Sometimes my snark gets the better of me. When I interviewed Frank Scavo, president of Computer Economics, about his recent survey of Oracle applications customers, I titled the Q&A "Has Oracle Got Its Application Customers Where It Wants Them?" (Scavo found a significant number of them are dissatisfied with the company's support.) When I tweeted it, I couldn't resist adding the words "over a barrel" in parentheses.
Like other folks who have interviewed Scavo about the survey, I wondered why customers who are so obviously unhappy (42 percent are dissatisfied with the quality of Oracle support, while 58 percent chafe at the cost), stay with Oracle anyway. As Scavo notes in his own blog post about the survey, just 25 percent of respondents expect to spend a smaller share of their IT budgets on Oracle products and services over the next three years.
Scavo puts Oracle customers into three categories, using the analogy of a marriage to describe all three:
- Organizations that have standardized on Oracle products. He likens them to committed couples who have some squabbles but are able to overcome them due to the solid foundation of their relationship.
- Organizations that have deep enough investments in Oracle that they'll find it difficult to leave. Scavo compares them to spouses who want a divorce but stick it out for the kids' sake. As he told me in our interview: "It demonstrates that in many companies Oracle applications are embedded in their business processes and it's not an easy matter to make a wholesale migration."
- Organizations with limited choices. Scavo told me making a switch was especially tough on larger customers because they have fewer vendor choices for large wholesale systems that support global operations. In his post, he compares them to people who want to be married to someone else but are discouraged by the pool of potential spouses. Many of them see SAP as their only other choice, he writes, which "might not be a happy marriage either."
In addition to the "why don't they leave" question, I was struck by the seeming double whammy of being dissatisfied with both the cost and quality of the support. If the ideal is getting high-quality support for a reasonable price, the polar opposite is paying a lot for unsatisfactory service. That's a bit like a vendor adding insult to injury. Scavo told me:
... Oracle doesn't allow its customers to have a bare-bones level of service with tiered pricing. It's Cadillac price or nothing. I think it's especially jarring to customers in that Oracle boasts in its conference calls with financial analysts about the rich margins on maintenance. They boast about getting 85 percent-plus on their margins and using it to develop new products.
And he added:
My advice to Oracle would be to put a little bit more of that money back into support. By doing that, you'd accomplish several things: You'd decrease the noise level of complaints. You'd probably be able to sell more product to these customers. You'd lower the risk of losing customers to third-party maintenance providers. Oracle is trying to defeat those third parties through lawsuits. There's so many good things that could result if Oracle paid more time and attention to its support services.
Scavo ends his post with a postscript (and a glimmer of hope for the dissatisfied customers), noting Oracle recently brought respected executive Charles Rozwat back from an extended leave of absence to head up its worldwide support organization. Rozwat reports directly to co-President Mark Hurd.