Pros and Cons of Oracle Third-Party Support

Pros and Cons of Oracle Third-Party Support

Executive Summary:

Oracle third-party support has emerged as a popular strategy for enterprises seeking to reduce costs and extend the lifespan of their Oracle software.

It offers significant savings and flexibility by outsourcing maintenance to independent providers. However, CIOs and sourcing leaders must weigh those benefits against trade-offs, such as losing direct access to Oracle updates and assuming more responsibility for compliance and security.

Cost Savings vs. Financial Trade-Offs

Oracle’s annual support fees typically run about 22% of the license price (often rising a few percent each year).

Third-party support providers typically charge around half of Oracle’s rate, which immediately cuts maintenance costs by approximately 50%.

Many enterprises report saving millions of dollars that can be reinvested elsewhere (for example, a $5 million yearly Oracle support bill might drop to ~$2.5 million with an independent provider).

Despite the strong cost appeal, consider a few financial caveats:

• Reinstatement Fees: If you ever need to return to Oracle’s support later, Oracle may charge hefty back fees and penalties to reinstate your contract, which can offset some savings.
• Negotiation Leverage: Some customers use third-party quotes to pressure Oracle for discounts. Oracle might offer a price cut to retain your business, but even a 15% discount likely won’t match the ~50% savings from third-party support.
• Strategic Fit: Align the decision with your IT roadmap. For systems nearing retirement or replacement, third-party support is an ideal way to save costs in the interim. If a system requires continuous new features from Oracle, staying on Oracle support might deliver more long-term value.

Service Quality and Support Experience

Service quality is as important as cost. Oracle’s standard support is often criticized for slow response times and rigid scope (e.g., Oracle won’t troubleshoot custom code).

Third-party support often delivers a better experience, as it provides direct access to seasoned Oracle experts and typically results in faster issue resolution.

Independent providers will even support your customizations and integrations – they aim to fix problems across your whole environment, rather than saying “custom code isn’t supported.”

The result is a more personalized, flexible support experience that can boost satisfaction.

However, the support is only as good as the provider. Be sure to vet the third-party firm’s Oracle expertise and track record – you won’t have Oracle’s internal teams backing them up.

Upgrade Flexibility and Product Lifespan

Third-party support provides you with greater flexibility when it comes to software upgrades. Oracle ties its support to product versions – once a version’s support period ends, you’re expected to upgrade or pay extra for extended support.

In contrast, an independent support provider will keep supporting your Oracle software even after Oracle’s official support expires, so you can run a stable legacy version as long as it meets your needs, avoiding forced upgrades. (For instance, many Oracle E-Business Suite 12.1 users stayed on that release well past Oracle’s cutoff by using third-party support, saving on a costly upgrade project.)

This freedom to stay on older software is a double-edged sword. On one hand, you save on upgrade costs and avoid disruption by not constantly changing systems. On the other hand, you won’t get new features or improvements that come with Oracle’s latest releases.

Over time, skipping multiple Oracle upgrades can make a future transition more complex and costly.

In short, third-party support buys you time and cost relief, but you should still have a long-term plan to eventually modernize so you don’t accumulate excessive technical debt.

Security and Patching Considerations

A common concern when leaving Oracle support is how to handle security patches. Without Oracle’s regular patch updates, third-party providers take on that responsibility. Top third-party firms create their own fixes or workarounds for critical bugs and vulnerabilities.

They use techniques like virtual patching – for example, adjusting configurations or writing custom code to close a security hole without needing Oracle’s official patch.

Providers also monitor new threats and will alert clients with mitigation steps or scripts as needed. Additionally, they provide important regulatory updates (e.g., tax and legal patches for Oracle ERP systems) to ensure your applications remain compliant.

So far, the security track record of third-party support has been positive – many companies (even in sensitive industries) have remained secure without Oracle’s patches. That said, success requires a capable provider and diligent processes.

Ensure the provider has strong security expertise and clear procedures for emergency fixes.

You’ll also need to document how each vulnerability is addressed, rather than relying on Oracle patches, to satisfy auditors or regulators.

In summary, you can stay secure on third-party support, but it demands vigilance from both your provider and your internal IT team.

Licensing and Legal Considerations

Switching to third-party support does not cancel your Oracle licenses – you still own them and must follow your license agreement.

The good news is that using an independent support provider is permitted under Oracle’s contracts. There’s no clause forcing you to buy Oracle’s support (and courts have upheld the legality of third-party support).

That said, keep these points in mind regarding compliance:

• Use of Patches: After Oracle support ends, you cannot apply new Oracle patches or updates (those are only available to active support customers). You will need to rely on your third-party provider for future fixes.
• All-or-Nothing Scope: Oracle’s policies prevent mixing support providers for the same product. You generally have to move all licenses of a given Oracle product to the third-party – you can’t keep some licenses on Oracle support and some on independent support for the same product family.
• Unlimited License Agreements: If you’re in an active Oracle ULA, do not switch to third-party support until the ULA term ends and you’ve certified (finalized) your license counts. Switching support mid-ULA can violate your contract, so wait until the ULA is converted to normal licenses.

Also, consider Oracle’s approach to audits and relationships. Leaving Oracle support doesn’t mean Oracle stops checking license compliance.

They could still audit your deployment, so it’s wise to perform a thorough internal license audit before you switch. Many companies do a “true-up and exit” – they ensure all usage is properly licensed, then leave Oracle support confident they comply.

Keep records of your entitlements and the date you left Oracle support, in case questions arise later.

Finally, recognize that your relationship with Oracle will change. Oracle’s sales and support teams may pay less attention once you’re not a support customer.

If you need Oracle’s help in the future (such as purchasing new licenses or migrating to Oracle Cloud), be prepared for a more rigorous negotiation.

And if you ever want to resume Oracle support for a product, remember you’ll likely face those reinstatement fees. Plan and budget for that scenario in your long-term strategy.

Oracle Support vs. Third-Party Support – A Comparison

As shown, choosing Oracle third-party support is a balance between cost savings and potential trade-offs in support scope, updates, and risk.

The right choice depends on your company’s goals and how critical Oracle’s ongoing innovations are to your strategy.

Recommendations

If you’re considering third-party support, use these best practices to maximize success and avoid pitfalls:

1. Review Contracts First: Scrutinize your Oracle license agreements for any clauses that affect support changes (e.g,. matching service levels, ULA restrictions). Understand your obligations upfront.
2. Ensure License Compliance: Audit your Oracle deployments to verify full compliance with license terms. Resolve any overuse or compliance issues while you’re still under Oracle support, so you exit on clean terms.
3. Time the Switch Strategically: Plan the move around your support renewal dates. Provide Oracle with the required notice of non-renewal to avoid overlap costs, and initiate third-party support immediately upon Oracle support termination.
4. Vet Providers Thoroughly: Not all vendors are equal. Evaluate third-party support providers on their experience with Oracle products, security practices, SLA guarantees, and client references. Choose a provider with a strong track record in your industry.
5. Download Key Resources: Before your Oracle support lapses, download any critical patches, updates, or documentation you might need from Oracle’s portal. You won’t have access to Oracle’s support site after termination, so stash away useful materials legally available to you.
6. Prepare Your Team: Communicate the support change to your IT staff and end users. Explain how to engage the new support provider and set expectations for any process differences. Early education will prevent confusion when issues arise under the new model.
7. Stay Security-Focused: Work with the third-party provider to understand their patching process. Internally, be ready to test and apply their fixes promptly. Keep documentation of these fixes to satisfy any security audits – you want proof that you’re maintaining a secure posture without Oracle’s patches.
8. Plan for the Future: Define how long you’ll rely on third-party support and what the end game is. For example, if you aim to migrate to a cloud solution in three years, use third-party support as a bridge and budget accordingly. If there’s any chance you might return to Oracle support, factor in the potential reinstatement costs and negotiate terms if you can.

Checklist: 5 Actions to Take

1. Inventory Your Oracle Environment: List all Oracle software in use (products, versions, and license counts) and identify which systems are good candidates for third-party support (typically stable, mission-critical systems that don’t need immediate upgrades).

2. Review Support Contracts & Policies: Examine your Oracle support agreements for key terms – notice periods for cancellation, the matching service level rule (all licenses in a product family must move together), ULA considerations, etc. Mark down important dates and requirements.

3. Perform a License Audit: Conduct an internal audit (or engage a licensing expert) to ensure you’re not exceeding your Oracle license entitlements. Address any compliance gaps now by adjusting usage or purchasing additional licenses, ensuring you remain fully compliant with Oracle support.

4. Evaluate Third-Party Providers: Research and compare third-party support providers that specialize in Oracle. Check their service offerings, pricing, and reputation. Get references from similar enterprise customers. Ensure the provider can support all the Oracle products you plan to switch. Select the best-fit provider and finalize the contract.

5. Execute the Transition Plan: Coordinate the timing to end Oracle support and start the third-party support seamlessly. Provide Oracle with formal notice of termination as required by the terms of the agreement. Work with the new provider on onboarding – share system documentation, set up support contacts, and review processes for issue handling. Train your IT team on how to engage the new support. Once the service is live, monitor it closely and address any issues in the early stages of the new support model.

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: Is it legal to use third-party support for Oracle software?
A: Yes. Oracle’s contracts do not prohibit customers from using third-party support. As long as you stick to your license terms (for example, use only the software licenses you’ve purchased and don’t download new Oracle patches after your Oracle support ends), you are within your rights. Courts have upheld the legality of third-party support as a valid option for Oracle and other enterprise software.

Q2: Will we still receive patches and updates after leaving Oracle support?
A: You will no longer get Oracle’s official patches or version upgrades once you leave Oracle support. Instead, your third-party provider supplies bug fixes and security updates through their own patches or workarounds, and they provide any needed regulatory updates. In essence, the third-party takes over responsibility for keeping your software up-to-date. Many companies have operated safely for years in this manner, but it does place the onus on the provider to stay on top of vulnerabilities.

Q3: How much cost savings can we expect with third-party support?
A: Typically around 50% off Oracle’s support fees. For example, if you currently pay $1 million per year for Oracle support, a third-party offer might come in at around $500,000 for the same coverage – immediately saving you $ 500,000 annually. Over multiple years, and by avoiding costly forced upgrades, the cumulative savings can reach into the millions. The exact savings will depend on your Oracle footprint, but it’s usually substantial.

Q4: What are the main drawbacks of moving to third-party support?
A: The biggest drawback is giving up Oracle’s direct updates and roadmap. You’ll be relying entirely on the third-party for fixes and support, which means you must have confidence in their quality and responsiveness. You also assume full responsibility for staying in license compliance (Oracle won’t be advising or forgiving if you deploy things improperly). If you later decide to return to Oracle’s support, it can be expensive – Oracle will likely charge back support fees for the gap period. Additionally, you’ll need to adjust to a different support process, and you won’t have Oracle’s engineers to escalate tough problems to. These trade-offs are manageable for many, but it is essential to acknowledge them.

Q5: Does third-party support work for Oracle Cloud or SaaS products?
A: No – third-party support is only an option for on-premises Oracle software that you host (such as Oracle Database, E-Business Suite, PeopleSoft, JD Edwards, etc.). Third parties cannot support Oracle’s Cloud SaaS applications and cloud infrastructure services; those remain supported only by Oracle. The independent support model applies to Oracle’s licensed software running in your data center (or cloud infrastructure you control), not to Oracle’s subscription-based cloud services.

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