Everyone is talking about Cloud at the moment, especially major ERP providers Oracle and SAP. They are doing everything they can to win the Cloud war.
This is important because both Oracle and SAP are putting their customers on a deadline to upgrade to their Cloud products. They are repeating the same mantra to their customers of ‘move now or lose your competitive edge,’ citing their increasing Cloud sales figures across many industries.
But are their claims of Cloud market domination just hot air?
Oracle is being sued by its own investors over its Cloud claims
Oracle is in an ongoing lawsuit with its own investors (a major pension fund) over claims that Oracle artificially inflates its Cloud revenues through a combination of aggressive sales practices and artificial Cloud deals. The investors believe that Oracle inflates its Cloud revenues and growth rate, hoping to demonstrate customer demand and its place in the Cloud race.
Oracle quickly hit back that there was nothing wrong with its sales practices. The vendor said that its practices do not mislead its investors. This is something that is still being argued in the courts.
Reviewing the legal case so far confirms some of the sales tactics we’ve seen ourselves. The plaintiffs have gathered accounts from nine former Oracle executives. They have outlined some of the main tactics Oracle uses to force its customers into Cloud contracts:
Tactic 1: The ABC strategy
ABC stands for audit, bargain, and close – and should sound familiar to any Oracle customer!
The plaintiffs claim that Oracle has set up many of its on-premises software packages to automatically install products in a way that is likely to lead to customers violating their agreements, as well as making licensing as confusing as possible for many of its customers.
Oracle then triggers a licence audit of these customers and threatens large penalties for any violations that it finds. Unless of course, customers purchase a short-term Cloud subscription…
This is how the plaintiffs described the ABC strategy in their legal response:
“Oracle coerced its customers into bogus ‘purchases’ of short-term Cloud subscriptions… In truth, these were not Cloud sales. These customers were purchasing relief from draconian audit penalties related to Oracle’s on-premises software, or discounts on the on-premises software itself.”Source: Court drama: Did Oracle bully its customers into the Cloud?
Tactic 2: Attached deals
“Attached deals” (or ‘financially engineered deals’ as it’s supposedly called by Oracle) is one of Oracle’s tactics. The vendor offers its customers discounts for on-premises software and other products if they also sign up for a short-term Cloud subscription.
These ‘attached deals’ may seem harmless, but the plaintiffs argue that this is the main cause of Oracle’s misleading figures. They cited a VP of North American Cloud Sales who reported that 90-95% of the sales his team made were driven by this type of sale. Furthermore, 90-95% of those deals had no real use cases!
This brings into question just how ready and mainstream Oracle’s Cloud software really is. Is it the obvious choice that it makes it out to be?
Tactic 3: Stopping support (or massively increasing the price)
Finally, Oracle steadily raises the cost of supporting its older products until it completely stops support altogether. This not only increases pressure to upgrade over time, but gives a clear cut-off point where customers have to decide to either go unsupported or upgrade to Oracle’s latest version (which is now Cloud).
To make matters worse, when on Extended Support, we’ve found Oracle’s main response to breakages is “upgrade to the latest version to fix this.” We’ve worked with many customers where this response has been the norm. They have been pleasantly surprised when we quickly fix these issues during their transition to our service.
What can you do?
- Check your licensing: Do an audit of your Oracle estate and its licensing. Being prepared for an audit and understanding your risk areas will mean you are less likely to be strong-armed by Oracle.
- Investigate third-party support: You do not need to upgrade to Oracle’s latest versions. Many of the “benefits” of Oracle’s latest versions provide very little actual value to many of its customers. Support can be provided by a third party at a fraction of the cost.
If you don’t want to put up with Oracle tactics to force you to Cloud, join the Support Revolution.