How Much Can You Save with Oracle Third-Party Support?
Enterprises often underestimate the financial upside of moving from Oracle’s expensive support contracts to an independent third-party support model.
The cost savings go well beyond the obvious 50% reduction in annual maintenance fees. For guidance, review our overview of Oracle third-party support.
This guide provides a detailed analysis of Oracle third-party support costs, breaking down direct and indirect savings, to answer the key question: How much can you save with Oracle third-party support?
We’ll explore immediate fee cuts, as well as avoided expenses such as upgrades and “shelfware,” multi-year savings projections, and tips for building a solid business case.
The Cost Problem with Oracle Support
Oracle’s official support program is notorious for its high costs and rigid policies. Companies pay steep annual fees (around 20–22% of the original license cost) for Oracle support, which means in roughly five years, you might repay the entire license cost again just in support.
These fees also tend to escalate 3–5% per year, compounding your spend over time.
In addition, Oracle’s policies often force customers into costly actions:
- Forced upgrades: Oracle requires periodic upgrades to stay on full support. Once a product version’s Premier Support ends, you face extended support fees or lose support unless you upgrade. These upgrades are expensive projects (involving new software versions, testing, possible hardware refreshes, and consulting costs) that are driven by Oracle’s timetable rather than your business needs.
- Rigid contract rules: Oracle typically insists that you maintain support on all licenses in a product family (“all or nothing” coverage). If you attempt to drop support on unused licenses, Oracle may reprice the remaining ones at a higher rate, thereby erasing the expected savings. They also impose hefty reinstatement penalties (often 150% of back fees) if you leave and later return to Oracle support. This rigidity locks many organizations into paying for more support than they truly need.
- Shelfware and waste: Over the years, companies accumulate shelfware – Oracle modules or licenses that are no longer used (or never used at all) but still incur annual support fees. Under Oracle’s model, it’s challenging to eliminate these costs without consequences. As a result, many enterprises continue to pay maintenance fees for software that delivers no value, further bloating their IT budgets.
In short, Oracle’s support model creates a cost problem: escalating fees, mandatory upgrades, and support-for-everything contracts that often diverge from the customer’s actual usage and needs. This sets the stage for exploring the costs of Oracle support versus third-party support, where the differences can be dramatic.
For more information, read our Oracle Third-Party Support vs Premier Support guide.
Direct Savings — 50% or More on Annual Support Fees
The most straightforward benefit of third-party Oracle support is the direct reduction in annual support fees. Organizations that switch to an independent provider typically save 50% or more on the support line item.
For example, if you currently pay $1,000,000 per year to Oracle, a third-party support firm would likely charge around $500,000 for equivalent coverage.
That immediately frees up the other $500,000 in year one.
Many third-party support customers report savings of over 50%, depending on their product mix – it’s not uncommon to see a 50% discount as the minimum, with savings of 60% or more in some cases.
How can third-party providers consistently charge so much less? A few reasons explain the Oracle third-party support savings:
- Lean cost structure: Independent support providers focus solely on supporting existing software. You’re not funding Oracle’s R&D for new versions or its hefty sales overhead. The third party’s business model is more efficient, passing savings to customers.
- No forced product spend: Because they support your current systems as-is, there’s no indirect push to buy add-ons or upgrades. Oracle’s fees often subsidize future product enhancements you might not use; third-party fees strictly cover maintenance of what you have.
- Stable pricing: Third-party contracts typically include minimal annual increases (often tied to inflation, e.g., 0–3%). Oracle’s support, in contrast, tends to rise annually and can jump if you enter extended support periods. Over time, the cost gap widens further in favor of the third party.
Direct fee savings are reflected directly in the bottom line. Enterprises can cut their support budget in half and immediately redirect those funds to other priorities.
And importantly, this isn’t a one-time windfall – it’s sustained, year-over-year savings as long as you remain on independent support.
Avoided Upgrade Costs
Another major financial win is the ability to avoid costly upgrades that Oracle would otherwise push you into.
Under Oracle’s support policies, when a version reaches end-of-support, you’re pressured to migrate to a newer release (or pay extra for limited extended support).
These forced upgrades carry significant costs that often rival or exceed the annual support fees themselves.
By moving to third-party support, you gain the freedom to stay on stable software versions for as long as needed, avoiding the following upgrade-related expenses:
- Implementation and testing costs: Upgrading an Oracle Database or an enterprise application (such as E-Business Suite or PeopleSoft) is a major project. It requires project management, integration work, extensive testing of customizations, and often outside consultants or Oracle services. This can cost millions for a large enterprise deployment.
- New hardware or licenses: A new software version may demand more powerful hardware or updated middleware. In some cases, you may need to license additional Oracle components or cloud services to support the latest release, which can further increase costs.
- Downtime and training: Upgrades inevitably involve system downtime or cutovers, which can impact business operations. There’s also user retraining and change management to consider. These carry a productivity cost, even if not directly billed.
- Extended support fees: If you choose not to upgrade by the deadline, Oracle may offer extended support or “market-driven support” for a limited time, but typically at a hefty surcharge (for example, an additional 10% or more on top of your normal fee). This is essentially a penalty to buy a bit more time. Third-party support makes this unnecessary.
By avoiding Oracle’s forced upgrade cycle, companies save on all these fronts. You can run a stable version for 5–10 years or more if it suits your business, with your third-party provider supplying necessary fixes and regulatory updates.
One Fortune 500 CIO recently noted that skipping a single Oracle ERP upgrade (enabled by third-party support) saved his company as much as $5M in project costs. These are real, hard-dollar savings that often dwarf the direct fee reduction.
Additionally, avoiding disruptive upgrades allows your IT team to focus on projects that drive competitive advantage, rather than spending time and money on vendor-imposed refreshes.
Shelfware Elimination
Shelfware refers to Oracle software licenses that you’ve purchased but aren’t actively using – yet you’re still paying annual support on them. This can include unused modules in an Oracle application suite, excess user licenses, or database options and add-ons that were enabled but never needed.
Each of these idle licenses incurs a roughly 22% yearly support charge for no return. Identifying and eliminating shelfware is a key part of Oracle support cost savings, and third-party support makes this much easier:
- With Oracle, reducing your license footprint or support scope can be challenging. If you try to drop support for unused components, Oracle’s contracts often force you to drop entire license sets or face repricing of what’s left. Many companies avoid the hassle and continue to pay, wasting their budget on shelfware.
- By contrast, when you move to an independent Oracle support provider, you have full control over what you continue to support. You can choose to discontinue support for specific products or modules that are no longer in use. There is no Oracle-imposed rule requiring you to cover everything. This means you stop bleeding cash on unused licenses.
- The savings from shelfware elimination can be substantial. For example, if 15% of your Oracle estate is shelfware (a common occurrence in large enterprises), that’s 15% of your support bill that could be eliminated. On a $2M annual Oracle support spend, that’s $300,000 per year saved just by not paying for what you don’t use. And you still retain the licenses if you own them – you’re simply not paying maintenance on idle assets.
The move to third-party support is an ideal time to right-size your support coverage. Most organizations conduct an audit of their Oracle deployments and usage before making a switch.
In doing so, they often discover modules that can be retired or licenses far above current needs. Trimming that fat under the flexible third-party model means your support costs align only with real, active business requirements. You’re no longer writing checks to Oracle for shelfware sitting on the (virtual) shelf.
Multi-Year Savings Models
It’s important to look beyond the first year and consider the multi-year savings when comparing Oracle vs. third-party support.
The financial impact tends to grow over a 3-, 5-, or 10-year horizon. Let’s illustrate with a simplified scenario to show the cumulative effect:
- Oracle status quo: Imagine your organization spends $2 million on Oracle support this year. With Oracle’s typical 4% annual uplift, that becomes about $2.08M next year, $2.16M the year after, and so on, over five years, sticking with Oracle, you’d pay roughly $11.5 million in support fees (and this is before any potential extra charges for upgrades or extended support). If an upgrade project is required in year 3, that might add, say, another $3 million in one-time costs, bringing the five-year total to approximately $ 14.5 million.
- Third-party support path: Now, assume you switch to third-party support at 50% cost. Year one costs $1.0 million instead of $ 2.0 million. The third-party contract has a minimal increase, approximately 3% every other year, so costs remain around $1.0–$ 1.06 million per year. Over five years, you’d spend roughly $5.3 million. No major upgrade expenditures are needed during that period, as your software can remain on the current version. The five-year total might be around $5.3M (plus perhaps a small internal cost for the transition in year one).
The bottom-line impact: In this scenario, the company would save approximately $9 million over five years by utilizing third-party support (~$6.2M from the 50% fee reduction each year, plus ~$ 2.8 M by avoiding the upgrade).
Even if your numbers differ, the pattern holds – organizations commonly free up millions of dollars across a 3–5 year span.
Over a longer horizon, the divergence is even greater. Some analyses have shown that over ten years, third-party support can reduce cumulative support spend by 60–70% compared to staying with Oracle, once all factors are accounted for.
These multi-year savings models underscore an important point: moving to independent support isn’t just a short-term cost-cutting measure, but a strategy that yields compound benefits.
Every year you’re not paying Oracle, you’re not only saving that year’s fees but also avoiding the inflated base on which future Oracle increases would apply. It’s a bit like interest on a loan – cut the principal now, and you save more in the long run.
For CIOs and CFOs, this long-term view shows a clear ROI for Oracle third-party support that grows over time. The longer you leverage third-party support, the more total dollars stay in your company’s bank account rather than Oracle’s.
Hidden Savings Opportunities
Beyond the obvious categories, there are several hidden savings opportunities when switching to third-party support.
These are areas where enterprises can reduce costs or avoid overhead, even if they don’t always show up as a line item on a vendor invoice:
- Internal resource efficiencies: Oracle’s constant patching and upgrade cycle can consume a lot of your IT staff’s time. When you break out of that cycle, your team spends far fewer hours on reactive maintenance (applying patches, testing updates, coordinating upgrade projects). Those internal hours have a cost. With third-party support, IT staff can be reallocated to higher-value activities rather than chasing Oracle updates. In effect, you reduce the “people cost” of maintaining Oracle systems.
- Comprehensive support (including customizations): Oracle’s support will often deflect issues if they relate to customizations or integrations, meaning you might have to hire consultants or use internal developers to fix problems. Many third-party providers, however, support your whole environment, including custom code and performance tuning. This can eliminate the need for separate support contracts or ad-hoc consulting spend to resolve issues outside Oracle’s limited scope. The result is a saving on outside services and a simpler support experience.
- Audit and compliance risk reduction: While Oracle can audit customers regardless of support status, organizations that move off Oracle support usually conduct a thorough license compliance review beforehand (“true-up and exit”). By ensuring you’re fully compliant when you leave, you significantly reduce the risk of unexpected audit penalties down the road. Avoiding an Oracle audit fine (or the costly scramble of an audit defense) is an indirect financial benefit. Additionally, once you are on third-party support, you won’t be in regular communication with Oracle’s sales teams, which reduces the likelihood of aggressive upselling or compliance tactics that lead to unplanned spending.
- Simplified procurement and budgeting: Under Oracle, every year (or every few years) you’re negotiating renewals, handling complex quotes, or just bracing for the standard uplift. That’s time and effort from your procurement and finance staff. Third-party contracts often lock in multi-year savings and predictable costs, reducing the negotiation frequency and administrative overhead. Budgeting becomes easier when you know support costs will remain flat or only gently rising, versus the uncertainty of Oracle’s future fees or potential upgrade costs.
- Opportunity cost of reinvestment: This is a more strategic consideration, but worth noting: the dollars saved on support are dollars that can be invested elsewhere. Whether it’s new digital transformation initiatives, hiring developers, or upgrading other infrastructure, there’s an opportunity cost to every dollar tied up in Oracle maintenance. By freeing a significant portion of your IT budget from Oracle support costs, you unlock funds for innovation and business growth. The value of that innovation can vastly outweigh even the direct savings, though it’s harder to quantify.
These hidden or secondary savings reinforce that moving to independent Oracle support is not just about trimming one big expense – it can streamline operations and remove many smaller costs and inefficiencies that come with Oracle’s way of providing support. When pitching the idea internally, it helps to mention these benefits, as different stakeholders (e.g., CIO, CTO, CFO, procurement lead) will each appreciate different aspects of value.
How to Build the Business Case Internally
Making the switch to third-party support is a significant decision, and it usually requires a solid business case to get buy-in from all stakeholders.
Here’s how to build that case in a structured, compelling way:
- Quantify your current costs and pain points: Begin by documenting your current expenses for Oracle support. Break down the data by product, if possible, and note any annual increases or upcoming renewal spikes. Identify any pending costs (like an upgrade or extra modules you’re paying for) as part of the status quo. This establishes the baseline “Oracle support cost” that your company is locked into if nothing changes.
- Calculate potential savings: Reach out to one or more reputable independent Oracle support providers for an estimate, or use the rule-of-thumb that third-party support will cost ~50% of Oracle’s fees. Calculate the direct annual savings (e.g., 50% of your current spend). Then add in indirect savings we discussed: if you know an upgrade project is on the horizon, include the avoided project budget; if you have obvious shelfware, include the maintenance dollars that would be cut. This becomes a multi-year financial model – for example, “Over the next 5 years, we will spend $X with Oracle versus $Y with third-party, saving $Z in total.” Work with your finance team to validate these numbers and, if necessary, translate them into an ROI or Net Present Value figure for the project.
- Address risk and requirements: Anticipate the questions and concerns. Common ones include: “How will we get security patches and updates without Oracle?” and “What if something goes wrong – can the third party handle it?” Prepare answers in your business case. For instance, note that top third-party providers have their patching programs and a strong track record of keeping customers secure. Highlight that many highly regulated companies are successfully on third-party support (proving it’s viable). Additionally, plan for license compliance by outlining that you will conduct a license audit and remain compliant, thereby eliminating any legal risk. By demonstrating a mitigation plan for each perceived risk (security, support quality, compliance, and future flexibility), you reassure stakeholders that switching support is a safe choice.
- Align with procurement and IT strategy: Involve your procurement and sourcing team early – they can help evaluate third-party vendor proposals, negotiate terms, and ensure the contract meets your requirements (e.g., service levels, liability, etc.). Simultaneously, align with IT leadership on strategy. Emphasize that this move lets IT support current systems longer and perhaps invest in modernizing on your timeline (since money saved can fund new initiatives). The business case should frame third-party support as not just a cost reduction, but as an enabler for strategic flexibility. That way, CIOs and CTOs see it as a win for their roadmap, not just a finance-driven cut.
- Demonstrate the ROI clearly: When presenting to the C-suite or approval committee, be very clear about the financial benefits. For example, “By moving to independent Oracle support, we will save $5 million over the next 3 years, a reduction of 55% in support costs, with immediate savings in the first year. The investment (if any) is minimal, and the ROI is over 300% with payback in under 6 months.” These kinds of statements make the value tangible. Accompany the numbers with a narrative: what could the company do with those saved millions (e.g. fund digital transformation or improve earnings)? The goal is to show that staying with Oracle support is essentially burning money that could be put to much better use.
- Plan the transition (to ease concerns): Lastly, outline at a high level how you will execute the switch if approved. Mention timing (e.g., aligning with your support contract end date to avoid overlap), the need to notify Oracle of non-renewal, and onboarding the third-party provider. If you have internal support processes that will change, note that you’ll train the IT staff on the new support model. This portion of the business case demonstrates that the move is practical and that you have thought through the change management. Executives will appreciate knowing that there’s a clear path to realization after the decision is made.
By building a comprehensive business case covering the cost analysis, risk mitigation, and strategic benefits, you equip your procurement leaders and executive sponsors to confidently support the move. Often, just surfacing how much is being overspent on Oracle support versus the third-party alternative creates a sense of urgency.
Many CFOs are surprised (and excited) when they see the dollar figures and ROI laid out side by side. Remember, Oracle’s sales representatives are not going to volunteer this information – it’s up to the internal team (with perhaps the help of an independent licensing advisor) to quantify the savings that Oracle won’t discuss.
Read about our Oracle support switch advisory service.
