SAP and Oracle’s payment holiday traps

money trap contract

ERP vendors: doing their bit?

The COVID-19 pandemic has seen a range of offerings to help organisations, and their customers, survive the lockdown – such as delaying mortgage payments, or offering online courses for free.

Often the largest concessions have come from the smallest organisations, but what are the mega-vendors such as Oracle and SAP doing to help their customers during the pandemic?

This is a big question, and one that’s difficult to answer. Any deals which these vendors are making are being kept quiet. After all, the more help they provide, the more they stand to potentially lose.

We’re currently aware of two tactics:

SAP’s payment holidays

SAP are currently offering customers delayed payments, or a ‘payment holiday’ on their support costs. Rather like mortgage providers allowing their customers to take three months off; SAP customers can skip payments for a set period of time.

However, SAP’s offering isn’t the free ride it may sound. Although organisations can delay payments, they will need to pay double the support costs in the end.

Say for example, if you chose to delay payments for 12 months, then the following year, you’ll need to pay double support costs to make up for it.

Given that nobody can predict what’s going to happen in the future – if COVID-19 is anything to go by – having this additional cost hanging over you is a significant risk to take. A few hundred thousand saved now may not be as beneficial, when the cost doubles at a time you could need it all the more.

The only way to save…

We are glad that SAP are offering concessions to their customers at this tough time – admittedly we hadn’t expected anything from them, or Oracle.

But the fact remains, SAP’s payment holidays are not a way to save money, but simply delay the inevitable expense. The ONLY way customers can save money on their support and maintenance costs is by moving to third-party support (see below).

Oracle’s mini ULAs

Oracle are also yielding a little in their practices for their customers; but theirs is even less desirable than SAP’s approach.

What is a ULA?
A ULA is a contractual agreement between an organisation and Oracle. The organisation pays a single, up-front fee, for the licenses they want, on an unlimited basis, for a selected set of Oracle products, over a fixed period – typically, a ULA term lasts three years.
(If you’d like to learn more, read our Oracle ULAs whitepaper.)  

Oracle typically offer their customers a three-year period Unlimited Licence Agreement (ULA).

Now, Oracle seem to have acknowledged that organisations can’t adequately justify the cost of a multiyear (three year) ULA, or ULA extension in the current climate.

Instead, Oracle are offering a one-year-duration ULA for a reduced price. BUT, it includes a fixed Cloud lock-in at the end. Regardless of whether you want or even need their Cloud products. And either way, that Cloud contract can be very tricky to escape.

Oracle allow you some flexibility with one hand and take it away again with the other.

“Oracle’s one-year ULA is a genuine deal, as it is cheaper than their mainstream choices. But Oracle are still potentially going to sell you something you don’t need or want, while they’re successfully boosting their sales of Cloud during the pandemic.”

Simon Cunningham, Infrastructure Services Manager at Support Revolution

Oracle’s “generous” gesture in this difficult time will ultimately improve their sales figures. How convenient!

The agony of choice

So, your options are: delay payments and lose budget in the long run; or be coerced into an unwanted Cloud product by way of manipulative sales tactics…and ultimately still lose budget in the long run.

Fortunately, there are other, more beneficial options available.

The third option: Join the Support Revolution!

It is easy to point out flaws, what – you may be asking – are we doing to help organisations during the pandemic?

Here at Support Revolution, we’re helping every kind of industry cut their vendor support bills in half, while also providing organisations an improved level of service. Customers on our third-party support can make huge savings, unlocking budget that can be put towards more crucial projects – even if that’s simply doing what they need, to make it through these challenging times.

So, if you too have had enough of what Oracle and SAP support have to offer, or the lack thereof, then you’ll need to compile a business case, to convince your organisation of the benefits of switching to third-party support.

Happily, we have a guide to help you get started on that, too: