Interesting article on Oracle Maintenance Fees on ZDNet

[DSauve]

The following 02/24/2010 post on ZDNet tells an interesting story about Oracle's 22% annual maintenance fees.

http://blogs.zdnet.com/Howlett/?p=1805&tag=nl.e539

 

[Eric Lehti]

Customers also get UPGRADES to new releases when paying annual maintenance.
See this response to article:
http://talkback.zdnet.com/5208-12688-0.html?forumID=1&threadID=75707&messageID=1474045&tag=content;col1

Let me clarify the 22% Maintenance:
1- You get both Support & Upgrades for that price. You get ALL Major releases not like SAP where you had to buy a new license for R3.
2- Support is not that bad
3- The 22% maintenance fees are calculated on the NET license price you paid (not the one on the price list). If you were smart enough during the negotiation to get 75% and more price reduction then the 22% are calculated on that discounted price
4- It is true that the margin of the Oracle team that manages the maintenance fees is 92%
5- Over 55% of the overall Oracle turnover is made out of the maintenance fees.
6- You have to manage your maintenance fees in details with the Oracle maintenance team. Oracle has a record of all the sales they made with you, ask them to produce the count of licenses they have for you and re-negotiate with them.

 

[Larry_Jones]

Eric,

responding to your points out of order:

2. Support is not that bad.
Agreed. Support quality does vary depending on the analyst assigned. This is true of all support organizations. On the other hand, support is not great either.

6. Managing maintenance fees and re-negotiating with Oracle.
If you're an older customer (pre-Oracle) that has not yet upgraded to a current release, you're going to be shocked when Oracle tells you that sorry, you now to buy new licenses just to allow users to login (Tech Foundation). You'll be more shocked at the balls they have when they tell you that part of the software you bought years ago and that you have been using for years is now part of a "new" software module that you'll need to license just to continue use of what you purchased long ago. Yes, they'll negotiate - just like the Car Salesman at the Dealership who has to run all numbers back to the mysterious "Sales Manager". You may end up paying only a small % of the application license . . . but wasn't that what your maintenance dollars was funding anyway? The ongoing enhancements to the software?

1. Support & Upgrades for same price - unlike SAP.
The thing is, I think SAP's model is not the norm, rather, if you're paying substantial maintenance dollars the norm is that you DO receive upgrades as part of your maintenance fee. Its not that we object to paying substantial maintenance in return for value received, the objection is that the maintenance fees continue to spiral up while the value received is going the other direction.

There's my 2 cents worth.