Oracle’s Unlimited Licensing Agreements (ULAs) have long been a staple for larger enterprises looking to navigate their relationship with the tech giant. The allure of such agreements is undeniable: a seemingly unending use of Oracle’s vast software library. But it comes at a cost—steep annual fees that typically increase over time. Often, these fees have been counterbalanced by a protective umbrella against Oracle’s progressively more frequent software license audits.
However, the landscape is shifting. Recent price increases and licensing changes are causing some enterprise customers to ponder whether leaving the ULA framework might be a more financially sound decision. For some customers, the answer is yes, but departure requires due diligence, strategy, and meticulous preparation. For other enterprise customers, a more pragmatic approach is to optimize their existing ULA. This also takes serious preparation and considerable runway.
NPI recommends customers immediately begin strategizing their next renewal as soon as the last deal is signed. Waiting until the eleventh hour (or even a few months prior to expiration) can be a detrimental oversight, especially for vast IT environments or those with unique challenges. Ideally, a 6 to 12-month preparatory period is what enterprises should aim for at a minimum.
Understanding Your Current Deployment Landscape
The cornerstone of Oracle ULA optimization is having a clear understanding of the customer’s current deployments. This typically reveals two important things. The first is license underutilization, which translates into savings opportunities. The second is noncompliance, which gives customers an opportunity to remediate compliance issues before Oracle gets involved.
It’s worth noting that IT procurement and SAM professionals have become increasingly familiar with these types of self-audit activities. Oracle (as well as other vendors like IBM and SAP) now require more frequently submitted license reports from clients, in some cases now making voluntary tasks now mandatory.
Begin by establishing a robust “Business As Usual” (BAU) perspective of your current environment. Make sure you’re not paying for software you don’t use. If you are, this could be leverage for putting your Oracle ULA renewal into question or for right-sizing your renewal for savings. For more extensive customer deployment scenarios, it’s worthwhile to craft a comprehensive License Position Assessment (LPA) that defines usage at a granular level. NPI regularly performs this service to identify over and under usage across the customer’s entire Oracle estate, define a remediation plan for right-sizing, and establish a true baseline to feed into requirements for their next renewal.
Diversify Your Pricing Strategies
NPI’s extensive deal analysis over the years reveals a consistent pattern: having multiple licensing strategies invariably leads to better final rates. This is particularly evident during Oracle ULA renewals. Even if you’re leaning towards retaining your ULA, the exercise of contemplating an exit can unearth latent compliance challenges or under-utilized products, offering better negotiation leverage.
Beyond the standard BAU approach, we advise enterprises to explore expanded and contracted pricing options. This diversified strategy often requires Oracle to provide increased pricing transparency across the board.
Combat Annual Price Escalations
Oracle’s pricing model has grown more aggressive over the years, with automatic support cost increases moving from an initial 3 to 5% to a current average of 8% YoY increase. Despite this trend, our insights indicate that there’s still room to maneuver, especially when equipped with benchmark-backed targets and vendor-specific negotiation strategies.
In summary, while Oracle ULAs offer enterprises vast software access, the associated costs and complexities require proactive management and strategic foresight. With the right approach, enterprises can optimize their Oracle investments while ensuring compliance and financial prudence.
If you have an Oracle ULA renewal on the horizon, NPI can help. Contact us to learn more.
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