- SAP and Oracle take advantage of the standard rules of commercial software.
- How did they do it and what has it means for the software industry?
How Oracle and SAP Broke the Agreed Upon Rules of Commercial Software
It is common to propose that SAP and Oracle are merely following the normally accepted rules of commercial software. It is difficult to see how this is true. The original idea of compensated software was that work in creating and maintaining software required compensation. That is certainly fair. However, SAP and Oracle have moved the goal posts. Moreover, they use licensing rules to extract far above the value of their software. They spend far more on sales and marketing than they do on development and maintenance. The licensing agreements SAP and Oracle give customers are like credit card contracts. The complexity of the terms and conditions places Oracle and SAP in a dominant position versus the customer. Oracle and SAP have their customers so restricted by rules and restrictions that the goal of the software is often a secondary concern.
Furthermore, Oracle and SAP have been using this position to coerce their customers into things they don’t want to buy.
Promises Made to Wall Street
Unfortunately for customers with substantial investments in Oracle and SAP, because of the promises made to Wall Street by these companies, we see these abuses only getting worse in the future. Oracle and SAP have been ratcheting up coercive tactics to obtain revenues to hide the fact that these companies are not growing in the new areas where they tell Wall Street they are growing, but instead they are merely extracting more income from their old areas. Is the fastest growing part of SAP or Oracle is cloud business? Is it SAP’s “hot new IoT” solution called Leonardo? Is it Oracle’s Automated Database? No. Every year, support grows as a higher percentage of both of these company’s revenues.
If you listen to Oracle sales reps they put themselves in the position of being there to help. They want to “help” their customers, but if one analyzes how they are helping, it is from Oracle’s own coercive policies! If you create a coercive scenario, but then appear to “fix” that scenario, that is called racketeering. The standard approach came from protection rackets. Where a mobster would approach a store owner and declare..
“If you pay me protection money, your store will be protected from the mob.”
However, then, the same mob is the only entity that would damage or destroy the store! Wouldn’t it be a terrible thing if something happened to that store? Yes. So in a way, those that negotiate terms on protection rackets are also “helping” their “customers.”
We know many Oracle sales reps, and this logic of helping customers from punitive actions by SAP is one of the primary ways that they justify the often dirty business of what they do. Oracle has an internal sales culture that it is best to steer clear of which we categorize as the worst sales culture in enterprise software in the article. The Oracle Software Sales Model. There is no doubt that Oracle has developed the worst reputation for business practices in the software industry.
Financial Bias Disclosure
This article and no other article on the Brightwork website is paid for by a software vendor, including Oracle and SAP. Brightwork does offer competitive intelligence work to vendors as part of its business, but no published research or articles are written with any financial consideration. As part of Brightwork’s commitment to publishing independent, unbiased research, the company’s business model is driven by consulting services; no paid media placements are accepted.