"The average Oracle/SAP customer pays around 22 per cent of their initial licensing price in maintenance fees annually, and 90 per cent of this fee is profit for Oracle/SAP."
That striking fact, surfaced by IT Pro Portal, explains exactly why both Oracle and SAP are deeply nervous about something called third-party support — a business model that replaces their official vendor support for only half the price, effectively cutting away the most profitable and stable revenue generator for both companies.
This article highlights the benefits of using third-party support and the tactics Oracle and SAP are deploying to eliminate it as an alternative for customers.
Understanding this dynamic is essential for any enterprise that has significant Oracle or SAP licensing. The maintenance renewal conversation is one of the most predictable leverage points in enterprise software negotiation — and knowing the vendor's margin structure gives buyers a significant advantage.
Virtual Procurement Services works with enterprise organizations to analyze, benchmark, and negotiate Oracle and SAP agreements. Contact us to learn more.