Oracle Clarifies Price Cuts

Oracle is trying to lure enterprises to license its entire Oracle 11i E-Business Suite of applications with a new flat-fee pricing structure that re-enforces its message that it is cheaper to buy the whole enchilada.

Amidst some initial confusion and two weeks after its proclamation that it would reduce the price of its Oracle 11i E-Business Suite, Oracle Corp. cleared the air yesterday.

Sort of.

Jacqueline Woods, vice president of Global Practices Pricing, said in a press conference that beginning March 31 Oracle would in fact charge a flat $4,000 license fee per application module for Professional users of the suite and $400 per application for Self-Service users.

A professional user is defined as anyone who uses an application or module to do his or her daily job and make decisions. A self service user is defined as any user that is able to perform a task – say changing the number of dependents in a human resources application – by logging on to the Internet and interfacing with that application.

The new pricing scheme encompasses the 15 modules in the companys E-Business Suite. It does not apply to applications for specific verticals – Communications, Utilities, Public Sector, University and Financial Services. The new fee structure is, in large part, a way for Oracle to back up its message that a homogenous software environment saves money on integrating disparate applications. Officials there are hoping that the new pricing structure will entice users to purchase the entire E-Business Suite.

According to Woods, the new pricing could represent between 25 and 75 percent savings for companies licensing Oracles E-Business Suite.

The caveat is a there are minimum number of licenses that must be obtained under the new pricing structure – 10 percent of a companys employee base for either the Professional user or Self-Service user fee to apply.

"For you to realize that type of discount, you would need to standardize on the entire suite," said Woods, in Redwood Shores, Calif. "If youre not going to be using more than one application and you have a big company, you should probably license [the software] on a component basis."

An example of the E-Business Suites pricing can be found online at the Oracle Store. The Oracle 11i Manufacturing module, which includes six separate applications, is listed at $15,970.00 per user, while the Human Resources module includes seven applications priced at $275 users. The entire E-Business Suite has 15 modules.

Oracle will take into account those users that have already purchased software and want to migrate to the E-Business Suite. As part of the new pricing structure Oracle will credit customer for what they originally paid for the software, minus any discounts. However, customers still must meet the licensing minimums.

Another change is that Oracle will charge extra for machine-to-machine orders that come in through its Order Management module. Oracle will charge $2 per order sent through the system with a minimum 12,500 orders