Oracle sets $250,000 "minimum charge"

NEWS Oracle customers will need to buy new software licences for at least one fifth of their employees if they want to benefit from the simplified 11i pricing structure. The new pricing, introduced by Oracle CEO Larry Ellison at this month's AppsWorld in Amsterdam, divides customers into two categories and charges flat rate licence fees for both categories. Customers and analysts have long complained that Oracle's previous pricing policy, which is based on the volume of use and number of users for different components of an application, was difficult to understand. But now, under the new pricing policy, professional users - defined by Oracle as an employee who uses any application from the 11i suite - will pay a $4,000 per user licence fee. Self-service users, for example, an employee who intermittently uses Oracle applications to process their own expenses or travel costs, will pay a $400 licence fee. While Ellison revealed these details at the AppsWorld conference no mention was made of the prerequisite expenditure and licencing conditions. But in a conference call today, the Oracle Vice President of Global pricing Jacqueline Woods, provided further pricing details. Woods said customers must spend a minimum of $250,000 and licence at least twenty per cent of employees to avail of the new pricing structure. The twenty per cent licencing requirement can be split equally between professional users and self service users, or customers can splash out on all professional licences. However, based on Oracle's own calculations, a company meeting both the twenty per cent licencing requirement and the $250,000 minimum expenditure will need 567 employees. Companies with fewer employees will need to license a higher percentage of staff. Customers implementing the complete 11i suite can save between 50 and 75 per cent on the cost of implementing it piecemeal, Woods said. But she added Oracle did not expect many customers to take this option. "Buying everything will be expensive. In general people might say they want everything, but will they use everything?" she said. According to Wood customers who pay for self service licences and then opt to upgrade to Professional status will have their self service licence fee credited to the cost of a professional licence. Customers opting to upgrade from older Oracle application suites, to the 11i suite, will receive a similar discount. But customers can still expect to battle with pricing headaches, as some applications, including payroll, electronic ordering and supply chain management will continue to be priced on the old component system.