Oracle revamps 11i suite pricing

New, simplified pricing for Oracle Corp.’s 11i applications suite was announced in Amsterdam Thursday at Oracle AppsWorld by chairman and chief executive officer Larry Ellison. Effective now, customers will pay US$4,000 per power user, and $400 per casual user for use of the software.

“Our price list was very complicated. We had all these complex matrixes. I couldn’t keep it in my head,” Ellison said at a press briefing after his keynote address. “This is the complete price list, for everything you want.”

As often happens when Ellison speaks at press conferences, he apparently jumped ahead of the Oracle public relations office, which later issued a separate statement “confirming” what the company chief had already revealed to reporters and promising additional information.

Ellison also detailed Oracle’s new outsourcing plan, promising to slash IT budgets by five per cent year on year. Oracle will take over a client’s complete IT operation in exchange for a five-year contract and that company’s entire IT budget for a fiscal year to be paid each year. Companies wishing to take part will become ASP (application service provider) customers, a service called, Ellison said.

“We will take your applications and migrate that to full Oracle. We won’t charge you for the migration, but will just tell you that you’ll pay us what you pay now, sign a five-year contract, and each year we will charge you five per cent less,” Ellison said in his keynote.

The migration includes upgrades of a client’s existing IT infrastructure, if needed, Ellison said.

“There will be no requirement to invest to get savings a few years out. You can pencil in your IT budget a few years out. We guarantee you spend less. We think we can move you to a unified environment, charge you less money and still make a lot of money,” Ellison said.

The outsourcing offer will undoubtedly attract attention, but many may just be interested in getting information and not necessarily in buying the product, said Jeremy Young, president of the Oracle Applications Users Group (OAUG) and business process manager at Oracle customer DHL Worldwide Network NV in Belgium.

“It is a great headline solution. Everybody wants to save money, so most would be interested in seeing how this will work for them. In general, people aren’t comfortable yet going the ASP route and I guess that is why Oracle is making this offer. It is clear that some need an incentive,” Young said.

Oracle can expect many information requests, as the deal to move customers to the ASP service is remarkable, said Beth Barling, a senior analyst with AMR Research Inc.

“This is an amazing deal, not only will they (Oracle) replace everything you have, but they will also give you five per cent of your budget. The caveat is if they will be able to meet demand,” she said.

On the new pricing for 11i, Barling said questions remain, as Oracle has not defined its power and casual user scheme. Also, Barling said, “what happens if you only want part of the applications suite?”

OAUG President Young said the new 11i pricing model is something that many present Oracle customers will obviously investigate.

“It sounds very interesting and I think a lot of people will look at it and compare with how their applications are priced now,” he said.

Observers see the single pricing on the full 11i suite as an attempt by Oracle to push its customers to use more of the applications. Many customers today are only buying the parts of the suite they need, Oracle officials have said repeatedly during the past days here. Now, instead of selling the suite piecemeal, Oracle will provide all of its components.

Looking into the future of the applications suite, Ellison said he doesn’t expect a version 12i to come anytime soon.

“The 11i framework is so robust that we think we can enhance and improve it without going to a next version of our software,” he said, joking that there won’t be a 12i until “the day after I retire.”

Oracle has more than 12,000 customers worldwide on different versions of its applications software. Of those, about 1,150 are now live on version 11i, which was introduced 18 months ago, Oracle said. The company expects half of its applications customers to move to its ASP offering within five years, it said this week.

Oracle Canada in Mississauga, Ont., is at