Oracle support - how to save costs?

02 sep '16 - Andra Tarata - share: LinkedIN Mail
oracle-support-how-save-costs

Introduction
In our previous article “ Oracle Technical Support Policy – Understanding the Basics”, we provided an overview of the basic terms and specific clauses you as an end-user should be aware of when obtaining support services from Oracle

In this article we will detail the typical scenarios that you will experience in case you want to terminate the support on (parts) of your licenses or reinstate the support maintenance for licenses that currently do not have an active support maintenance contract. Issues that many organizations are struggling with when they start to explore cost savings opportunities related to their Oracle software portfolio.
 

Support termination

As per Oracle’s so-called “Matching Service Levels” policy, end-users are not allowed to have licenses with an active support maintenance contract and licenses without an active support maintenance contract, if these licenses do belong to one and the same license set. 

Example:

In case the end-user obtained 10 Processor licenses Oracle Database Enterprise Edition through one order and 25 Named User Plus licenses Partitioning through another order, both the Oracle Database Enterprise Edition and Partitioning licenses are required to have an active support maintenance contract or none of these licenses should have an active support maintenance contract, since both programs (Oracle Database Enterprise Edition and Partitioning) are part of the “database” family and as such are part of one and the same “license set”.

In case you would like to terminate the support maintenance for specific licenses that are part of a license set but you do have other licenses in this same license set for which you do want to have an active support maintenance contract, you will be required to terminate the unsupported licenses through a so called ‘Termination Letter’.
 

Example: 

In case the end-user obtained 10 Processor licenses Oracle Database Enterprise Edition through one order and 25 Named User Plus licenses Partitioning through another order, both the Oracle Database Enterprise Edition and Partitioning are part of the same license set. In case you would like to terminate the support maintenance for Partitioning but you would like to keep an active support maintenance contract for the Oracle Database Enterprise Edition, Oracle will require you to terminate the Partitioning licenses.

Although Oracle’s Technical Support policies state that you are required to terminate the unsupported licenses, please note that Oracle will usually not legally enforce signing the termination letter, since you most likely purchased “perpetual” licenses which, as the name indicates, can be used forever.

A lot of end-users don’t realize that they can choose to end the support maintenance for all their licenses. Most end users don’t want to do this since the software is being used for business critical operations within their organization. However, if you decide to end support maintenance, you need to be aware of the fact that you will not be entitled to perform any software updates anymore. Software updates include updated versions of the software, maintenance releases and patches. As such, in case you decide to stop paying support maintenance, you will need to freeze on the latest specific version of the software you have paid for;  you are not allowed to deploy any newer releases, versions or patches.
 

Pricing following reduction of licenses or support level

The pricing that is applied for support maintenance is based upon the level of support (e.g. Premier Support or Extended Support) and the volume of licenses for which support is ordered. In the event that a subset of licenses on a single order is terminated or if the level of support is reduced, support for the remaining licenses on that license order will be priced at Oracle's list price for support in effect at the time of termination or reduction minus the applicable standard discount. 

Such support price will not exceed the previous support fees paid for both the remaining licenses and the licenses being terminated or unsupported, and will not be lower than the previous support fees paid for the licenses continuing to be supported. If the license order from which licenses are being terminated established a price hold for additional licenses, support for all of the licenses ordered pursuant to the price hold will be priced at Oracle's list price for support in effect at the time of reduction minus the applicable standard discount.

As such it is always important to review what specific licenses you would want to take out of support maintenance and to validate if these licenses belong to a specific order which also contains licenses that you would want to continue to have support maintenance for. If that’s the case, the support maintenance for these remaining licenses will be re-priced as per the current pricelist with a maximum discount of 25%. It therefore is possible that the recalculated support maintenance fee for the remaining licenses stays at the same level as for all the licenses that were included in the full order.

Let’s look at an example:

An end-user purchased in 2014 through a single Ordering Document the following programs: 

The fees as paid for these licenses (against a discount of 50%) are reflected in the below table:

The following year the end-user decides to purchase support maintenance for these products. As a result of this, the applicable fees for these licenses (with an indexation of 3%) come down to the following:

Then, in 2016, the end-user decides to terminate the support maintenance  for the Weblogic Suite licenses, since he is no longer using these licenses. According to the “Pricing following reduction of licenses or support level” clause, the recalculation of the support maintenance fees for the remaining licenses, is based on Oracle’s current pricelist, coming down to:

As a result of the above, it is clear that the termination of the support maintenance fee for the Oracle Weblogic Suite licenses, results in an increased support maintenance fee for the Oracle  Database Enterprise Edition and Partitioning licenses. As a result of this, end-users typically continue to pay support maintenance fees for the overall order or obtain special license consultancy from companies like B-lay to reduce the recurring support maintenance fees for their future license needs.

Reinstatement of Oracle technical support

End-users often are discouraged to terminate the support maintenance for certain licenses, due to Oracle’s policies and reinstatement fees. Reinstatement fees apply if technical support lapses or was not originally purchased with a program license. 

The reinstatement fee is calculated as follows: 

a) if technical support lapsed, the reinstatement fee is 150% of the last annual technical support fee the end-user paid for the relevant program. The reinstatement fee is prorated from the date technical support is ordered back to the date technical support lapsed.

b) if an end-user never acquired technical support for the relevant programs, then the reinstatement fee remains 150% of the net technical support fee that would have been charged if support had been ordered originally. The reinstatement fee is prorated back to the original program license order date. 

If the end-user previously acquired technical support from an Oracle authorized distributor and is now acquiring technical support directly from Oracle, an uplift may be added to the reinstatement fee and to the technical support fee. If support is not reinstated for the entire license set or if support for a subset of licenses from an order is reinstated, then the “License Set”, “Matching Service Levels”, and “Pricing following Reduction of Licenses or Support Level” policies will apply.


Conclusion 

Oracle’s Technical Support policies are often misunderstood or not fully understood by end-users entering into a support maintenance agreement. With this article, we aim to provide you with a basic overview of how the different clauses of Oracle’s Technical Support policies work. A proper understanding of these clauses and agreements is the first step to determine cost saving and cost avoidance opportunities that may be applicable for your own Oracle software license portfolio. If you want to know more about how you can save costs do not hesitate to contact B-lay, the license management company through   info@b-lay.com

 

 

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