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Posted by Ray Wang on May 4, 2009
By R "Ray" Wang
Oracle President Charles Phillips pleasantly surprised Oracle Applications User Group (OAUG) Collaborate 09 attendees this morning during his keynote with the decision to waive Extended Support fees for a number of product lines through 2010 and 2011. As customers and prospects face one of the worst global economic crises, proactive relief on support and maintenance fees could not come at a better time. Summary details of the program can be found in Figure 1.
Figure 1. Oracle's Revised Support Policies
(Source: Oracle Corporation)
Proactive change in support offering creates a win-win
Oracle's move to address the support issue may stem from a variety of reasons but the main focus centers around improving the vendor-client relationship for a few reasons:
The bottom line - user groups should now determine the minimum R&D percentage of investment from revenues
Oracle continues to gain economies of scale with each acquisition. The good news - Oracle has the capacity to reinvest $2.6B per year into R&D and the real dollar amount has increased from 1.9B in 2006. While this is a large figure, the bigger and more important issue - what percentage of the maintenance revenues have been reinvested? Here's where we find a slight drop from 12.6% to about 11.6% in 2008. Consequently, like SAP's users and user groups, OAUG and the other Oracle users and user groups should begin to track the ratio of R&D dollars that tie back to the amount of maintenance revenue. In fact, they may want to take a look at the SUGEN KPI's and see if they are applicable to Oracle's environment. R&D spend from maintenance and the need for Third Party Support options will be the key ownership issues for the next 5 to 10 years. In any case, the need for preserving and strengthening independent user groups will be one effective check and balance in the consolidating world of enterprise software.
Do you feel Oracle made the right move? What have your experiences been like with Applications Unlimited and Lifetime Support? Send me a private email to firstname.lastname@example.org. Posts are preferred! Thanks and looking forward to your POV!
Copyright © 2009 R Wang. All rights reserved.
Reposted from http://blog.softwareinsider.org