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Foiled! How to beat software vendors' sneaky price increases

Robert L. Scheier | Jan. 14, 2014
Between complex licenses and the cloud, Microsoft, Oracle, and SAP have lots of ways to hike up prices. Here's how to fight back

Oracle: Some users delay negotiating with Oracle hoping for end-of-the-quarter deals. But in his September 2013 Wikibon post, Vellante advised against it, at least for customers negotiating deals under $2 million. It instead says such customers should "negotiate hard early in the quarter" when sales reps are less busy chasing larger deals and are trying to build their sales pipeline.

The post also said Oracle was offering "extremely competitive" deals for its Exadata storage hardware, especially for customers buying large bundles of Oracle products and services. But it warned Exadata's appeal will fade "as competitive offerings enter the market and Oracle's terms become more onerous" once users are locked in to it.

SAP: In a blog post, Upper Edge predicts that SAP will begin annual support fee increases after Dec. 21, 2016, the date on which many current "locks" on maintenance fees expires. At that point, Blake predicts, SAP will try to make up for its lower-than-usual maintenance increases during the recent recession. It may do this, he says, by raising maintenance fees based on cumulative increases in the Consumer Price Index (CPI) since the last renewal, not just since the CPI increase in the previous year. This means, he says, that if SAP did not raise its support fees for five years, and assuming the CPI increases 3 percent each year, SAP could argue for a nearly 16 percent increase in year six.

Both Oracle and SAP are also "making it very attractive" for customers to move to their cloud HR platforms (SAP SuccessFactors and Oracle in the Cloud, respectively) due to competition from Workday, says ISG's Feuless.

 

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