Oracle Actions

According to Oracle Corp.'s Web site, certain Oracle customers will face support fee increases soon. In other Oracle-related news, per conversations with Oracle Exadata partners, sales of the database appliances are increasing at a phenomenal rate.

Focal Points:

• Customers of several Oracle applications will have to decide this year whether to upgrade or potentially pay more for support. Oracle provides five years of Premier Support after a product's general availability. However, after that period ends, customers of that product must purchase Extended and then Sustaining Support, which costs more and sometimes provides fewer benefits. Extended Support lasts for three years, and with it, customers get the benefits of Premier Support. Under this service though, certifications may not be available for new versions of third-party applications. Following Extended Support, customers must purchase Sustaining Support, which is available indefinitely from Oracle. However, this support omits key services, such as new certifications with Oracle and third-party products, new critical patches, and new tax and regulatory updates.
• According to Oracle, next month, JD Edwards EnterpriseOne 8.12 and JD Edwards CRM Mobile Sales 8.12 will go into Extended Support. Oracle E-Business Suite 12 and Siebel CRM 8.0.x will also enter Extended Support, but in January 2012, Oracle added. Later this year, Extended Support will end for PeopleSoft FMS/ESA 8.8, as well as for PeopleSoft ELS 8.81 and PeopleSoft HRMS 8.8, said Oracle. Previously, Oracle also announced a number of platform-specific Extended Support fee waivers for Database 10gR2 customers. It also granted a first-year waiver of Extended Support fees for customers of PeopleSoft Enterprise 9. A number of PeopleSoft Enterprise 9 modules are set to enter Extended Support this year, pursuant to Oracle's Web site.
• Piper Jaffray reported that conversations with 32 Oracle distribution and reseller partners show that the Exadata line of database appliances is growing significantly. The investment bank and institutional securities firm said that Exadata could account for five percent of Oracle's revenue in the next one to two years. This amounts to $1.7 billion in business. Additionally, Piper Jaffray said that distributors and resellers "finished three percent above plan for the third quarter." In other words, 66 percent of respondents noted that the pace of business in the fiscal third quarter, which ended in February, was better than previous quarters. Piper Jaffray added that it believes Oracle has sold Exadata to less than 1,000 customers, although the pipeline has ballooned from $500 million to $2 billion in a year. The initial transactions involved a quarter-rack purchase, but Piper Jaffray expects the second-round activity may involve five or 10 full racks at a time.

Experton Group believes Oracle customers facing support fee increases have little more than two months to negotiate and close support deals. This is the most favorable time (prior to Oracle's fiscal year end) to get the vendor to yield on pricing and other terms and conditions. Customers can expect heavy Exadata competition from all of Oracle's major storage competitors. Both price and performance will be attacked and challenged. IT executives using or intending to use Oracle hardware and software should take advantage of the current negotiating window and obtain terms that are as favorable as possible for current and future needs.