Research group deals Oracle pricing another blow

A leading research company Tuesday issued a report criticizing Oracle Corp.’s database pricing methods, becoming the second industry watcher in as many weeks to take Oracle to task over pricing issues.

In the report, three Gartner Inc. analysts said they believe that “Oracle sales staff has inappropriately imposed extra licensing fees on some database customers.” The analysts charged that the database giant made pricing models confusing for customers and often applied charges incorrectly. The tactics were an attempt to offset weak database sales by lifting revenue with “extraneous licensing fees,” Stamford, Conn.-based Garter said in the report.

Consulting company Meta Group Inc., also in Stamford, issued a statement last week saying that some of its clients that used a named user license pricing model were forced to buy more licenses or convert to a more expensive processor-based licensing scheme.

Gartner’s report examined some of the same issues, saying that Oracle forces customer to pick the most costly option between named-user and processor-based pricing. Gartner advised customers to ask Oracle for two pricing proposals based on both licensing methods and to perform their own periodic audits.

Gartner said interviews with its clients also showed that Oracle attempts to “pre-sell far more licenses than the customer will ever use in the form of a five- to seven-year enterprise license agreements with many thousands of named users or processors.” Oracle tries to have customers pay extra fees for a data warehouse that has information coming in from either Internet feeds or internal data sources.

Oracle executive vice-president of North American Sales George Roberts issued a statement in response to Gartner’s charges.

“Oracle management does not condone or encourage the type of sales force behavior that is mentioned in this analyst report,” he wrote. “If a customer has an issue with a sales proposal, Oracle has always encouraged customers to get in contact with a senior Oracle sales executive.”

Gartner said Oracle’s pricing tactics have affected its credibility. It also leveled other complaints against the vendor.

Oracle employees in some instances claim that non-Oracle data warehouses must be licensed, regardless whether the target database is Oracle’s. Lastly, Oracle sometimes will perform occasional audits and come back to customers with increased licensing costs. On other occasions, it will offer discounts that are smaller than would normally be expected. Additionally, Gartner called for customers to “seek immediate legal and purchasing advice about the legality of any extra charges levied by Oracle,” and “renegotiate contracts with Oracle if these licensing issues arise and, in any new contract, ensure the licensing method is agreed to explicitly.”