Dave Welch (@OraVBCA), Chief Evangelist
We were informed by an Oracle partner that Oracle sent out an announcement September 1, 2020 deprecating the option to purchase licenses with two, three, four, and five year terms. Furthermore, the one-year term option has now been reduced to a short list of products. One of Oracle’s announced motives is that both Oracle and its partners are focusing on Oracle Cloud. We find the part about Oracle’s cloud focus credible.
In this regard, be aware that the five term license pricing tiers, as described below, were dropped from the September 8, 2020 Technology Global Price List:
“Term licensing available for all Oracle Products. The list price for a term license is based on a specific percentage of the perpetual license price. Annual terms licenses are available from 1 to 5 years: 1 year – 20% of list; 2 year – 35% of list, 3 year – 50% of list, 4 year 60% of list and 5 year 70% of list. Support for all term licenses is 22% of net perpetual fee.” (March 1 2020 Oracle Technology Global Price List)
Deprecation of term licensing options removes a less expensive alternative for audit clients to make Oracle whole in cases where the clients have used Oracle software for more than a year but less than two. Oracle just shifted the perpetual purchase breakeven point massively in its favor.
Deprecation of term licensing options is of course contrary to the direction most of the industry is headed. Take AWS for example, many of their offerings are like a water meter. So, you pay only for what you use month in and month out. Stop using it and stop paying. AWS leaders, including Andy Jassy, have called out Oracle in recent years for doing just the opposite – pushing toward vendor lock. Oracle is affirming the criticism by substantially reducing short-term licensing options.
Oracle published the Oracle Software Investment Guide until about three years ago. The document contains this juicy tidbit:
“License migrations enable customers to modify their existing software licenses to benefit from Oracle’s current licensing metrics, which best reflect the current state of technology, software use, and hardware configurations. Over time, Oracle’s licensing models have become less restrictive.”
Rather, nothing about the newly announced term licensing restrictions is less restrictive.
Given the one year 20% term license percentage has been dropped from the price list, Oracle clients should be on the lookout for the very real possibility that Oracle will attempt raise the price on one-year term licenses. Keep the Software Investment Guide quote in mind as you negotiate your purchase with Oracle Sales, and of course House of Brick is always happy to assist.