Lessen Dependence

By Lisa Vaas  |  Posted 2004-12-21 Print this article Print

That belief engenders a tripartite approach for a company such as Oracle, Burris said, wherein you have to get revenues by a) raising prices on your installed base, b) taking steps to make sure it becomes increasingly hard to move off of your technology, and c) buying an installed base. Oracle has a good balance sheet, and it has a good installed base. What it needs to do now is to take steps to make it hard for people to leave its fold. As it is, Oracles often seen as a database of record for PeopleSoft accounts. With the purchase of PeopleSoft, Oracle not only increases the size of its installed base in enterprise applications, but its better able to control the tie-in to PeopleSoft on the database side, Burris said. That will make it easier for Oracle to raise prices. Anthony Bradley, a former META Group analyst whos now a consultant with Booz Allen Hamilton, told me that the situation with PeopleSoft—especially where an enterprise is running PeopleSoft applications on top of Oracle databases—creates a stronger Oracle footprint in the corporation that Oracle will use in negotiations.
"Oracles known to be very hard-line in negotiating," he said in a recent conversation. "Even in situations where customers need for software and licensing has declined, theyll deploy a number of negotiation techniques to maintain revenues."
Bradley has penned a must-read article on the intricacies of Oracles licensing and negotiating tactics: "Oracle is Putting the Support Screws to Customers" (PDF file). After you read that, do your due diligence and check out Oracles response on IT Managers Journal. The more dependent a company is on Oracle, the stronger hardball Oracle can play in contract negotiations. When it comes to getting out from under the 800-pound gorilla, it all comes down to two things: either decreasing dependence on Oracle or decreasing the appearance of dependence on Oracle. Decrease dependence on Oracle technology. As Bradley puts it, Oracle is a big company. It sells databases, application servers and, particularly in the future, applications. If your enterprise can do so, mix it up. Dont run Oracle applications on top of the Oracle applications server on top of the Oracle database. Or, Bradley said, if youre running an OLTP database, choose a different database vendor for data warehousing. Or use smaller application vendor products. "Even if Oracles the primary vendor, maintain the capability to expand deployments on Oracles competition," Bradley said. Have a real option, even if its relatively small in comparison to Oracle. Run SAP somewhere, anywhere—maybe for general ledger, with PeopleSoft running human resources. Make sure, of course, that Oracle knows that competitors are in the shop. Sandwich vendor presentations. This is a little trick Bradley has clients do: Schedule three vendor presentations on the same day. Schedule Oracle to be in the middle. Make sure that, as Oracle reps come in the door, they see Microsoft reps leaving. Have IBM waiting in the lobby as Oracle reps are leaving. Or Lawson, or Salesforce.com, or whatever competitors might be in the race for a given application. Make sure Oracle understands that your enterprise has options. Gather up potential business and hold it over Oracles head. Heres another Bradley trick: Look through your organization and gather up all of the potential business Oracle could get from your organization. Then wave it over their heads. Make it be known that, if mistreated, this is the business Oracle wont get. Dont migrate. If youre running PeopleSoft on a non-Oracle database, consider the negotiating strength this lends you. Dont increase your dependence—stay put, and stay strong come negotiations time. Write to me at lisa_vaas@ziffdavis.com. eWEEK.com Associate Editor Lisa Vaas has written about enterprise applications since 1997. Check out eWEEK.coms for the latest database news, reviews and analysis.

Lisa Vaas is News Editor/Operations for eWEEK.com and also serves as editor of the Database topic center. Since 1995, she has also been a Webcast news show anchorperson and a reporter covering the IT industry. She has focused on customer relationship management technology, IT salaries and careers, effects of the H1-B visa on the technology workforce, wireless technology, security, and, most recently, databases and the technologies that touch upon them. Her articles have appeared in eWEEK's print edition, on eWEEK.com, and in the startup IT magazine PC Connection. Prior to becoming a journalist, Vaas experienced an array of eye-opening careers, including driving a cab in Boston, photographing cranky babies in shopping malls, selling cameras, typography and computer training. She stopped a hair short of finishing an M.A. in English at the University of Massachusetts in Boston. She earned a B.S. in Communications from Emerson College. She runs two open-mic reading series in Boston and currently keeps bees in her home in Mashpee, Mass.

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