Vendor traps: Oracle’s “coercive sales practices”

Cloud ERP platforms are all the rage right now. Or… are they? Is anyone actually upgrading, or would the providers just like us to believe they are? Is this just one of SAP/Oracle’s sales tactics?

It turns out that Oracle’s Cloud platform (and revenues) might not have been quite as robust as we were all led to believe. So much so that Oracle went to extreme lengths in an attempt to achieve its goals.

In this series of blogs, we’re taking a look at some of the most common traps Oracle and SAP use, and explaining what (if anything) customers can do about them.

Today, we’re looking at some of the more extreme tactics Oracle has used to “convince” customers to switch to its Cloud ERP platform. These tactics were so shocking that even its own investors couldn’t stand idly by.

Who sued Oracle?!

Recently, Oracle’s use of contentious sales tactics has become so pronounced, even its own investors have taken action against it.

In a lawsuit filed in February 2019, Oracle’s investors claim the company’s management made “false and misleading statements concerning the business results and prospects of the Company.”

Oracle’s management, the investors claim, knew the company’s Cloud revenues were partly driven by “…improper, coercive sales practices,” which included:

• Threatening existing customers with audits of their use of the company’s non-Cloud software licences and levying expensive penalties against those customers, unless the customers agreed to shift their business to the [Oracle] Cloud programs.
• Decreasing customer support for certain… on-premise or hardware systems, to drive customers away from such systems and into Cloud-based systems.
• Strong-arming customers by threatening to dramatically raise the cost of legacy database licences if the customers chose another Cloud provider.

Source: Rajiv and Sarita Chugh, Derivatively on Behalf of Oracle Corporation v. Jeffrey S. Berg et al. and Oracle Corporation

Oracle has two primary reasons for wanting to drive existing customers to adopt its Cloud solutions:

1. Oracle’s Cloud solutions are subscription-based, which gives them another opportunity to lock customers into expensive contracts.
2. Most of Oracle’s Cloud subscription packages are bundled with support, making it difficult for customers to opt out of the official support program.

This is just one case of Oracle’s sales tactics to extract more money from customers and also keep them locked into expensive contracts.

Anecdotally, many customers claim Oracle has threatened them with audits or other consequences if they tried to leave Oracle’s support program or take other action that could harm Oracle’s profits.

What can you do about it?

If Oracle threatens your organisation with audits (or any other negative action), ask them to put it in writing. Doing so would place Oracle at severe risk of legal action, so it will not be able to do so.

The second thing you can do is approach third-party support providers to ask for quotes. Many of Oracle’s sales tactics are related to price rises or other financial penalties. Having much lower quotes from third parties will also increase your bargaining power.

Don’t stand 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 tricks, and what customers can do to protect themselves.

In the report, we cover:

• How SAP charges a small fortune for its official support programs… but doesn’t even provide guaranteed response or resolution SLAs for most issues.
• Why Oracle suddenly slaps customers with hefty, automatic, annual price rises with no obvious explanation or warning.
• What customers can do to protect their interests against the barrage of tricks employed by Oracle and SAP. This includes how to save at least 50% on annual support contracts while receiving a higher level of service.

And much more.