Oracle Pool of Funds Negotiation
Negotiating an Oracle Pool of Funds (PoF) agreement can yield substantial cost savings and flexibility for enterprises.
This article provides CIOs, CTOs, and procurement leaders with practical strategies to negotiate favorable PoF terms, from maximizing discounts and defining scope to timing the deal for optimal leverage. Use these insights to secure the best value from Oracle during your PoF negotiation.
Read Oracle Pool of Funds Compliance Risks and Pitfalls.
Leverage Timing and Sales Quotas
Oracle’s sales teams have quarterly and annual targets. Timing your negotiation can improve outcomes:
- Fiscal Year-End: Oracle’s fiscal year ends May 31. Negotiating in Q4 (Apr–May) often means Oracle is eager to close deals – they may offer bigger discounts or extras to meet annual goals.
- Quarter-End Push: Similarly, in the final weeks of a quarter (end of February, May, August, November), Oracle reps are often more flexible about hitting quotas.
- Don’t Rush: Don’t accept the first offer. Indicate you have other options or can wait – this often prompts a better offer as deadlines approach.
Key Negotiation Points
Several contract elements are negotiable. Focus on:
- Discount on Licenses: Negotiate significant discounts off Oracle’s list prices. Aim high – large commitments can get 20–30% or more off list prices.
- Support Fee Caps: Oracle support is typically 22% of net license fees annually. Try to cap or freeze the support cost or ensure it’s 22% of the discounted price (not list price).
- Included Products: Clearly define which Oracle products (database editions, options, cloud services) are covered. Negotiate to include anything you anticipate needing – adding later is very costly.
Recommendations
- Start Early: Begin PoF discussions well before your desired start date. Negotiations can take months, and you can use Oracle’s quarter-end deadlines to your advantage.
- Know Your BATNA: Determine your “best alternative to a negotiated agreement” – what you’ll do if PoF terms aren’t good enough (e.g., buying standard licenses or considering a ULA). This gives you leverage if talks stall.
- Aim High: Consider significant discounts and favorable terms in your initial proposal. It’s easier to concede from a strong opening position than to ask for more later.
- Document Everything: Ensure all agreed terms (discount rates, included products, support conditions) appear in the contract. Verbal promises from sales must be written into the PoF agreement.
- Stay Firm on Key Points: Identify your non-negotiables (e.g., a minimum discount or inclusion of a critical product) and be prepared to walk away if they aren’t met.
Read Oracle Pool of Funds vs Oracle ULA.
FAQ
Q1: How much can I typically save with a pool of funds compared to buying licenses normally?
A1: It varies, but enterprises often secure double-digit percentage discounts. For example, 20–30% off Oracle’s list prices is common for a large PoF commitment.
Q2: Is the 22% annual support fee negotiable?
A2: The support percentage is standard, but you can negotiate how it’s applied. Ensure the 22% is calculated on your discounted license costs. Organizations sometimes negotiate a year or two of support at a reduced rate.
Q3: Can I include cloud services in a Pool of Funds deal?
A3: Yes. If negotiated up front, Oracle will sometimes allow cloud credits or cloud services as part of a PoF. If you expect to use Oracle Cloud (OCI), discuss allocating part of your funds to cloud usage.
Q4: What if we don’t use all the funds by the end of the term?
A4: Unused funds will expire with no value unless you negotiated a rollover clause. Try negotiating rollover or conversion of leftover funds into other services, though Oracle often resists.
Q5: Should I consider an Unlimited License Agreement (ULA) instead of a Pool of Funds?
A5: It depends. A ULA can be better if you expect explosive growth in one product (unlimited usage), whereas a PoF is better if you need a mix of products or tighter control over spending. Mention that you’re evaluating a ULA to pressure Oracle for a better PoF offer.
Q6: Can we negotiate mid-term adjustments if our needs change?
A6: It’s wise to negotiate that upfront. For example, include a clause to add funds at the same discount rate or swap a new product if needed. Oracle might agree to a one-time mid-term adjustment if specified in the contract.
Q7: Who from our side should be at the negotiation table with Oracle?
A7: Involve IT (for technical needs), procurement (for pricing and contract), and a C-level sponsor (CIO/CTO or CFO). Showing Oracle a united, high-level team can lead to better terms.
Q8: What common pitfalls should we avoid in PoF negotiations?
A8: Don’t over-commit funds beyond what you can use. Get all promises in writing – never rely on verbal assurances. And don’t wait until the last minute; a rushed negotiation favors Oracle. Taking a proactive, well-documented approach will help you avoid costly mistakes.
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