If you work with Oracle long enough you will become familiar with the range of discounts that can be obtained. If you buy through Oracle’s website, you will get 10% off. However, if you buy through an Oracle partner, your discount can range from about 15 to 30%. Depending on the size and uniqueness of the deal, there is also a special discount request that your trusted partner may submit on your behalf in order to get discounts of 40-60%.
These discounts are provided from Oracle to distributors, then from the distributors to partners, and finally from partners to customers. Discounts play a big part in the purchasing process but so does an effective partner relationship. Customers want to make sure they are getting the best deal and in doing so, it’s difficult to not focus on the best discount. While as a partner, we have more often than not offered better discounts when competing directly with Oracle, there is much more to be considered than just discounting.
Often times, while focusing on the software for the existing architecture, customers end up with the “best” deal (biggest discount) but fail to consider re-architecting their environment for the “right” deal (least expensive). This is because once it’s discovered that the business needs additional licenses for compliance, an assumption is made that there is only one way to purchase. A closer look will reveal that a smaller number of licenses can often work in an improved architecture.
Consider the following example:
A customer has a server with four quad core processors that they would like to use to run a web application with an unlimited number of users. After speaking with an Oracle representative who confirmed the specifications of the server with the company’s DBA, the representative sent over a quote for eight enterprise edition database licenses that met the company’s requirements. Because the quote was more than $250,000 and the company had a limited budget of just $200,000, the customer got an extra discount for a total discount of 50%. At $190,000, not including support, the price came in under budget.
This felt like a win for the customer because they got a large discount on the eight licenses they needed for the current server. Had the customer turned to a trusted partner, they probably would have considered buying a new server for $8,000 with just two quad-core processors. For this server, only four enterprise edition database licenses are required. In this case, the customer would receive a smaller discount of 30% for a total cost of $138,000 without support but including the new server.
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In the above example, a partner helped determined that the customer didn’t need as powerful of a server as the one it had planned to use. Even though this meant the customer needed to buy a new server and would receive a much smaller discount, the up-front cost for the right deal was more than $50,000 less than the up-front cost for what Oracle suggested was the “best” deal. The higher cost of the bigger discount becomes quite clear when we consider that the annual support cost for Deal 1 is more than $13,000 higher than for Deal 2.
The lesson from this example is clear – license discount is not as important as purchasing for an overall better solution. There is usually more than one way to architect a database environment. An Oracle partner who is motivated to architect the environment for the right deal, even if it gets a smaller discount, will save a company a lot of money compared to Oracle who is usually motivated to architect the environment for the best deal (with the higher ticket price and support costs). If you are purchasing Oracle licenses for an existing or planned database environment, stop and ask if the environment you are planning to license can be re-architected for a more cost efficient solution. Consider looking for another way to structure the deal and you may just realize you were looking at percentages when you should have been looking at cores.
Having a relationship with an experienced partner can help you ask, and answer, the right questions to uncover solutions you hadn’t considered and identify ways to receive a higher discount on your Oracle software.
Follow the Money! Understand how your Oracle rep is compensated, and notice what they want to present to you and what they are willing to explore. Do the same with an Oracle partner with deep technical experience – like Guardian Eagle. Look at what we will explore and discuss (pretty much everything) in order to find the right solution for you. We don’t sell, we solve. We are not compensated by selling just one set of products (or by selling as much of it as we can). We make money over the long haul by doing the right thing for our customers and building long term relationships.
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