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Users cautious about new Oracle pricing

Mike Simons
New Oracle pricing models announced at the January Appsworld conference are causing concern among users.

Oracle chief executive Larry Ellison said pricing for his company's 11i product was complex and announced flat pricing: $4,000 (£2,800) for a "power user" and $400 (£283) for a "casual user".

Ronan Miles, chairman of the UK Oracle User Group, told CW360.com that efforts to get a UK price had so far proved fruitless and said that the new pricing regime raised as many questions as it answered.

It took Oracle almost a week to explain the new classes of user. An Application Power User (APU) was defined by Oracle as "an individual whose primary job function utilises the program to perform their job, regardless of whether the individual is actively using the programs at any given time. Additionally, the individual must be authorised by the customer to use the application programs, which can be installed on a single server or on multiple servers."

An Application Casual User (ACU), said Oracle, is defined as "an individual whose primary job function is not determined by the utilisation of the application. An ACU will typically perform queries or run reports against the application and/or infrequently update data."

Miles said: "Oracle has listened to its users on licensing and I welcome the principle of a flat fee but perhaps this is too simple."

Many key modules of the Oracle's e-business suite are not charged on a per user basis, said Miles, and it would be difficult for IT directors to get a clear view of return on investment until there was more clarity in pricing.

Modules that are not charged per user include human resources, which is priced per employee, procurement, which is priced per order line, iStore, which is priced per processor and advanced supply-chain planning, which is priced per on the basis of goods sold.

He also called for more explanation of the casual and power user definitions. "Would a salesman on the road, for example, qualify as a casual user? We need clarity."

Jeremy Young, president of the US-based Oracle Applications User Group, thought the definitions were workable, but was concerned about migration from the old pricing scheme to the new one.

Bill Clough, research manager at analyst firm IDC said, "Oracle is not doing this [changing the pricing] to get more money out of each installation," but warned that uncertainty around the price of deploying Oracle applications would continue.

"The biggest part of the IT bill is the services cost," said Clough. "The pricing change would make a portion of a customer's software implementation less confusing, but there still is the services side, which is often bigger and very much unknown."

"The overarching message from Oracle is that they want to become the Microsoft of the enterprise-applications area. One of the things they would have to do is have a very basic pricing structure," he said, "but the company is really banking on the suite message."

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