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Oracle preps customer guidebook

After a recent spate of highly publicized contract debacles, the company will post guidelines on its Web site about its licensing and pricing policies.

Oracle has created a guidebook for its customers that maps out the company's licensing and pricing policies, Oracle said Wednesday.

The move to publish the "Software Investment Guide" follows a recent spate of highly publicized contract debacles that include a controversial contract with the state of California.

No other company in the enterprise software industry offers a similar guide, according to analysts. While customers may appreciate the effort, analysts and customers note it will probably do little to restore customer confidence in dealing with the software giant.

"If this book is a way to calm people down, I don't think it will do that," said Mark Paris, an information systems director with Kleinfelder. The California-based engineering consulting firm had a dispute with Oracle over a licensing contract.

But in the current economic environment, where IT spending has slowed to a trickle and every dollar counts, customer confidence is paramount.

This is not lost on Jacqueline Woods, vice president of Oracle's global pricing and licensing strategy. She hopes the guidebook will fulfill customers' expectations by addressing their needs and reducing any miscommunication between the sales team and customers.

"The purpose of this guidebook is to provide customers with a better understanding of our pricing and licensing policies," Woods said. "It's a comprehensive guide on how to license our products."

The guidebook, which will be available on Oracle's Web site next week, will feature key questions customers need to ask themselves to determine the best license to suit their needs; metrics to apply to their business to determine the appropriate license; details on the various applications and database licenses; as well as information about how to upgrade an existing license.

Oracle expects the 40-plus-page document to help customers when ordering software. For example, it covers what a customer should consider when deciding between a license based on the number of employees who will use Oracle's software and one based on the number of microprocessors powering the computers that will use the software. And it spells out issues to weigh when deciding whether to upgrade from a standard version of the database to an enterprise version.

Oracle will update the book as it makes a policy change on pricing and licensing, Woods said.

Before developing the guide, Oracle handled questions through its sales team and also by publishing documents online on topics that generated a large amount of customer confusion. Both outlets will continue to be available to customers, Oracle said.

"They've made it easier for customers to find the information in one location, as opposed to searching throughout the Internet...it's produced in a form that is easier to print and sets the tone that they want to work with you to help you understand their pricing guide," said Jane Disbrow, a Gartner research director. "But the information is still not very detailed, and it's very much just an overview."

Woods noted that the document won't be exhaustively comprehensive.

"People want brevity, so we couldn't include all scenarios known to man," Woods said. "It's a delicate balance between providing people with just enough information so they don't get overwhelmed with how to license our software."

Better relations?
Analysts question whether the guidebook will offset some of the aggressive sales tactics customers have complained about when licensing Oracle software.

"It seems like they're coming out with these guidelines because of the distrust they've developed with the end users," said Mark Shainman, an analyst with the Meta Group, a technology research company. "When you have ambiguity in the licensing terms, the sales reps have more flexibility and leeway in working with customers. And when you have vagueness, coupled with an aggressive sales force, (the sales team) may take advantage of this."

The guidebook will do little to address concerns about sales tactics, Disbrow said.

"What makes things complicated is Oracle's sales tactics, and this guideline doesn't have anything to do with the sales tactics," Disbrow said. "This is something customers need to read before meeting with Oracle's sales team."

Woods said the guidebook will serve as common ground for the sales team and customers to discuss the parameters of a license.

"It gives the basis for the customer to say: 'This is what is in the document,'" Woods said. "Miscommunication is never a good thing, and this will facilitate better communication."

Paris, the IT director at Kleinfelder, hopes Oracle's application sales and database sales teams will read the guidebook as well, so they can become familiar with each others' licensing terms. He said they've had difficulty trying to sort out the terms of the two types of contracts.

"I've had cases where I've told them: 'Guys, you need to do your homework,'" he said.

Oracle's sales team of more than 6,000 representatives will receive the document, as well as related training, Woods said.

Out of the entire sales team, she said there may be a handful who use inappropriate sales methods, "or there may be some who are new and don't have all the right information. This guide will put the onus on the sales rep and customer to be well informed."

Oracle recently faced controversy over its former $95 million contract with California as well as a pricing disagreement with customers over multiplexing, which is the transferring data to the Oracle database.

"There was confusion over the multiplexing (issue). It was not a new policy," Woods said. "That is why we're doing the guide. It's important for people to understand our policies."

The California case also made an impression on the database maker. Oracle stated in its recent annual filing with the Securities and Exchange Commission: "Even though we have rescinded the contract, our government business, in California and elsewhere, may be affected as a result of this controversy. Other government agencies may be hesitant to enter into an enterprise contract or other types of contracts with us for some period of time, and the negative publicity regarding this controversial contract may harm our reputation and adversely impact our business."

The state's technology buyers may find the guidebook useful in defining some of the licensing terms, but it will not serve as a shortcut for the state's own detailed financial analysis of any contract proposal from Oracle, said Clark Kelso, chief information officer for the state of California.

"It would be like a used car salesman telling you how much of a car you need," Kelso said. "You can make use of that information, but you don't suspend all judgment when trying to make a decision."