By Craig Guarante, Palisade Compliance

An article recently came out on CNBC detailing Amazon’s move away from Oracle, and Oracle’s response basically saying that it’s never going to happen.  It’s a fascinating read and you can see the entire article here.  While it’s a great read (for those of us interested in these things), the article completely misses the point of why customers really can’t get off Oracle.

Today, new companies have a choice in databases: open source databases, Sql Server, DB2, and others can do 95% of what Oracle’s database does.   In almost all circumstances, a non-Oracle database is sufficient for a customer’s application.  So why is Oracle database so sticky?  Two reasons – Applications and Contracts.

Many Oracle customers use Oracle applications.  These include Oracle Financials, Peoplesoft, Siebel, Hyperion, etc etc.  Oracle has made well over one hundred acquisitions over the years.  Pretty much all of the applications they’ve acquired now have to run on an Oracle database.  Even if the application can technically run on a non-Oracle database, Oracle terms and conditions require the Oracle database be licensed as well.  We’ve helped many clients analyze their Oracle database usage as they are attempting to move off Oracle.  In many cases they can move everything away from Oracle except those databases “running Oracle eBusiness Suite.”  If you want to move away from Oracle database you have to move away from Oracle ERP, and that’s where there is a huge cost.  It’s the applications, not the database.  Many customers stop there.

Oracle has also locked in customers through onerous contractual terms.  Let’s say an Oracle customer can reduce their Oracle database usage from one thousand licenses to one hundred licenses.  You would expect that 90% reduction in usage results in a 90% reduction in Oracle support costs.  The reality is that Oracle can use their contracts to “reprice” the cost of your remaining estate and surprise surprise you end up paying the same.   What this means is that customers who reduce their Oracle usage will pay Oracle the same money and also incur the switching costs.  Again, this is where some companies stop their migration away from Oracle.

Oracle’s acquisition strategy and contract terms are the main reasons why Oracle database customers don’t move off Oracle database.  It really has little to do with the Oracle database technology itself.  That’s becoming a commodity and that’s why Oracle is desperately trying to convert their customers to the Oracle cloud before their customers figure out a way to get out of their database contracts.