are merged into one CSI and y ou are bound by the repricing rule and prevents you from partially terminating licenses.

What is a Oracle support renewal

If you’re not familiar with auto-renewing Oracle support contracts, you’re probably wondering what it means for you. Oracle has recently made the process clearer and easier to turn off, but there are ways to opt out of the auto-renewal feature. The first step is to understand the benefits of auto-renewal, which are typically less than half of current costs. Oracle has a very high price for support, so if you want to save money on it, consider third-party support.

You can avoid automatic renewal by reading Oracle renewal notices. Oracle typically sends renewal notices three months before they expire. The renewal notices include details such as your company’s details, products, metrics, usage levels, and renewal dates. Then, it’s time to check if you need to renew your support for the same products and/or service. You can also double-check the amounts and verify that you want to keep the same amount of support as before.

How much does Oracle technical support cost

If you’re wondering how much Oracle technical support costs, you’re not alone. Many customers are frustrated by Oracle’s inflexible support policies and the high fees they’re forced to pay. And since the cost of support increases by about 3% a year, it’s no surprise that it’s become a major pain point for many customers. While Oracle doesn’t have a separate SKU for support, it does charge a support fee based on the net license spend that customers pay. Typically, there are three tiers of support rates for each.

The Premier Support tier covers bug fixes, patches, security updates, legislative changes, and security updates. It’s the highest-level support from Oracle. Premier Support typically lasts three years after the product release date, but it can last longer. The cutoff date for Premier Support varies, so it’s important to check your product documentation for details. Extended Support may not be available if your database version is in the middle of a major update cycle.

How to reduce oracle support fees

One way to reduce your Oracle support bill is to cancel or limit your product licenses. Oracle publishes a table of their core factors. The higher the core factor, the higher the number of Oracle licenses you’ll need to use the product. It will not help to cancel your support when you’re still making money. And, if you’re still using Oracle software, it may not work properly in the future.

Another way to decrease Oracle support costs is to downgrade. Most companies set annual support on auto-renewal to ensure continuity, but this removes an important administrative burden – a sense-check or a regular evaluation of on-going Oracle support costs. But you may be missing a golden opportunity to negotiate a reduction in costs. For this reason, it’s helpful to engage an external expert to perform a cost comparison. A third option is to contact the ITAA, which will analyze your current costs against industry standards.

Outsourcing support from an Oracle vendor is a great way to cut costs without compromising quality. Third-party providers have proven to be extremely efficient, offering significantly lower prices for Oracle support compared to internal resources. Additionally, third-party support offers more freedom and control for companies to reduce the cost of Oracle support. As a result, companies can cut costs by up to 75 percent. And, most importantly, outsourcing support reduces risk.

What is third party support for Oracle?

Getting help from Third-party support providers is the way to go for many end users who are running legacy applications that use older Oracle databases.Third-party support providers are specialized in supporting Oracle software and the environment that surrounds it. Because of this, third-party support providers have experienced staff and processes to get the job done right. The average tenure of these engineers is 15 years or more. Companies should carefully evaluate the risks of using a third-party support provider before making the switch.

As a leading provider of enterprise software support, Spinnaker provides comprehensive services to replace Oracle Support. Its services include rapid response time, ISO-certified processes, and focused attention. They cover everything from customized code to interoperability issues. Customers can rest easy knowing that they are getting the highest quality support for their money. The benefits of third-party support go beyond resolving common problems. A comprehensive guide can remove any uncertainty and give you the answers you need. Rimini street and support revolution are 2 other equal providers offering support for Oracle software.

Top10 ways for how to reduce Oracle support

Why is it difficult to reduce Oracle support costs?

Oracle has been very successful with their technical support policies preventing companies from:

Taking a break from Oracle support. For example, you go without support for a few years because you made an upgrade to 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”

What this means: Is that an Oracle customer must have all of their Oracle products within the same product 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 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 the reason why most Oracle customers cannot take a break from Oracle support.

Oracle repricing

The other major challenge Oracle customers face is that they have historically made an Oracle purchase. Now, years later they have unused Oracle software licenses, they wish to terminate support for those unused licenses. Oracle has come up with a support policy to prevent you from doing this or at least to make it difficult for you.

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. In the event that a subset of licenses on a single order is terminated or if the level of support is reduced, support for the remaining licenses on that license 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 established a price hold for additional licenses, support for all of the licenses ordered pursuant to 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 originally received 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 cost of support on the remaining licenses at list price and any standard volume discount. The result: you will not reduce any support costs.

Frequently asked questions about Oracle support costs

Oracle Support Renewal what is the costs based upon?

Oracle technical support policies are available here, and the cost is based upon 22% of what the one-time license fee was. For example, if you paid 2 million for Oracle license the new support will be 22% of that fee equaling 440 000.

Oracle Support Renewal – Why are the costs increasing?

The annual increase is usually 4% every year., this is defined in the Oracle technical support policy, which states that Oracle reserves the right to adjust the technical support fees that you pay.

Recommendation: When you purchase Oracle software agreement, negotiate this clause to avoid the annual increase for as many years as possible.

Oracle have consolidated many different CSIs into one large Oracle support renewal quote, can I do partial termination and reduce Oracle support?

The answer is yes. Every CSI should be treated as individual contract unless you have contract language linking them. Oracle have different technical support policies making it challenging to reduce Oracle support, such as Oracle matching service levels and repricing rules. However, just because you have decided for administrative reasons to consolidate your Oracle support, it doesn’t mean that you cannot partially terminate each contract if you do not require the license and support.

If we terminate our Oracle support, will Oracle want to license audit us?

The answer is, it depends. Before you make any termination of support always perform a license assessment to be certain you are license compliant. You want to be ready for the Oracle audit and you want to make sure not terminate licenses you need elsewhere.

How does Oracle repricing work for Oracle support?

Oracle has granted you a discount per contract. Discount applies to both licenses and support. The discount you were granted was based upon you purchasing a certain volume of licenses and support. Oracle technical support policy dictates that if you terminate a subset of any contract, the support on the remaining licenses on that specific CSI will be recalculated and only standard volume discount is applied if any. In most cases no or very little discount is applied and you will be paying list price support for the remaining licenses.

What is Oracle Extended Support ?

Oracle have different levels of support, Premier support, extended support, and sustained support. The simplest way of explaining what they are is that the older your Oracle software versions are the lesser support you will receive from Oracle, but you will also pay more as Oracle stance is that if they are supporting you with an older version, it cost more for them. Oracle extended support will cost you 10-20% more than premier support. This is a main reason why many Oracle customers upgrade their software, to remain on Premier support and receive all the updates, bug fixes and support.

Are Oracle technical support policies contractual?

They are not attached to your Oracle license agreements or Oracle OMA. However, the technical support policies clause in your contract have a hyper link to this policy document. When you sign the Oracle contract you accept the Oracle technical support policies.

What is Oracle Matching Service Level?

Oracle matching service levels is a technical support policy stating that you must have all your Oracle licenses within the same license set under support, its an “all or nothing approach”. You cannot choose to have 75% of your Oracle database licenses with active support and then have the remaining 25% with no support. It is a policy for Oracle to make sure you pay technical support for unused licenses, or you need to terminate licenses, which is not always easy, see “Oracle repricing”.

Oracle support renewal – 4 recommendations before renewing

01

Always review if you are using the Oracle license or not, if you haven’t done an Oracle licensing review before your renewal, you are most likely going to renew support for unused Oracle software licenses.

02

Perform the annual Oracle license optimization to optimize your Oracle licensing that will lower your Oracle licensing requirements by 10-30%.

03

You can find ways around Oracle repricing rule and terminate unused software licenses, but it requires some work to succeed.

04

Oracle support negotiation can only achieve the waiver of the annual 4% increase. Don’t expect any other results to come from negotiating Oracle technical support.

Two Oracle technical support policies that you must know about

It is possible to reduce Oracle support fees, but the biggest mistake that companies make is that they believe it done by a negotiation with Oracle. Negotiation often leads to no reductions at all or at most very minimal results, that no Oracle customer would be happy with. Below is a list of strategies to investigate when embarking on a mission to reduce Oracle software maintenance and achieve real savings. The easiest way to reduce would simply to take a break when you dont need upgrades or techncial support. But Oracle has a technical policy preventing you to do that.

Reduce Oracle support by moving to third party

Move to a third-party support provider, such as Spinnaker Support – you will reduce your Oracle support fees by at least 50%. Note that you will lose the right to upgrade to later versions of Oracle software and updates that are released after you leave Oracle support.

Stop paying support for licenses that you are not using

Review which licenses you are using and which licenses that you are not using. In average 30% of all Oracle software licenses are unused. Review your Oracle software deployments and match them towards your Oracle license entitlements.

Downgrading to lower versions will cut your support costs

Consider downgrading to lessor versions of Oracle software, from Enterprise to standard edition. We come across many clients who are not using Enterprise Edition features and can downgrade to standard edition.

Oracle license optimization will reduce your support

Consider Oracle license optimization – this can be done by changing license models from processor to named user plus licenses with a 50% saving.

How to terminate unused licenses and avoid Oracle repricing

If you have unused licenses in your support agreements but are unable to terminate licenses because of Oracle Technical Support Policy and repricing, review this video for how you can work around that rule.

Moving to Oracle cloud can reduce your Oracle support

Consider moving test and development environments to Oracle Cloud – as you would only pay for the time you are utilizing the environments. If you use test and development licenses on premise, you pay for the license 24/7.

Moving Oracle licenses
to AWS or Azure can lower
your costs

Consider moving Oracle workloads to AWS, Azure or Oracle BYOL as you can then license on vCPU or OCPU which is often more cost effective.

Changing your hardware platform, to for example Oracle IBM will reduce your support fees

Change the hardware platform where Oracle is running, consolidating to specific hardware such as IBM LPAR can reduce Oracle licensing requirements by 40%.

Leave Oracle all together

Stop paying maintenance completely. Investigate if you are using Oracle technical support. If you are transitioning to another solution – do you need to keep paying maintenance to Oracle?

Negotiation with Oracle rarely reduce your support

Negotiation with Oracle will often only result in small reductions, such as a waiver of the annual uplift (4%)

Oracle Support Reduction – FAQ

Are there any other possibilities of achiving Oracle support reduction ?

You may might consider re-purchasing your licenses. If you can negotiate a high enough discount with Oracle, you will be able to show a return of 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 in the Oracle would call “Cancel and Replace”.

I 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, I have helped clients achieve that, but some clients were also able to 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 I move my support contracts to a third-party support provider?

No, they don’t care. Oracle doesn’t have the time to care about you as a customer. I frequently speak to companies who are paying millions of dollars in support renewal, and I often hear “we don’t have any relationship with Oracle” or “We don’t know who our account manager is” “Oracle only care if we buy something new”.
In truth your support renewals are treated as a back-office task either it is outsourced to an offshore country where the process is automated (automated proposals for renewal and reminders) alternatively you might have a support renewal rep in your country. That person usually has a large target of 100-200m $ in support renewals. Make an educated guess how much they care about a contract worth 0-2m $. Also, Oracle wants to sell new licenses and services to you. In 3 years, they can come back and sell you licenses again at a much lower price.
For example, you might have an Oracle ULA certified – that you are paying 10m € in annual support. If you keep paying Oracle that support in perpetuity you will in the next 10 years pay Oracle 100m €.

What you can do instead is

• Terminate the support agreement with Oracle.
• Go to third party support support or be unsupported.
• In 3 years, you can go back to Oracle and negotiate a new Oracle ULA for 1-2m € and pay an annual support stream 22% of the net license fees paid. Over 10 years you will save your company up to 80-90m €

Why should I review my licensing before I move to a third-party support provider?

You need to make sure you are compliant, not because there is an audit. But if you need to buy new licenses. If you are not under support, you might be forced to go back to support again if you need additional licenses. Also, you need to review your contract making sure you can move to third party support.

Which Oracle Software contracts are usually customers moving to third party?

Almost always it is application support agreements and legacy systems that are not being developed/updated. For example, if you have decided to leave your Oracle Peoplesoft environment for workday in 1-2 years. But it takes a year or two for Workday to go live and you might need Peoplesoft for archiving. Why would you pay the support fees for the archiving/backup environment? You should strongly consider moving to third party support or terminating support all together.

What should actions I do before I move to third party support?

You need to start early; this is not something that not completed in one month. You need to start the discussion with Spinnaker or Rimini Street at least six months ahead of your support contract is up for renewal. These things take time.

A small check list to help you:

• Review your contracts to understand if you take the move.

• Review your licensing (not because of the audit risk, but primarily making sure you are compliant what if scenarios and that you have a small buffer of licenses if you expand)

• Negotiate with third party support provider, don’t take first best offer.

Can I go back to Oracle Support?

Yes, at any time, Oracle will never say no to your money. Oracle has a rule saying there is a penalty for going back to on active support. But if you have the right negotiation expertise you can avoid that penalty fee.

We have Oracle application licenses. Can’t I simply exchange them and get cloud services in return/credit?

Oracle has discontinued this for most products, this option exists but it so cost ineffective that it makes no sense. You are better off by going to Oracle and negotiate a new cloud services agreement. You will obtain better price, better terms with more flexibility.

We have an Oracle ULA, but now we are out. How can we ask for Oracle support reduction?

I have bad news; your options are very limited. Here are the main options

• You can negotiate the annual uplift.

• You can go third party support or stop paying support for x years and then go back to Oracle and negotiate a new Oracle ULA after 3 years.

What if I sign an Oracle PULA how can achieve Oracle support reduction?

Its even more difficult, as with a Oracle PULA you can never terminate Oracle support. If you, do you are in breach of contract and will loose all licensing entitlements.

What advise can you give me on how to start with Oracle support reduction?

I have bad news; your options are very limited. Here are the main options

• Start by doing a Oracle license compliance review. Don’t start by terminating licenses that you might actually need.

• Perform a license optimisation, usually you can optimize your licensing and free up licenses that you either terminate and save money on support or use for other purposes. The average optimization is 35% in the projects I have been engaged with.

• Once completed you can start the “support reduction” activities such as splitting up agreements, assigning licenses to subsidiaries or negotiating a pure write off

If you need further assistance, Redress can help you with

Understand what cloud products you need to purchase, if you are an existing Oracle EBS customer, we can help you map your current on-premises usage with the right cloud services.
Redress can help you design the cloud agreement making sure that you minimize any waste as you implement Oracle HCM.

If you have an Oracle license audit and Oracle asks you to run the scripts our team can help you analyze the scripts before you share them with Oracle. The same goes for any other Oracle licensing situation which could be internal Oracle license review of Oracle ULA Certification, where you want to run the Oracle LMS scripts or License Compliance Scripts. If you are interested to know more about our Oracle license consulting services, contact us to schedule a meeting.

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