Vendor traps: Oracle automatic renewal and price hike

When working with a big ERP supplier like Oracle or SAP, some element of “foul play” – like the new Oracle automatic renewal – is expected.

After all, they didn’t become market leaders by making it easy for customers to choose to go elsewhere.

But in recent years, Oracle and SAP Support customers have been faced with some seriously outrageous traps. These have been designed to keep customers locked into overpriced service contracts that get more expensive every year, and consistently underdeliver on key SLAs.

Over the next few weeks, we’ll be taking a look at some of the most common traps set by Oracle and SAP, and explaining what (if anything) customers can do about them.

Today, we’re kicking things off with a look at Oracle’s latest plan to extract money from its long-suffering support customers.

The Oracle automatic renewal: avoiding negotiation and trapping customers

In the past, leaving Oracle Support was easy. When your contract came to an end you simply stopped paying, and Oracle stopped supporting you. This approach was problematic for the mega-vendor for two reasons:

  1. A team had to manually chase and negotiate with customers each year.
  2. It was too easy for unhappy customers to leave their support program.

So in 2018, Oracle made some contractual changes to its support agreements. Now, instead of renegotiating their support contract each year, customers are opted into an Oracle automatic renewal clause. Unless a customer opts out at least 30 days before the end of their contract, support is automatically renewed for another year.

While customers were notified of this change, the announcement was minimal at best. It’s a clear case of Oracle using a trap to keep its customers locked into expensive support contracts. As if that wasn’t bad enough, dig a little deeper into Oracle automatic renewal support contracts and this is what you’ll find:

“Then at the end of the Support Period specified […] the technical support services will Auto Renew for an additional Support Period at the fees specified […] which will include Oracle’s then-current percentage increase over the prior year’s fees.”

Source: Auto Renew Terms & Conditions in the Oracle Store

Under the auto-renewal clause, Oracle automatic renewal also means automatic price rises. No negotiation, no clear notifications, just a flat percentage added to your bill.

How bad can 4% annual increases really be?

Customers hit by this auto-renewal clause see their support fees raise by 4% annually. That might not sound like a lot, but it adds up quickly. Imagine your annual support contract costs £100,000. Here’s what happens when you leave an annual 4% price rise unchecked for 10 years:

RENEWAL YEAR ANNUAL SUPPORT COST
1 £104,000
2 £108,160
3 £112,486
4 £116,985
5 £121,665
6 £126,531
7 £131,593
8 £136,856
9 £142,331
10 £148,024

After 10 years of seemingly small increases, your annual support cost has risen by almost 50%.

What can you do about the Oracle automatic renewal?

One of the best things you can do is immediately cancel your auto-renewal and go back to manually negotiating your renewal costs each year. Don’t worry — Oracle won’t let you forget.

Better yet, find out how much you could save by switching to a third-party support provider. Customers switching from Oracle’s official support to a third-party provider routinely see annual cost reductions of 50% or more.

Even if you ultimately decide to stick with Oracle Support, getting a quote from a third-party provider will give you extra leverage when you come to negotiate your renewal costs.

Don’t fall for vendor traps

If you’ve had enough of the traps Oracle and SAP set to keep you paying over the odds for poor quality support, we can help. Recently, we published a report on their most common traps and what customers can do to protect themselves.

In the report, we cover:

  • How Oracle uses “matching service levels” and other confusion tactics to keep customers locked into expensive service contracts year-after-year.
  • The new licensing problem SAP invented and then “solved” at great cost to its customers—even some that thought they were fully-licensed.
  • What customers can do to protect their interests against the barrage of traps employed by Oracle and SAP—including how to save at least 50% on annual support contracts while receiving a higher level of service.

And much more.

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