Oracle's Offer Of A Lifetime - InformationWeek

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Oracle's Offer Of A Lifetime

Offering customers "lifetime support" sounds so charitable. Oracle made that pledge last month to reassure users of Siebel, PeopleSoft, and JD Edwards applications. But that stream of support and maintenance revenue is part of why Oracle bought those companies, along with the chance to upgrade their customers. And third-party support competitors are vying for those customers.

Here are the economics, laid out by Oracle's VP of licensing strategy, Jacqueline Woods: In the first five years after a purchase, a company pays what amounts to 22% of the software's purchase price. In year six, the annual price goes up 10%, and for years seven and eight, it's another 20% hike. In year nine, it reverts back to the price of the first five years, but support doesn't include updates that keep an application in line with regulatory changes. Seth Ravin, president of Rimini Street Inc., a startup selling Siebel support, says: "What they're really doing is charging a premium price for a declining level of support."

Woods says most firms aren't going to use a 9-year-old payroll system, and those that do can access Oracle's self-service sites. And of course, Woods says, they can upgrade to a new Oracle app.

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