June 24th, 2008
Oracle / SAP increase prices
Will you jump for joy to learn Oracle has raised prices 15%-20% across major product lines? SAP fans shouldn’t feel left out, since that company has increased support costs by 5%.
Sensationalist technology rag, The Register, discusses the Oracle increase in flowery terms:
The increases, detailed in Oracle’s latest annual price list, have Wall Street both admiring and questioning the size of Oracle chief executive Larry Ellison’s cojones in a tightening economy.
The more subdued and genteel investment paper, Barron’s, described Oracle’s increase as an “eye-opening development.” Here’s a link to the new price list.
Meanwhile, SAP has raised support costs for new maintenance contracts. ComputerWeekly reports:
[T]he cost of this additional support will increase the total cost of ownership of SAP significantly.
Ray Titcombe, chairman of the Strategic Supplier Relations Group, said, “A 5% increase from 17% to 22% is a significant expense for users and SAP has to demonstrate that the extra cost will reduce business users’ costs.”
One pitfall is that users may end up paying for Enterprise Support when they do not actually need the extra services it provides.
“In our conversations with ERP customers we found a general wariness of overpaying for annual maintenance services that are under used…” said Ovum principal analyst Madan Sheina.
How do these companies get away with higher prices during a recessionary period? According to Bertrand Diard, of open source data integration vendor, Talend, “because they can:”
Because their customers are locked in by the proprietary model. When you have invested millions of dollars or euros in Oracle or SAP software, you can’t just walk away from it. And since you don’t have access to the source code, or to an alternative network of service providers who can take over support and maintenance, you are stuck with them, for best or worst. And this year, worst seems to be taking over.
Oracle’s new pricing is a bold, even outrageous, move by a gutsy company. At the same time, SAP’s increase ups the ante on the “maintenance tax” it charges customers, which is how one of my Enterprise Irregular colleagues described high software maintenance costs.
Michael Krigsman is CEO of Asuret, Inc., a software and consulting company dedicated to reducing software implementation failures. Click here to discuss this post with him on Twitter. See his full profile and disclosure of his industry affiliations.
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