Oracle moves to simplify pricing schemes

Acquisitions equal complexity

Oracle is creating a unified set of pricing schemes for its myriad applications that users hope can simplify what has become a complex maze.

The updated schedule streamlines the many licensing options that came with several major Oracle acquisitions in recent years, including PeopleSoft in January 2005, and Siebel Systems a year later. The new list consolidates the pricing plans into four programs that cover all of Oracle's product lines.

"I am all in favor of simplicity," said John Matelski, chief security officer and deputy CIO for the city of Orlando, which runs the J.D. Edwards ERP software that Oracle gained in the PeopleSoft acquisition. "Having said that, I need more information as to how this new pricing scheme will be executed in practice."

For example, he asked, "If I am an applications customer and also use database and middleware [products], does that mean I have to choose multiple licensing options?

"All in all, I believe this is a move in the right direction," Matelski said. "However, the challenge will be to apply [the new model] consistently and, from a customer perspective, favorably to ensure that costs are minimized and contained."

Matelski is also a former president of the Quest International Users Group, an applications user group that represents PeopleSoft and J.D. Edwards customers.

In a statement, Jacqueline Woods, vice president of global pricing and licensing strategy at Oracle, said the new scheme combines "the best of Oracle, PeopleSoft, Siebel and J.D. Edwards licensing programs."

Oracle said that all new applications will be sold using the new pricing model. Buyers of applications that shipped prior to last month's announcement can choose between the new scheme and an old one, Oracle said. The cost of support for all Oracle applications remains fixed at 22 per cent of the net license fees, the company said.

Company officials declined to further discuss the new pricing plans.

On the surface, a single licensing model sounds like a good idea, said Patricia Dues, enterprise program manager for the city of Las Vegas, a user of Oracle's E-Business Suite of business applications. Dues is also president of the independent Oracle Applications Users Group, based in Atlanta.

However, Dues said there are still several unanswered questions, which she hopes will be discussed at an as-yet-unscheduled meeting between the user group's pricing council and Woods. For example, she said, Oracle needs to explain whether credits on purchases made under the old scheme will be accepted under the new one.

"I like the concept of choice, but I can't tell whether it would be good or bad until I see some actual pricing comparisons for my environment," said Jim Prevo, CIO at Green Mountain Coffee Roaster. The company runs PeopleSoft ERP software and pays Oracle based on an enterprise license.

Prevo also said the new schedule appears to change enterprise licensing requirements, which would allow him to test new applications among a small group of users before expanding its use throughout the company.

Even with the simplified models, noted Rebecca Wettemann, an analyst at Nucleus Research customers will still have to negotiate a final price with Oracle.

"I don't see a huge impact for customers," she said. "They'll still be negotiating with Oracle. It may give customers some more flexibility in planning a deployment that's appropriate for their size and structure."

Computerworld Australia is awaiting a formal response from the local Oracle user group.

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