5 Tips for Negotiating with Oracle

Oracle is notorious for its complex licensing policies, aggressive sales tactics, and frustrating negotiation style.  Once you become a customer, it is extremely difficult to walk away or manufacture leverage to negotiate better pricing and terms.  But when armed with relevant market intelligence and the right tailored approach, it is possible to negotiate highly competitive pricing while improving your overall relationship.

Follow these tips for negotiating with Oracle for a less stressful experience and more beneficial outcome.

How to Negotiate With Oracle

1. Map out your short-term and long-term needs

Customers with disaggregated demand who have a lack of visibility into their overall long-term roadmap can be too short-sighted in their negotiations which sets them up for higher costs down the road. Take the time to fully assess and define your project goals and business requirements before engaging with Oracle.  When you have your goals and requirements listed in detail, you can share it with Oracle and request that they identify their SaaS products that are needed to address your business requirements.

This exercise is purely to help you evaluate all of your product options so be sure to make it clear to Oracle that all of those products may not be in scope.  You just want to make sure that your evaluation is comprehensive enough to include potential longer-term business scenarios.

Once you’ve completed the product mapping process, you can determine whether you need to make changes to your roadmap and establish the timing of your requirements.

2. Develop a comprehensive Bill of Materials (BOM)

Preparation is critical in any negotiation, but many companies often overlook the importance of developing a comprehensive BOM prior to requesting a proposal and engaging in negotiations with Oracle.  When and how you develop your BOM can impact your negotiation leverage.

Be sure to only communicate your BOM and request pricing after you have completed your product mapping exercises, determined your product deployment sequencing, and have a clear understanding of your immediate and longer-term requirements.  This way, you can ensure that your BOM includes only products you are 100% confident in deploying.  Keep in mind that it is always easier to negotiate better pricing and terms if you are adding solutions to your BOM during negotiations rather than reducing them.

3. Obtain complete pricing transparency and protections

Request that Oracle provides pricing transparency and discounting for each of the products you have an immediate need for that you included in your BOM as well as the products you may potentially consider adopting in the future.

Emphasize that you want to establish a long-term relationship with Oracle and that obtaining this level of pricing and discounting transparency and future price protection for the duration of the cloud subscription term will help you budget and plan for future purchases.  This way, when you are ready to make those future purchases, you will now have the contractual right to do so at these negotiated prices.

Additionally, Oracle’s cloud pillars can make negotiating difficult since the pricing is different for each pillar and Oracle will drive customers to negotiate with representatives from each pillar separately.  Be sure to negotiate your entire BOM and potential future solutions that you want price protected comprehensively.  You want Oracle to provide pricing transparency on a line item and pillar basis, but you want to be sure that you are negotiating everything as part of one holistic package.

4. Negotiate renewal term price protections

While Oracle may offer attractive pricing for your initial term, they will aim to make up for that loss (and more) come renewal time when it isn’t practical to switch to a different solution.  Cloud subscription fees typically only go in one direction – up.

Negotiating price protections for subsequent renewal terms can eliminate the potential of being faced with substantial renewal fee increases.  Though Oracle has provided some renewal term price protections, it’s critical to review and understand the fine print.

This means you will need to review the percentage increase, how often the increase will be calculated, and any conditional terms.  It is standard practice for Oracle to include language stating that any renewal term price protections are conditioned on the customer renewing for at least the same modules and quantities, otherwise the protections do not apply and are subject to standard increases or re-negotiation.

5. Obtain pricing and commercial term benchmarks

You should also consider obtaining recent Oracle pricing benchmarks that are relevant to your industry, company size, and the size of your Oracle deal.  Having reliable benchmarks on hand can help you better understand whether the discounting and related commercial terms Oracle provided is in fact competitive and how much of a negotiation opportunity exists for further improvement.

Keeping these tips in mind when developing your Oracle contract negotiation strategy can help you save money on Oracle and improve your overall relationship with more favorable commercial terms.

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