Oracle revamps 11i suite pricing

Oracle has used AppsWorld in Amsterdam to announce a simplified pricing structure for its 11i applications suite.

Oracle has used AppsWorld in Amsterdam to announce a simplified pricing structure for its 11i applications suite.

Chairman and chief executive officer, Larry Ellison said customers would pay $4,000 (£2,786) per power user, and $400 per casual user for use of the software.

"Our price list was very complicated. We had all these complex matrixes. I couldn't keep it in my head," Ellison said. "This is the complete price list, for everything you want."

Ellison also expanded on the company's new outsourcing plan, promising to slash IT budgets by 5% year on year. The strategy involves Oracle taking over a client's complete IT operation in exchange for a five-year contract and that company's entire IT budget for a fiscal year to be paid each year. Companies wishing to take part will become ASP customers, a service called Oracle.com.

"We will take your applications and migrate that to full Oracle. We won't charge you for the migration, but will just tell you that you'll pay us what you pay now, sign a five-year contract, and each year we will charge you 5% less," Ellison said.

The migration includes upgrades of a client's existing IT infrastructure, if needed, Ellison said.

"There will be no requirement to invest to get savings a few years out. You can pencil in your IT budget a few years out. We guarantee you spend less. We think we can move you to a unified environment, charge you less money and still make a lot of money."

The outsourcing offer will undoubtedly attract attention, but many may just be interested in getting information and not necessarily in buying the product, said Jeremy Young, president of the Oracle Applications Users Group (OAUG) and business process manager at Oracle customer DHL Worldwide Network NV in Belgium.

"It is a great headline solution. Everybody wants to save money, so most would be interested in seeing how this will work for them. In general, people aren't comfortable yet going the ASP route and I guess that is why Oracle is making this offer. It is clear that some need an incentive," Young said.

Beth Barling, a senior analyst with AMR Research said: "This is an amazing deal, not only will they [Oracle] replace everything you have, but they will also give you 5% of your budget. The caveat is if they will be able to meet demand."

On the new pricing for 11i, Barling said questions remain, as Oracle has not defined its power and casual user scheme: "What happens if you only want part of the applications suite?"

Young said the new 11i pricing model is something that many present Oracle customers will obviously investigate.

"It sounds very interesting and I think a lot of people will look at it and compare with how their applications are priced now," he said.

Observers see the single pricing on the full 11i suite as an attempt by Oracle to push its customers to use more of the applications. Now, instead of selling the suite piecemeal, Oracle will provide all of its components.

Looking into the future of the applications suite, Ellison said he does not expect a version 12i anytime soon.

Oracle has more than 12,000 customers worldwide on different versions of its applications software. Of those, about 1,150 are now live on version 11i, which was introduced 18 months ago, Oracle said. The company expects half of its applications customers to move to its ASP offering within five years, it said this week.

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