Oracle customers complain of cloud coercion.
In my personal experience dealing with customers (former Oracle employee) they tell me in no uncertain terms that Oracle's cloud is seen as a joke. About 70 to 80 percent of my customers have a mandate to migrate off of Oracle products. I sell to enterprise customers. Here is some direct evidence reported in the news.
The important thing is that this is a serious problem. Oracle has bet its survival on the cloud. I see no win for Oracle and a can easily predict rapid decline in revenue across the board in the near future.
A poll by the Itam Review has identified anecdotal evidence that IT departments are being offered significant discounts to buy Oracle cloud. The poll comes just six weeks after a US court dismissed a case that alleged Oracle had misled investors over Oracle Cloud subscriptions.
Discussing the poll, Martin Thompson, founder of the Itam Review, said: “We’ve known for a long time that Oracle sales reps are incentivised heavily. They receive an absurd amount of commission to sell cloud, and so they go to great lengths to sell Oracle cloud, in spite of whether companies need it. Everyone knows this is going on.”
For example, said Thompson, Itam Review readers have reported that if they renew their on-premise contract, they might receive a 30% discount, but if they also opt to purchase Oracle cloud, the discount is 60%.
In a number of instances, the Itam Review found that Oracle customers were being coerced into buying cloud services. “We have been in an audit situation three years ago,” one user told the Itam Review. “Even though we had been licensed properly, due to mergers and acquisitions, Oracle figured out that the licenses were not properly ‘transferred’ to the new companies. Oracle then threatened us with a fine of over €150,000.”
The user then said that Oracle offered to waive the penalty if €50,000 of Oracle cloud licences were purchased instead. “We agreed to do so, fixed everything, got that certificate of compliance,” the user said. “We never used that Oracle cloud because we did not need it and because that cloud was not technically effective.”
For Thompson, the poll illustrates the challenges that Oracle faces as it tries to establish itself as a major cloud provider in a market dominated by AWS, Microsoft Azure, Alibaba and Google Cloud.
Oracle will often argue that its products work best on the Oracle Cloud because its engineers fine-tune and optimise the Oracle workloads, but Thompson said: “Oracle does not have a compelling enough offering. It is an economies-of-scale game.”
Even if Oracle’s claims about being able to run its software better on the Oracle Cloud are valid, said Thompson, a CIO who chooses an alternative cloud provider can always decide to buy professional services from Oracle to improve the performance.
He added: “In traditional software sales, you could do ‘smoke and mirrors’ with deals because there was no material cost in selling software. But the cloud is very different. It costs money to build out IT infrastructure.”
This means that heavy cloud discounting that does not lead to cloud subscription renewals is a financial drain, said Thompson, and the cloud provider may have to build out its IT infrastructure to support customers that do not renew their subscription.
In 2018, the City of Sunrise Firefighters’ Pension Fund began a class action against Oracle, alleging securities fraud, which claimed that the company had misled investors on the strength of its cloud business. Oracle argued that the case should be dismissed.
Court papers published on CaseText reveal that a confidential witness, who worked at Oracle as a regional sales director across the Middle East and Africa, claimed: “Executives were instructed to offer customers a 90% discount on on-premise licences if they purchased $300,000 worth of cloud subscriptions.”
On 17 December 2019, the US District Court, Northern District of California, San Jose Division, dismissed the case.
US District Judge Beth Labson Freeman ruled: “Because plaintiff (City of Sunrise Firefighters’ Pension Fund) fails to adequately plead that defendant (Oracle) made any false or misleading statements and that they did so with scienter [knowingly], the motion to dismiss is granted.”
However, the court gave the City of Sunrise Firefighters’ Pension Fund until 17 February 2020 to file an amended complaint, which sets out the securities fraud allegation in chart form.
www.computerweekly.com/news/252477506/Oracle-customers-complain-of-cloud-coercion%3famp=1