Pros and Cons of Working with an Oracle License Reseller
Pros:
- Significant discounts on license purchases
- Flexible payment terms
- Expertise in handling Oracle audits
- Potential for additional discounts through negotiations
Cons:
- Information sharing with Oracle sales
- Potential conflicts of interest
- Dependence on the reseller’s knowledge and expertise
- Possible reduced bargaining power with Oracle directly
What is an Oracle Software Reseller?
Definition and Role of an Oracle Software Reseller
An Oracle software reseller can purchase Oracle licenses at a discounted rate and resell them to end customers. These resellers act as intermediaries, helping customers acquire the necessary software licenses while offering additional services and support.
Membership in Oracle’s Partner Network
Oracle software resellers are typically Oracle’s Partner Network (OPN) members. This membership signifies that the reseller has met Oracle’s stringent requirements and deeply understands Oracle’s products and services. As part of the network, resellers have access to exclusive resources, training, and support from Oracle, enabling them to provide informed and reliable service to their customers.
Understanding of Oracle’s Products and Licensing Structures
To be effective, Oracle resellers must comprehensively understand Oracle’s product offerings and complex licensing structures.
This knowledge allows them to guide customers through purchasing, ensuring they select the right products and licensing models to meet their business needs.
How do Oracle Resellers Get Paid?
Explanation of Profit Model for Oracle Resellers
Oracle resellers generate revenue through the re-sell margin on their licenses.
Unlike other vendor resellers who might receive direct incentives or bonuses from the vendor, Oracle resellers earn their profit by purchasing licenses at a discounted rate from Oracle and selling them at a higher price to end customers.
The difference between the purchase price and the selling price constitutes their margin.
Comparison with Microsoft Resellers
The compensation model for Oracle resellers differs significantly from that of Microsoft resellers. Microsoft resellers often receive direct incentives or bonuses from Microsoft, which can supplement their income.
In contrast, Oracle resellers do not receive such incentives from Oracle; their earnings are solely derived from the margins on their license sales.
Revenue Generation Through Re-Sell Margins
Oracle resellers typically receive a minimum 30% discount on the licenses they purchase from Oracle, regardless of the transaction size. They can negotiate with Oracle for higher discounts based on the value of the transaction.
The reseller determines the final margin they offer to the end customer, which can vary depending on the specifics of the deal and the relationship with the customer.
Oracle Resellers Benefits
Minimum 30% Discount Per Transaction
One primary benefit of working with an Oracle reseller is the discount on license purchases. Resellers receive a minimum 30% discount on each transaction, which can result in significant savings for the end customer.
This discount is available regardless of the transaction size, making it an attractive option for businesses of all sizes.
Potential for Increased Discounts Based on Transaction Value
Beyond the standard 30% discount, Oracle resellers can negotiate for even higher discounts based on the transaction’s value.
Larger transactions or strategic deals may qualify for additional discounts, reducing the cost of Oracle licenses for the customer. This potential for increased discounts can make working with a reseller even more beneficial.
Negotiation Possibilities for Higher Discounts
Resellers are often skilled negotiators who can leverage their relationship with Oracle to secure better customer pricing. They can negotiate not only higher discounts but also favorable terms and conditions.
This ability to negotiate effectively can result in more advantageous contracts for the end customer, including extended payment terms or bundled services.
Determining Margin Passed to End Customers
Several factors, including the transaction size, the relationship with the customer, and the competitive landscape, determine the margin resellers pass on to their customers.
Some resellers may pass on a portion of their discount to the customer to secure the deal, while others may retain a larger margin. Customers need to discuss and negotiate these margins with their resellers to ensure they get the best possible deal.
By understanding the role, payment model, and benefits of Oracle resellers, businesses can make informed decisions when purchasing Oracle software, potentially saving money and securing better contract terms.
Oracle Resellers Bonus Opportunity
Logging Opportunities in Oracle CRM Systems
Oracle resellers can log opportunities in Oracle’s CRM systems. These opportunities can be reselling or referral opportunities. By logging these opportunities, resellers can keep track of potential deals and coordinate with Oracle to maximize their chances of closing a sale.
Resell Opportunities with an Additional 3-5% Discount.
When resellers log an opportunity as a resell in Oracle’s CRM system, they can receive an additional 3-5% discount on top of their standard discount. This additional discount is a direct incentive for the reseller to secure the deal and provides further cost savings that can be passed on to the customer.
Referral Opportunities and Their Implications
Logging an opportunity as a referral means the reseller simply informs Oracle sales about a potential deal without directly reselling the product.
While this may result in less direct profit for the reseller, it can still lead to benefits such as strengthening the relationship with Oracle. However, end customers should be cautious about the information they share with resellers, as it may be passed on to Oracle.
Caution for End Customers Regarding Information Disclosure:
End customers must be careful about the details they disclose to Oracle resellers. Information shared with resellers can be logged in Oracle’s CRM system and communicated to Oracle sales, potentially affecting negotiations and pricing.
Customers should ensure that sensitive business information is protected and only disclosed when necessary.
Oracle Resellers Cons
Contractual Obligations to Cooperate with Oracle Sales
Oracle resellers are contractually obliged to work closely with Oracle sales teams. This cooperation includes sharing information about potential opportunities and activities.
While this can be beneficial in some cases, it also means that resellers may prioritize Oracle’s interests, which could conflict with those of the end customer.
Sharing of Information with Oracle Without Customer Knowledge
One significant downside of working with Oracle resellers is the potential for information to be shared with Oracle without the customer’s knowledge.
Resellers may communicate details about negotiations, pricing, and business needs to Oracle, which could impact the customer’s bargaining position.
Potential Conflicts of Interest Given the close relationship between resellers and Oracle, there is a potential for conflicts of interest.
Resellers might prioritize maintaining their standing with Oracle over securing the best possible deal for the customer. Customers must know this dynamic and ensure their interests are adequately represented.
Oracle Technical Support
Initial Year Support Sold by Reseller When purchasing Oracle licenses through a reseller, the reseller typically includes and sells the first year of technical support.
This initial support period ensures customers can access the necessary assistance and resources to implement and manage their Oracle software effectively.
Direct Renewal with Oracle from the Second Year
After the first year, support renewals are managed directly with Oracle. Customers must coordinate with Oracle for ongoing technical support to ensure continuity of service and access to updates and patches.
This transition from reseller to Oracle for support renewals is standard practice and helps maintain consistent support quality.
Option to Request Support Quotes Through Resellers Without Additional Margin
Customers have the option to request support renewal quotes through their resellers. This can be advantageous as the reseller can facilitate the process and negotiate better terms.
However, resellers cannot add their margin to support renewal quotes, ensuring that customers only pay the standard Oracle support fees.
By understanding these aspects of working with Oracle resellers, customers can make more informed decisions, balancing the benefits of discounts and flexible terms with the potential risks of information sharing and conflicts of interest.
Should You Buy via a Reseller?
Pros of Purchasing via a Reseller
Discounts and Flexible Payment Terms
One of the main advantages of buying Oracle licenses through a reseller is the significant discounts offered.
Resellers typically offer a minimum discount of 30% on transactions, and these discounts can increase based on the size and nature of the purchase.
Additionally, resellers often offer more flexible payment terms than Oracle’s standard 30-day terms, providing businesses with better financial flexibility.
Handling of Audits Resellers can assist customers in managing Oracle audits. Their deep understanding of Oracle’s licensing policies and requirements can help ensure compliance and minimize the risk of penalties.
They can also provide valuable advice and support during the audit process, making it less stressful and more manageable for the customer.
Cons and Potential Downsides
Information Sharing with Oracle Sales
A significant downside of working with resellers is the potential for information sharing with Oracle sales teams.
Resellers are contractually obligated to cooperate with Oracle, which means they may pass on details about your business, negotiations, and potential opportunities. This could impact your bargaining position and the overall deal you receive.
Factors to Consider Before Deciding
Before deciding to purchase via a reseller, weighing the pros and cons is important.
Consider the potential benefits of discounts and flexible terms against the risks of information sharing and possible conflicts of interest.
It’s also crucial to assess the reseller’s expertise and reputation to ensure they can provide the support and services you need.
Read how to become an Oracle reseller.
Who are the Best Oracle License Resellers?
Importance of Former Oracle Staff on Reseller Teams
When selecting an Oracle license reseller, one key factor is whether they have former Oracle staff on their team.
These individuals bring invaluable experience and insights from their time at Oracle, enabling them to navigate the complexities of Oracle’s licensing policies and negotiate better deals for their customers.
Benefits of Working with Resellers with Deep Oracle Knowledge:
Resellers with deep Oracle knowledge can offer several advantages. They are more likely to understand the intricacies of Oracle’s products and licensing structures, provide accurate advice, and negotiate effectively with Oracle on your behalf.
This expertise can help ensure you receive the most favorable terms and pricing for your Oracle licenses.
Recommendation to Avoid Resellers with Limited Oracle Expertise
It’s advisable to avoid resellers with limited knowledge about Oracle. Large resellers focusing primarily on other vendors, like Microsoft, may not have the specialized knowledge to secure the best deals for Oracle licenses.
Their lack of expertise can lead to suboptimal contracts and higher costs for your business. Instead, look for resellers with a proven track record and in-depth understanding of Oracle’s offerings.
