CAPEX & OPEX challenges for Oracle clients

Most clients greatly benefit from Oracle’s premium products. At the same time, the ongoing support costs for Oracle software have profound impact on the operational expenditure (OPEX): Every year, existing agreements are indexed by Oracle – often annually and beyond market indices. This phenomenon eventually leads to financial footprints that no longer correspond with the perceived value, the actual utilization of Oracle Software programs – or both. As a result, companies have difficulties in explaining the OPEX internally. And, they are unable to identify leverage about the Oracle OPEX in their negotiations with Oracle representatives, who will simply defer to the established agreements.

 

Money talks

Expressing the utilization of Oracle software components in CAPEX and OPEX is critical for making informed decisions. For example a client may be using an Oracle software component which a Server administrator finds ‘absolutely necessary’ for the daily work. This component is licensed at $15,000 per 2 Core’s. Assuming this component is used on 100 Core’s, the CAPEX then is $750,000 and the OPEX is increased by 22% (or $165,000) per year.

Only by quantifying the cost of software in monetary value, the client can determine if this specific deployment is ‘absolutely necessary’. And, with a long and often complex historical background of Oracle software (and license) deployment, clients often don’t know

• Which Oracle software components are exactly over/under deployed;
• What the relationship is for each Oracle component with the total OPEX of Oracle software;
• If re-modelling the architecture may have an unexpected (positive or negative) impact on the CAPEX / OPEX cost model.

Opex / Capex models in our services

License Consulting evaluates the historical and projected OPEX costs of the Oracle software spend in reports that are easy to digest for both IT and Finance staff. Ideally, this report is compared with current and future Oracle software deployment footprint of our client organization. By doing so, clients can establish how the OPEX expenditure can be optimized or renegotiated – while ensuring business continuity and license compliance.

Below we explain how we include the ‘money talks’ phenomenon in some of our Service Descriptions:

Oracle Support Savings – 100% OPEX focus

Oracle customers spend significant time to achieve annual savings, only to find out that Oracle describes many limitations in the Technical Support Policies to make it happen.

 

For example: A company has stopped (or significantly reduced) the deployment of a specific Oracle product. Based on the reduced product utilization, the client expects the annual support fee to be reduced from $1,500,000 per year to $1,150,000 per year. Upon discussing the case, Oracle’s support representative explains that this triggers the clause Pricing following Reduction of Licenses or Support Level would be effectuated. And so, remaining licenses would be repriced causing no or only insignificant OPEX reductions.

Specific support agreement clauses referred to by Oracle are:

• Matching Service Levels
• Pricing following Reduction of Licenses or Support Level
• License Set

It is only because of our understanding of Oracle’s internal organization that we can optimize and save on support – even when Oracle already confirmed you cannot reduce your OPEX. How much clients can save depends on many factors, amongst others their unique set of Oracle software agreements, the company structure, the actual software deployment, other license requirements and many other variables.

 

Audit Simulations – CAPEX prevention and OPEX optimization

This scenario would apply to clients utilizing our Internal Audit or Audit Defense Service Description, during which we quantify the utilization of every Oracle product in the way Oracle’s auditors would quantify the license (and support) fee. During our Oracle to VMware Compliance Service similar scenarios are calculated, presented and discussed.

It is only because of our understanding of Oracle’s internal organization that we can optimize and save on support – even if you (and Oracle) think you cannot. How much you can save depends on many factors, amongst others your unique set of Oracle software agreements, company structure, software deployment, other license requirements and many other variables. After going through all of them, our customized recipe is very easy to understand, with a very predictable result.

This service is provided on a no cure no pay basis, and is only available if your expected annual saving exceeded €100.000.-. It is however included for clients who are subscribed to our internal audit service.

Tens of millions are saved by License Consulting every year, by:

100% independent

License Consulting does not sell licenses and does not profit from license sales in any way.

We also have no reporting obligations towards Oracle or it’s partners. Our only business is with you.

• • Helping you prevent incompliance (claims)
  • Reducing incompliance claims
  • Saving you money on annual support