As what was once a mutually beneficial partnership between SAP and Oracle grows increasingly contentious, customers may find themselves caught in the middle.
One symptom: the price for getting an Oracle runtime database license bundled with SAP Business Suite is now more than double what it was three years ago. As a result, customers covered by this licensing who are trying to grow their businesses on a budget may feel the pinch. They should think about changing their relationship with the vendors, compensating for the price increase with other savings or both.
What’s gone wrong here? Read to the end for a link to an independent assessment (and support for the numbers I’m quoting), but I’ll give my interpretation.
Gartner estimates about 40 percent of SAP customers run their software on Oracle DBMS. The majority purchase their DBMS licenses directly from Oracle. However, a typical reseller agreement with Oracle allows SAP to offer customers a single price and a single invoice to those who were not big Oracle customers for other reasons. Customers on this plan are usually charged a percentage of SAP’s pricing formula (known as SAP Application Value, or SAV) whenever they add seats or otherwise expand the footprint of their implementation.
Over the past three years, Oracle has increased the cost of those runtime licenses by 31 percent per year, on average, from 11 percent of SAV to 25 percent. Is another price hike in store for 2018 or 2019? We don’t know, but it’s very possible.
Inside Scoop: one enterprise IT leader recently told me she gets hit with this surcharge even when implementing SAP applications on top of other databases, such as Microsoft SQL Server. One way to escape from that clause is to jettison Oracle entirely.
Early in its history, SAP needed integrations with credible enterprise databases such as Oracle DBMS and IBM DB2 to win big company contracts. Since then, Oracle has become SAP’s fiercest competitor in the markets for ERP and enterprise application suites, both through its own development and acquisitions of other players such as PeopleSoft and JD Edwards. SAP has countered by introducing HANA, an in-memory database of its own design, and pushing customers to move to its next-generation S/4HANA business suite. In the S/4 world, Oracle DBMS is not even an option through SAP’s licensing options.
Although SAP and Oracle recently extended the reseller agreement covering the Oracle runtime DBMS through 2025, Oracle would clearly rather establish a direct relationship with these joint customers. Meanwhile, SAP wants customers to move to HANA. Neither seems invested in easing the customer’s transition.
Your strategic options include following the lead of one vendor or the other or trying to migrate to another database entirely (such as Microsoft SQL Server or SAP’s own MaxDB or ASE, formerly Sybase). You could also choose to do nothing and hope for the best.
For more detailed guidance on your alternatives from an objective source, read the Gartner report, “SAP Customers on Oracle Runtime DBMS: Accelerate Your Licensing Decisions as Prices Continue to Rise.”
Rimini Street cannot make these enterprise software giants play nice, but what we can do is put you first. By providing an alternative to overpriced vendor maintenance and forced upgrades, we can help lower total cost of ownership for ERP and other enterprise systems. We do that by providing excellent, responsive service at a reasonable cost.
Perhaps someday SAP and Oracle will compete on that basis.