Oracle has given customers running version 12.0 of its E-Business Suite software a reprieve from extended support fees, which would have kicked in this month, increasing the maintenance payments they were already making.
The waiver runs through January 2015, according to a recent post on an official company blog. Customers are still required to meet minimum patching baselines, according to Oracle.
Last year, the vendor previously waived first-year extended support fees for E-Business Suite 12.1, covering June 2014 through May 2015. It also granted a waiver on extended support fees for EBS 11i for the period spanning November 2010 to November 2013.
Extended support kicks in on Oracle products after an initial five-year premier support window expires. It retains most of the features found in premier support, such as bug fixes and regulatory updates, but Oracle may not certify that the product being supported works seamlessly with most new Oracle and third-party products.
The idea is to keep customers who are unwilling to upgrade happy, while still collecting lucrative maintenance revenues. Software vendors like Oracle enjoy profit margins on support fees of roughly 90 percent, with the money rolling in even when new software license sales are slow.
“This move is all about customer retention,” Forrester Research analyst Paul Hamerman said of Oracle’s latest decision to waive the fees. There are a significant number of customers on older releases, more than Oracle has publicly acknowledged, and waiving the extended support increase “has the same effect as extending the standard support window, in that it will presumably reduce attrition and accelerate maintenance contract renewals,” he said.
An Oracle spokeswoman didn’t respond Tuesday to a request for comment on the company’s reasons for the support policy change.
Its move could also reflect the competition for E-Business Suite support from companies like Rimini Street, which provide services at considerably lower cost but don’t have the ability to offer application upgrades and other features available through vendor-provided support.
Oracle is suing Rimini Street, alleging that the company uses an illegal business model. Rimini Street has denied wrongdoing. Oracle previously won a lawsuit against former SAP subsidiary TomorrowNow, which was co-founded by Rimini Street’s CEO, over similar allegations. Now Oracle is seeking a new trial on damages in that case after the initial US$1.3 billion jury award was lowered significantly by a judge.
Meanwhile, Oracle recently rolled out the first wave of its long-awaited Fusion Applications, which are supposed to pull together the best features of E-Business Suite, as well as the PeopleSoft and JD Edwards ERP products, into a next-generation suite.
In one sense, waiving Extended Support fees on E-Business Suite may seem counter-intuitive, since doing so removes an impetus for customers to start moving to Fusion.
But Oracle has made no aggressive efforts to push customers onto Fusion Applications, and that’s for good reason, according to Hamerman.
Oracle is “going to tread lightly on Fusion migration until it is a fully functional replacement for E-Business Suite or PeopleSoft,” he said.
The company will likely achieve that goal within a few years, but in core ERP areas such as finance and human-resources, “not for the whole breadth of ERP,” Hamerman said. For one, E-Business Suite has a significant footprint in manufacturing, and Fusion Applications won’t try to replicate it, according to Hamerman.
Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris’s e-mail address is Chris_Kanaracus@idg.com