How to steer your budget through inflation uncertainty

A woman driving a car, but the view is inside the window

Inflation is the silent, faceless destroyer of progress. 

It lurks in the background eroding budgets, curbing planning, and discouraging investment. It poses difficult questions to business leaders at both ends of the sales funnel: do you take a hit to appease customers, or raise prices to cover increased costs? 

At no time has this been more prevalent in recent years than it is right now. 

Worldwide inflation more than doubled between March 2021 and March 2022 from 3.7% to 9.2%. 

Organisations are still feeling the effects of Covid-19, as well as energy & oil price rises, rising labour costs & shortages, and increased material & transport costs.

“At the start of 2021, inflation barely registered on CEOs’ radars. But as [of] 2022, inflation has soared to the top tier of concerns. Last year inflation ranked 22nd on CEOs’ worry list; it’s now risen to 2nd.”

– The Conference Board Survey 2022 

Of the ~1,600 C-level executives surveyed, 55% expect inflation to continue to be a considerable concern well into 2023. 

Now more than ever it’s imperative that CIOs and IT leaders are looking at their support contracts and renewal quotes in a bid to cut costs wherever they can. 

And with public sector IT spending expected to rise by 5% this year (Gartner) – and by even more in the private sector – organisations can put vital funds back into other areas of the business. 

However, this is made even more difficult when both Oracle & SAP are still locking customers in to complex & expensive support contracts.

Oracle’s fee inflation game 

Oracle are no strangers to a price rise. 

Their support and maintenance pricing structure fixes customers into an automatic price increase of 4% every time they renew; this is regardless of whether customers are utilising support from the vendor heavily or not. 

This is especially noticeable during a period of inflation where every penny is being scrutinised and customers need to squeeze every ounce of value from the products they’re purchasing. 

Of course, there’s always an assumption that costs will increase over time; this is only natural. But customers need to feel like they’re receiving something in return for their loyalty and business. 

While inflation is the silent killer of personal wealth and business stability, Oracle has its own hidden inflation trap lurking in the backwaters of its online portal: 

Automatic renewal. 

Deliberately assigned to each contract, this ‘feature’ is turned on for every customer unless they have specified otherwise. Customers must manually turn this off themselves more than 31 days prior to the renewal date, otherwise they’re stuck paying for yet another year of Oracle support, removing choice from the equation. 

That’s why this ‘feature’ of Oracle’s support pricing is akin to the corrosive nature of inflation. It doesn’t discriminate between large enterprises or small business. If they’re paying for an Oracle support product, they’re exposed to the renewal trap. 

This is even more important while IT leaders are looking to reduce financial risk and avoid becoming bogged down in sticky and restrictive long-term contracts – an Oracle specialty. 

Afterall, this is Oracle’s cash cow. They’re going to try and get customers to pay these fees come hell or high water; they didn’t become one of the largest vendors in the ERP market for no reason. 

Additionally, as the customer’s software gets older – and their support moves from Premier, to Extended, to Sustaining Support – they’re having to pay additional fees on top of the original 22% of the product purchase price, PLUS the standard 4% annual renewal increase. 

Talk about compound fees!

Can you use inflation to your advantage? 

Times of increased inflation can be a difficult time for businesses. 

IT leaders will be looking to establish greater stability and retain some flexibility in their budget to ride the waves of inflation uncertainty. 

This isn’t helped by Oracle’s convoluted fee structure making it difficult to negotiate a better deal.  

Without the power of negotiation, organisations are at the bidding of whatever new pricing implementation it chooses to kindly pass onto its customers. 

Oracle spend a lot of time and effort on complicating their support and maintenance fee contracts to make negotiating with their sales teams appear like an almost impossible task (causing many customers to give in and renew their support and maintenance contracts for another X years at greater cost for few improvements). 

But the current economic outlook gives you as good an excuse as any to do something about this right now and save on unnecessary expenditure. 

Rising inflation doesn’t have to be all bad news. It can be an opportunity for your organisation to review your restrictive and costly IT support contracts and start making changes immediately to save on support costs that you could easily get out of (not that Oracle want you thinking it’s easier than it makes it out to be). 

This was even suggested in Gartner’s recent report, How to Handle Cost Increases Due to Inflation in Your IT Contracts. Point 3 suggesting looking at ‘a list of priority contracts to address immediately’ and negotiating with the vendor to ensure cost protection. 

But we know this is easier said than done with Oracle who build fixed and inflexible pricing into their renewal model. 

An organisation that genuinely believes in what they offer do not have to remain this inflexible. If the customer’s best interest was truly at the forefront of what they do, negotiating terms for the best interest of both parties would – at the very least – be a possibility. 

So, getting your support contracts in order should be a top priority for any organisation that finds themselves down the Oracle rabbit hole during this period of rising inflation. 

It might take a bit of time, but the cost savings will make you wonder why you left it this long.

Breaking up with Oracle – the traps 

During the process of reviewing your Oracle support contracts, you may come across several that you’re paying over the odds for. 

This will mean you’ll be looking to part ways with them and save a tidy sum in the process. 

We’ve already referred to one earlier on in this piece: automatic renewal, conveniently buried within its online portal. 

Let’s quickly summarise the three main areas you could trip up on when trying to move away… 

1. Automatic renewal 

In June 2018, Oracle changed its renewal policy from simply ending once the contract finishes, to automatically renewing unless the customer makes the change themselves within a 31-day window prior to the renewal date. 

Again, if an organisation truly believed in the value their service offered, the customer would want to renew it themselves anyway without the need to do it behind their back, on their behalf. 

2. The dreaded upgrade cycle 

To qualify for continued Premier Support, customers are required to regularly upgrade their Oracle products to the latest version or face the prospect of those products falling into Extended/Sustaining Support. 

But these customers may not want or need to upgrade to the latest shiny Oracle ‘toy’; the system they currently use may be perfectly suited to their requirements, both right now and for the foreseeable future. 

Furthermore, having to continually upgrade these systems just to retain the same level of support can come at a great cost with little to no ROI at the end of it. 

Support Revolution can help avoid the costly and unnecessary upgrades, retaining the system versions you want to use, AND receive continued support on ANY Oracle version. 

3. File download restrictions 

In February 2018, Oracle altered their terms to limit files downloads from their Support Portal to 500 items per day. These materials also must be used within 90 days for support of the authorised use of an Oracle product, for which you have a support contract with. 

This could put a strict timeline on your ability to download relevant patches and software updates before you leave that contract. So, make this one of your priorities!

Beating inflation with third-party support 

You shouldn’t have to rely on experts to help you through the minefield of Oracle support pricing, but it’s made it so you do. 

That’s why Support Revolution is here! 

You don’t have to be an economics whizz to mitigate rising inflation costs. Saving at least 50% on your support costs doesn’t mean reducing your support by 50%. In fact, you’ll receive even greater support with our 24/7 global support for all customers (no sustaining support here, no matter the version!), alongside our guaranteed response and resolution SLA times for all priority levels (you won’t get this with Oracle!). 

So, join the Support Revolution today, and receive at least 50% off your support costs that you can put back into your budget to fight against the cost of inflation. 

Sound too good to be true? We have extensive experience saving our customers money on Oracle support fees. Take a look at how we helped Tifco avoid an unnecessary upgrade and save at least 50% by moving to third-party support.

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