User groups defend licensing, but should Oracle rethink remuneration?

Two Oracle user groups have defended Oracle's licensing policy following open letter by Campaign for Clear Licensing

Two Oracle user groups have defended the company’s licensing policy following publication of an open letter by the Campaign for Clear Licensing (CCL).

Earlier this week CCL called for the supplier to make its software licensing more cloud friendly. The letter attacked Oracle’s approach to measuring successful software licence sales.

But John Matelski, CIO and director of information technology for DeKalb County Government and president of the Independent Oracle Users Group, noted in a blog: "I was extremely surprised and dismayed to learn that there are still those in the customer community that would suggest their relationship with Oracle is predominantly hostile and filled with deep-rooted mistrust – particularly when it comes to licensing and audits.

"Oracle is not just a solutions provider, but rather they are a partner in helping promote the success (or failure) of every organisation they do business with - for me, failure is not an option!"

Commenting on CCL’s call for Oracle to improve customer satisfaction, strengthen relationships and avoid using audits to generate revenue, Debra Lilley, a member advocate and board member of the UKOUG, wrote in a blog post:  "Users are very passionate when they feel wronged and immediately after an audit there can be a lot of shouting, and we hear of audits that happen in the last quarter and are then seen as revenue generating. 

"The discussions need to be outside actual audits, with less emotion. Oracle License Management Services (LMS) are trying to engage more with customers. Mark Hurd recently talked about employing 10x more staff whose only role is to improve relationships with customers. This is something user groups have asked for repeatedly, so let's give them the chance to demonstrate the payback to customers."

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Martin Thompson, founder of the Campaign for Clear Licensing, said: "The user group has referred to Mark Hurd's investment plans. But what steps will Oracle take to ensure its sales reps understand licensing issues?"

Oracle's challenges

One of the challenges Oracle may face in coming years is that customers often get discounts for buying multi-year contracts, such as an enterprise-wide agreement where Oracle offers a big discount on the third year of a three-year deal.

While the Oracle sales team is able to book the multi-year contract and gain a commission on the deal, Forrester principal analyst Duncan Jones believes customers who have entered such long-term agreements may not renew for four or five years. 

But sales still needs to show revenue growth every year, leading to Oracle milking its installed base, Jones added. Moreover, after four or five years, some Oracle users may even look at alternative technologies, which means Oracle could actually lose business.

Jones said: "I don’t believe Oracle can change its culture in the way that it needs to. I do not think it really believes it has to change and I don’t think its salesforce can possibly change."

Jones believes while the senior people at Oracle may want the company to be more customer-friendly he said this does not necessarily trickle down through the organisation.  As an example he said he recently spoke to a company that had previously bought Micros to deploy on Rackspace’s hosted service. But when Oracle acquired Micros in June 2014, Jones said Oracle salespeople told one customer that it was only possible to deploy Micros on the Oracle cloud.

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