Software // Enterprise Applications
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4/10/2014
12:15 PM
Doug Henschen
Doug Henschen
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Oracle Support Costs: 2 Savings Strategies

Oracle software maintenance costs have customers turning to growing ranks of licensing consultants and third-party support providers. Here's the skinny.

but Tim Hegedus, senior managing analyst at Miro, warns that "no tool is capable of understanding the rules." Oracle, in particular, is known for negotiating different terms for different customers. "Our value as a company comes from being able to understand the rules of the software publisher," says Hegedus.

Hope of saving money is the big reason firms tap Palisade and Miro, and that hope has also given rise to another cottage industry of independent support providers. Rimini Street is the largest and oldest of these firms, while Spinnaker Support is a fast-growing rival. Both firms support both Oracle and SAP applications, and both made splashy announcements at this week's Collaborate 14 Oracle user group conference in Las Vegas.

[Want more on licensing snafus? Read Software Audits: Are You Ready?]

Rimini Street announced that it has more than doubled its base of Oracle customers to more than 130 companies, and it cited Brandeis University as an Oracle PeopleSoft customer that it's helping to save $8 million on support over 10 years. Spinnaker introduced Oracle Database support at Collaborate, a service that Rimini introduced in 2011. This type of support is harder to offer because databases are compiled with software products, so Rimini and Spinnaker can't touch the code and offer the same sorts of patches and bug fixes they develop for ERP and CRM applications with exposed source code.

"How do they patch Oracle?" asked Oracle president Mark Hurd at last week's InformationWeek Conference in Las Vegas, co-located this year with UBM Tech’s Interop Las Vegas. "If you're just a support provider and you're not building the [intellectual property], you're taking the IP for free and somehow providing patches and support -- that's a good economic model, but it has to be legal."

Hurd was alluding to the ongoing lawsuit Oracle has pending against Rimini Street -- a case that's expected to drag into 2015. In the latest chapter of that legal brawl, a US District Court judge ruled in February that PeopleSoft licenses don't allow third parties the right to obtain a copy of the software. The decision led Rimini Street to suspend hosting of its customers' Oracle software in Rimini Street datacenters. But it continues to offer software support, including patches and bug fixes, at half the cost of Oracle support. In the case of Oracle Database, Rimini offers diagnostics and "super DBA services" including configuration and application integration support. The diagnostics can determine where the problem lies when things go wrong, whether that's in the database, middleware, or applications, according to Rimini.

Buyer beware
Miro and Palisade describe the third-party support providers as a good money-saving option when it's clear you're not going to move forward with a particular piece of software, but Guarente cautions, "You're frozen in time in terms of the software that you're using; if you're using 7.1.1 and you go off of Oracle support, you can't use 7.1.2. As long as you understand what you're getting into, that's fine."

As for ways to save on support from Oracle, Guarente offers a few points of advice:

  • Don't assume that IT-oriented license-management tools and methodologies will keep you in compliance with your contracts and license rights. Oracle LMS relies on scripts, policies, and contracts, not the tools IT uses, to determine software usage and rights.
  • Don't assume an unlimited license agreement (ULA) will cover use of instances on Amazon Web Services or other clouds. Make sure contracts spell out where you can use licenses and that they will count toward what's covered by the ULA.
  • Be prepared to negotiate. Customers too often renew ULAs and face higher costs because they're not armed with certain knowledge of what they are and aren't using and what's covered by the current agreement. "If you keep renewing, your support costs go up and up," says Guarente. "With knowledge you can negotiate something better."

Palisade and Miro declined to detail the cost of their services, saying it varies widely depending on the extent of software deployments and the goals of the engagement. Hegedus said Miro typically works for a fixed fee in a 6- to 12-week engagement, during which time customers can ask all the questions they want. He also said there's a performance guarantee whereby the company's fees will be "matched or exceeded by the cost savings."

Whether you tap an advisor or not, the first step toward taking control of support cost is getting a handle on what software you are using and what's covered in your contract. Without that knowledge you're flying blind and leaving it up to the software vendor to do all the measurement and interpretation.

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Doug Henschen is Executive Editor of InformationWeek, where he covers the intersection of enterprise applications with information management, business intelligence, big data and analytics. He previously served as editor in chief of Intelligent Enterprise, editor in chief of ... View Full Bio

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jagibbons
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jagibbons,
User Rank: Ninja
4/14/2014 | 9:19:33 PM
Re: Seeking Relief? Should you ask Oracle LMS
Support revenue is huge for Oracle. Given my personal past experience, it's extremely high margin as well as shown by the poor quality of support. Full disclosure: I am a Rimini Street customer for supporting our very stable and very customized implementation of PeopleSoft Financials.
RobPreston
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RobPreston,
User Rank: Author
4/14/2014 | 5:04:34 PM
Re: Seeking Relief? Should you ask Oracle LMS
Doug, the "horror stories" you reference, about customers who seek cost reductions from Oracle winding up getting audited, reminds me of a tactic I used as an adjunct college professor: I warned students that if they came to me to complain about a grade I gave them, I'd review my grading of not only the question they single out, but also my grading of the entire test to see if I had been too lenient elsewhere. Very few students came to me complaining about their grades unless they were reasonably certain of their position. Oracle is taking the same tack...and I don't blame it.

 
dabron
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dabron,
User Rank: Apprentice
4/14/2014 | 3:09:15 PM
Just another savings option
Nice article, Doug. I'd like just to mention another option that customers can use to save support costs. Oracle customers can use Oracle Standard Edition which costs much less comparing to Enterprise Edition. Furthermore, they can use some free tools which do not require additional licensing: for example, expensive Oracle Diagnistic Pack can be replaced by free STATSPACK  tool which is delivered with Oracle and does not require licensing. Using such free tools with inexpensive third party software solutions can be very effictive and save a lot of money. For example, there are several companies which offer inexpensive solutions for Oracle Standard Edition based companies like spViewer Software or Dbvisit, etc.
BrettM460
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BrettM460,
User Rank: Apprentice
4/11/2014 | 2:22:48 PM
Re: Oracle licensing and support cost reductions.
I agree completely.  The challenge customers have is to know who to trust, who is independent and are the "things" being suggested or recommended in the best interest of the customer or the seller.  I'm a fan of references.  I call it "Referential Selling".  Let my body of work speak for itself.  Some leave a trail of tears and others happy customers.  If you rely on reviews, blogs or forum comments what you end up with are the proverbial "Chevy" people are offended when the "Ford" crowd calls their truck junk and vice versa.  Name calling ensues, etc.  Becomes difficult for a customer trying to do their homework to know if a slam by a Ford fan is valid or just a shot.  My parting comment on my original post is that with Power servers, customers will probably never need to buy more Oracle licenses.  As the technology improves generation over generation they more more performance per core so each license delivers more results.  It seems that with x86 is where the servers overall core count is getting larger while the overall core performance seems to decrease generation over generation so more Oracle is continually required just to refresh the servers.  Just my observations.
craig guarente
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craig guarente,
User Rank: Apprentice
4/11/2014 | 12:28:37 PM
Oracle licensing and support cost reductions.
@Brett, moving to IBM is a strategy to use, sometimes however the contracts get in the way of executing that strategy.  We have helped customers make that transition when needed.

One other thing to note.  It's really really important to get advice and guidance from someone who doesn't make more money when you buy more Oracle.   Companies that resell Oracle (i.e., Miro) have a vested interest in you buying more Oracle.  Independent firms have no conflict of interest.

Regards,


Craig Guarente
D. Henschen
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D. Henschen,
User Rank: Author
4/11/2014 | 12:20:01 PM
Rimini ruling will set the tone for third party support
Everyone will be watching the outcome of the Rimini ruling because it will set a precident for third-party support. Rimini is the oldest and largest player, and if the model is affirmed, it will clear the way for Spinnaker and others. What's the right comparison? Is software like a car, which you can bring to the dealer or to a third-party mechanic? Or is it something others can't legally touch? This case will drag on. Even if a court decideds next year, as expected, there will surely be an appeal. There's a lot of money at stake.
BrettM460
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BrettM460,
User Rank: Apprentice
4/10/2014 | 10:06:55 PM
2 ways to reduce Oracle Supports costs
There are only two ways to reduce Oracle support costs: 1) Don't use Oracle and instead use another enterprise DB like IBM's DB2 or for the open source crowd EnterpriseDB's PostegresQL.  2) If you must run Oracle then run it on IBM's Power servers. 


IBM's Power servers are the only platform that control Oracle licensing cost. Alternatives like x86 are designed to grow software licensing to overcome their inability to scale and inherent unreliability.  They also require all cores to be licensed regardless if the license factor is .5, a 48 core server is still 24 cores and mix in RAC to cluster and it now becomes 48 cores of Oracle EE + RAC which is $70,500 per core + 22% annual maintenance.  Oracle's SPARC servers are only a little better.  The T5/M5 have improved performance but are RISC versions of x86 servers. In other words they are lacking the traditional RISC availability features.  IBM's Power servers let you allocate only the cores needed for the workload and license just those cores.  Even though the license penalty box factor is 1.0 that may be 8 cores when the 48 core is still 24 licenses.  Because of the efficiency of the Power Hypervisor and the ability to drive the utilization rate it isn't uncommon to see a 4:1, 6:1 or even a 10:1 reduction in cores and thus licenses due to these efficiencies.


Because Power servers have true mainframe heritage RAS features underpinning them all you can often eliminate expensive cluster software like Oracle RAC and additional servers as you consolidate multiple workloads onto fewer servers.

When you reduce Oracle licenses you reduce support costs.  22% times 8 licenses is much less money than 22% times 24 licenses....every year.  That is how you keep Larry from buying the next Hawaiian island so your business can reinvest, maybe maintain benefits or even consider raises.


Go with DB2 on AIX on a Power server and you get built-in compression, clustering, tools, performance pack, BLU acceleration and much more where you would pay for each of these features separately with Oracle.  Choose PostgresQL as the DB with Linux on Power servers and you get the reliability, scalability and virtualization flexibility with the open source benefits. Last results I saw using IBM's Advanced ToolChain compiler it delivered roughly 2X the results for the same workload running on x86.

It may sound like a commercial but it also may be true.  If it is true, is your business identified by what servers and OS it runs or by the results and savings produced by that solution? 
D. Henschen
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D. Henschen,
User Rank: Author
4/10/2014 | 1:08:55 PM
Seeking Relief? Should you ask Oracle LMS
Guarente shared plenty of horror stories about customers seeking cost reductions from Oracle and winding up getting audited. I guess from Oracle's perspective, they have to know what you're using to if they're going to come up with a strategy to save you money, but Guarente says cusotmers tell him they try to drop unused software or lower the number of users but they still end up paying more. Is that a sales pitch for Palisade Compliance services? Share your experiences with Oracle LMS with a comment.
Laurianne
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Laurianne,
User Rank: Author
4/10/2014 | 1:04:19 PM
Spinnaker and Rimini Street
Doug, how does Spinnaker's position compare to Rimini Street? Would it be similar legal ground for Oracle?
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