Ever get frustrated talking to Oracle? Do you find yourself wondering who’s in charge? Ever wanted to ask if you can speak to a manager, someone with actual authority to approve pricing and commercial terms across all Oracle products and services?
Don’t hold your breath. Unless you have a personal relationship with Mark Hurd or Larry Ellison, you will not find another person at Oracle with such authority. The fact is Oracle has structured its organization with many business unit silos. So if you are negotiating a deal that includes Oracle applications, technology products, consulting services and training, you will have to negotiate with four different business units.
This is different than Oracle acquisitions, where it is only natural that they will be operated as independent autonomous entities for a period of time until they can be fully integrated. But Oracle has deliberately chosen an organizational structure that maintains business unit silos in order to maximize revenue.
Oracle works as one company when it comes to tracking information about clients, identifying sales opportunities, and sharing leads. But when it comes to negotiating terms and conditions, each Oracle business unit must approve the specific terms and conditions that apply to their scope of products or services. Additionally, business units will try to close their deal themselves, then after contract execution pass you off to the next Oracle business unit to negotiate that deal, and then the next one. And each time you execute a deal you lose more and more leverage for negotiating the next one. Not to mention how time consuming and frustrating all the negotiations can be. It is no wonder so many of our clients come to us after years of sheer frustration in dealing with Oracle.
So what can you do about it?
1. First, Identify ALL Needs – Identify the products and services you think you may need over the next 3-5 years. Do not forget about the possibility of consulting and training even if you are only adding quantities for products previously licensed and if you regularly use a third party services firm. Sometimes these needs arise downstream, so you want to be prepared.
2. Second, Keep Oracle on a Need-to-Know Basis – Do NOT tell Oracle everything that you need. Keep Oracle on a need to know basis. The more information they have about you, the more they will leverage it to maximize their revenue today and downstream, despite their claims of only using this information to better service you. Only communicate to Oracle your most immediate requirements that you are highly confident in utilizing.
3. Third, Request a Single Point of Contact – Ask for Oracle to provide a single point of contact with authority to negotiate and approve across all Oracle business units. Oracle will almost always not be able to provide such a person. If not, then require Oracle to identify an executive sponsor from each business unit who has full approval authority for that business unit. Additionally, request a customer lead that you can coordinate all information and requests through. This will allow you a single point of contact for convenience, plus the opportunity to request direct meetings with the executive sponsors of each business unit as necessary.
4. Finally, Communicate Clearly About all Terms of the Deal – Be sure to communicate early, often, and continually that you will not execute any part of the deal until ALL components of the deal from all business units are fully agreed upon and contractually documented. You will need to keep the terms for some of the business units in separate contracts – since tying services to applications does create revenue recognition issues for Oracle which they will never allow. But you can execute all agreements simultaneously.
Remember, Oracle is highly incentivized to capture market share, recognize revenue, and close as many deals as possible. They have established a complex process designed to maximize their revenue capabilities under the guise of providing better service to customers. But customers do have opportunities to obtain highly competitive deals and there are negotiation strategies and communication approaches that we have helped our clients utilize very successfully.
With Oracle’s May 31 fiscal year end approaching, now is the time to formulate your strategy and approach to get the best deal possible.