Identify and Deal with Non-Negotiable Clauses in an Oracle ULA
For those Oracle customers that have walked the trodden path will know that certain non-negotiable terms of an Oracle ULA, which are apparently innocuous, could later mean a painful experience for them in regard to future maintenance and support payments. Oracle will apply their standard technical support policies to an unlimited deal (popularly known as Oracle ULA), and while the ULA costs the customer in the range of ££ Millions, the software vendor is usually not keen to allow room for out-of-the-book contractual negotiations.
At the time when the Oracle ULA is being drafted, Oracle will incorporate into the “unlimited agreement” all prior purchased licenses of the same product line into the ULA, the maintenance and support payment – and this can make it very challenging for the customer to ever achieve any reduction in support costs as everything then becomes part of Oracle’s then-current re-pricing policy. All previously applicable technical support policies and license metrics, albeit favourable to the customer, will cease to be in effect.
Past examples of conflicts draw our attention to the fact that the maintenance and support lock-in is a critical consideration towards whether a customer should enter into these unlimited agreements. Oracle has been known to be unyielding to negotiate for any long-term entitlement protections, and also showing resistance towards the customer’s right to drop support for partial licenses within a larger agreement, thereby reducing the support costs payable to Oracle. Any possible effort to protect the profitable maintenance and support payments has always been central to Oracle’s interests.
How You Must Deal with Oracle’s Re-Pricing Policy ?
♣ Do not frustrate yourself into trying to negotiate on Oracle’s technical support policies that are globally uniform, as customers have previously been unsuccessful in doing so. This is especially true if the deal-size is looked upon as “not-large-enough” by Oracle. Therefore, the not-so-favourable terms or policies of your agreement will have to be either accepted as a potential risk or mitigated using clever ways like licence optimization.
♣ Try to negotiate an upfront payment for the expected growth, instead of signing up to an Oracle ULA, because this will help preserve the existing “separate” ordering documents from prior purchases. In doing so, you will have more flexibility towards cancelling support for all products on a separate ordering document, subject to Matching Service Level policy. Oracle has been known to provide comparable discounts as long as the projected growth is in line with the actual installation.
♣ Separate your original ULA deal into 2 parts: An ULA agreement for applications (eg. Oracle E-Business Suite) and another ULA agreement for Oracle technology (database, middleware). For all practical purposes, do not mix application software and technology software on the same ULA agreement. According to Oracle’s policy, if an end-user decides to terminate the application software, the support charges for the technology software will be repriced, so there may be no reduction in the overall support costs even if the application software is fully removed. Avoid any linking language that contractually binds these 2 separate deals.
If Unplanned Now, Can Mean Non-Negotiable Later
IT procurement specialists negotiating the ULA contracts should involve a 2 to 3 months of evaluation and negotiation to ensure that every single term of the ULA agreement will cater for maximum contractual flexibility towards future requirements. While they are responsible towards ensuring that the ULA will present great value, the following potential occurrences may deliver less customer value:
♣ The customer will eventually not install as much Oracle software as they had originally forecasted. Once the Oracle ULA agreement is in place, the operational targets of achieving the projected milestones and timescales can fall apart due to unplanned delays. If future deployment plans are uncertain, you are not yet ready to sign-up to an ULA.
♣ The customer is locked into Oracle’s support stream due to the vendor’s technical support policies which allow increases to the remaining licenses if you cancel support for partial licenses on an ordering document. Oracle will never negotiate the T&C’s that eliminate this risk.
♣ An end-user who expects any form of reorganization must consider how such a change would affect the ULA. If 2 or more entities that are part of the reorganization are all on ULAs but for different Oracle products, there must be a process to define how the larger capacity of the combined organization would be priced. Also, if the purchased organization is higher than the negotiated revenue limit, it must be possible to define how the cost uplifts would be calculated.
♣ Restrictions on the usage rights of an Oracle ULA can prevent its efficient usage for other projects or in other locations. The most commonly observed limitations on usage rights include location, project name, type of license, restricted-use license, application-specific license, and the customer must be able to understand, monitor and mitigate those limitations.