IT departments could cushion the impact of
Oracle's recent price hike by taking advantage of the weak US
dollar to negotiate software licences in dollars and then pay in
sterling or euros.
Afer Oracle updated its product prices last month, some
businesses face a rise in licence fees of as much as 20%. For
example, the per processor licence fee for Oracle Standard One
Edition has risen by $800, from $4,995 to $5,800. And the cost of
application adapters for Oracle's Fusion middleware has gone from
$15,000 to $17,500.
"Much of the increase is due to the devaluation of the US
dollar," said Gartner research vice-president Jane Disbrow.
Oracle is one of the few major software companies that prices
its products only in US dollars, so users can benefit by taking
advantage of the weak US dollar.
Forrester principal analyst Ray Wang advised CIOs to negotiate
the best deal they could with Oracle and then buy the product in
euros.
"The price in euros is equivalent to 2006 levels, but the dollar
price has been increased," he said.
Forrester said one Oracle user had made major savings this way
on a global deal. "The company began its Oracle deal on two
continents. It then secured approval to buy globally. From there,
its EMEA subsidiary negotiated a $1m deal. In the course of four
weeks during contracts, the dollar fell by 10% and the company
saved $100,000 by paying in euros."
Wang urged users to focus on the final cost of a software
licence, rather than the percentage discount typically offered by
Oracle.
Removing unused products and services from an Oracle contract is
another relatively easy way to lower costs.
IT directors can improvee their software licence management with
remote licence monitoring tools such as AppVelocity.
David Mitchell, senior vice-president of IT research at Ovum,
said businesses often licensed too much software or paid for
products and services they would never use.
Firms weary of software licensing models >>
A necessary price rise?
Any price hike is unwelcome to Oracle users, but the increase
may be essential to support Oracle's
Fusion middleware strategy of building compatibility between
Oracle's Siebel, Peoplesoft, JD Edwards and eBusiness Suite
applications.
Ronan Miles, chairman of the UK
Oracle User Group, said, "Oracle has never paid a dividend, so
the profit has been reinvested into the company's growth."
Miles hoped the extra revenue Oracle would generate from the
licence increase would be reinvested to accelerate the work on
Fusion middleware.
"We should be looking at these price rises not as a cost to the
customer base but an added investment by the customer base in the
value future Oracle products will bring."
Never pay list price
Ray Wang's
advice is
to:
Consider using a European subsidiary to negotiate a global
deal
Negotiate in dollars, pay in euros