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Posted by Duncan Jones on July 2, 2013
Sourcing professionals already understand the importance of monitoring financial performance to assess risk in their key suppliers’ ability to deliver commitments. Sometimes sourcing professionals can also find valuable negotiation leverage in the financial results of their key suppliers, as is the case with Oracle’s Q4 2013 numbers . In my opinion, the revealing aspects that you can use to increase your bargaining power over the next couple of quarters, include:
What it means for sourcing professionals: Any Oracle sales teams that missed their 2013 targets will be particularly keen to achieve good numbers in its Q1. My colleagues have documented the challenges for Oracle’s applications business, including the signs that Oracle Customers Are Hesitant To Embrace Fusion Applications. In this context anyone considering buying application licenses in the next 6 months will have extra leverage right now – but only if you have a real walk-away alternative, such as to go with another vendor, or to delay the purchase. Those of you on older product versions may find Oracle working a bit harder to keep your revenue stream, rather than see you switch to a 3rd party support provider or migrate to a SaaS alternative. You may be able to get an amazing deal if you’re willing and able to bring forward license purchases you were planning to make later in the year and buy them now.
What it means for sourcing professionals: Oracle needs to grow the SaaS businesses it has acquired its way into, such as Rightnow and Taleo, but I don’t believe it can do that unless it embraces a more buyer-friendly approach to commercial negotiations. Anyone negotiating a SaaS contract with Oracle should hold out for vital contract terms, such as a renewal option at a guaranteed price, and should walk away rather than accept unacceptable contracts.
Bottom Line: Oracle is still a very successful, powerful company that will continue to be an important supplier to most enterprises. Oracle’s 4th quarter is usually the time to get the best deals, but two consecutive quarters of missed sales estimates may lead to exceptional pressure on sales teams to deliver better numbers in Q1 FY2014. This could be a good time to negotiate with Oracle.
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