Oracle has blamed falling first quarter sales on the recession, currency shifts and weakness in resellers’ performance. The database specialist posted a 5% decline in revenues to $5.1bn but managed to increase profits 4% to $1.1bn. One example of reseller underperformance is quoted as SAP who is selling fewer databases because its application business is down. New Oracle software licence revenues were down 14% while technology licence revenues fell 19%, and software licence updates and product support revenues dropped 8%. Services turnover fell 18%. Keeping expenses in check was partly responsible for the small increase in profits. According to Oracle their sales pipeline continues to grow, although closing rates are more conservative. The firm reckons sales will drop 1% to 4% compared to a year ago. So if you have to negotiate a new or renewal deal with Oracle this year, then make sure you squeeze their sales rep (or their reseller) for every last drop of discount before you sign. They are under pressure to keep revenues moving forward, and it’s your money that they need to keep their commission stream flowing! If you are unsure of how to negotiate with Oracle, then let Silver Bullet Associates guide you through their sales maze.

Many software vendors are now embracing licencing metrics that incorporate the requirements of a virtual environment. Oracle, Microsoft and IBM are just three of the many vendors who have accepted that they have to move away from tying their software licences to physical devices or processors. Licencing software in a virtual environment based on processors can add up fast so it’s a good idea to look at negotiating software licences based on named users.  Data volume is going up fast for many organisations which in turn requires more processors, even though the number of actual users may stay the same or actually be decreasing. And one other point; Silver Bullet Associates is aware that some suppliers support contracts are not written to incorporate virtual licences and could cause a cost problem when the supplier insists the client revert the support contract from virtual to physical licenses before addressing the original issue.

Looking at the most recently published Oracle price list, Silver Bullet Associates has spotted that some of Oracle’s products have leapt in price by as much as 40%. Processor licences for the company’s diagnostic and tuning packs, as well as a database configuration management pack, are now US$5,000(£3,040), up from $3,500(£2,130) in 2008. The first two products are meant to help database administrators target and resolve performance problems. The latter tool is used for a range of tasks, such as tracking database configuration changes and ensuring policy compliance. Just when the credit crunch is really biting, it sometimes beggars belief to see vendors upping prices. And any increase in license prices will also have a pro-rata increase in their annual Support/Maintenance costs. However, remember that these are price negotiation starting points with nothing to stop Oracle offering extra discounts. And let’s at least give Oracle credit for providing a price list that we can pick over. Most other software vendors don’t.

Oracle Corporation is to buy Sun Microsystems in a deal worth $7.4 billion. The deal comes a fortnight after talks between IBM and Sun collapsed, following IBM’s decision to significantly lower its offer. It will give Oracle access to Sun’s strategically important Java and Solaris technologies, which underpin the Oracle database. Negotiation tip: Try to spread your spend across the new IT supplier landscape of the ‘big four’ of IBM, HP, Oracle and Microsoft to increase competition and to give your leverage at the negotiation table.

One of Silver Bullet Associates’ clients was asking me the other day whether I knew of any readily available sources of finance that could help them fund some business critical IT projects. When I suggested he ask his IT vendors to help fund things, he looked at me as if I had grown a second head. So I explained to him that the big IT companies have always hoarded cash on a huge scale. Today, Cisco is sitting on $26bn in cash and short term investments while Microsoft has over $20bn and Oracle has over $10bn in their respective current accounts. In an era when capital markets have dried up and banks are loathe to lend, businesses are finding it hard to fund initiatives. IT vendors are acutely aware of this, and some of them are starting to bankroll their customers purchases. They may not be drawing on their cash mountains directly, but they are using their AAA credit status to enable customers to defer payments or spread payments over 2 or 3 years at minium or zero cost. In the past few months, we’ve seen Microsoft, HP, SAP and others offer 0% financing to some clients to help them fund new purchases. If you have some IT projects currently on ice which you might be able to defrost with some creative vendor financing, then it’s worth you asking your IT vendors what they can do for you!