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A Licence To Kill For

A Licence To Kill For

No more Mr Nice Guy. It's time to get tough at the bargaining table.

Dr Kevin McIsaac recently met with a client who had managed to knock the price of Oracle licences down from almost $1 million to just $200,000 through intense negotiations and contract tweaking. While impressed with his client's killer instincts, McIsaac reckoned there was scope to get the price down even further - perhaps as low as $60,000 or $70,000 - just by going with the Standard, rather than the Enterprise Edition. He recommended as much.

"[The client] said: Â'You're a bit ruthless aren't you?' And I said: Â'Not at all. With Oracle you've got to play to win. You've got to be ruthless'," Meta Group's program director server infrastructure strategies says.

Strangely enough, it was soon after that that Oracle apparently discovered a mistake. It was profoundly sorry, but it had failed to take into account that the client wanted a fail-over cluster. That meant it would have to license both machines. Suddenly the vendor's hand was out for an extra $100,000.

"So the price went up considerably, and then the guy came to me and said: Â'Now I know why you were always, constantly, ruthlessly hounding away about how to knock money off of Oracle'," McIsaac, an Oracle specialist, says. (Not that we're picking on Oracle: it is just that McIsaac says they are among the industry's best negotiators, and that is, after all, their job. He appreciates them for it.)Robert Neely also has clients who are being squeezed by software vendors. The partner at legal firm Minter Ellison says a couple of his clients are selling off a part of the business and want to separate out their software licences so that both parties can use them. He reports the vendor is insisting it has the right to charge the parts of the business being sold a completely new licence fee. Neely reckons he'll win that battle for his clients in the end, but says the whole conflict could have been avoided had the initial contract contained provisions for such an eventuality.

"We've got many instances where companies are acquired by another company or acquire another company and there needs to be a consent built into the licence so that that doesn't trigger any renegotiation with the licensee," Neely says. "If you've dealt with it properly in the licence in the first place, it's much harder for a vendor then to take a position which is unfavourable."

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More about AlphaCPI HoldingsDepartment of Information TechnologyHISInternational Computer NegotiationsMeta GroupMicrosoftMinter EllisonMinter EllisonMinter EllisonOraclePhillips FoxPhillips FoxProvisionSAP Australia

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