The situation
A portfolio company of a global private equity firm faced a $25M Oracle proposal covering database, middleware and support.
The sponsor's operating team had the number in front of them, but a single portfolio company sees an Oracle proposal of this size rarely, and comparable pricing is hard to find from the buy side. There was no reliable reference point for what it should be. Oracle proposals are difficult to read: list price, discount level, support percentage and bundled entitlements all interact, so a line that looks expensive in isolation may be sitting there to protect something else in the quote.
What we found
Deal IQ dissected the quote line by line, engaged a subject matter expert with Oracle background, and set the whole thing against our own data from agreements of similar size and shape. The question is never only what comparable deals cost. It is where Oracle's own priorities sit on a deal like this one, and which parts of the proposal the vendor has room to move.
Support was one of those parts. Oracle charges support at 22% of the net license fee and raises it annually, so the discount won on the license sets the support bill for every year that follows. License and support had to be negotiated as one number, which is not how the proposal was presented.
The result
- Latest vendor proposal
- $25.1M
- Final negotiated price
- $12.1M
- Reduction against proposal
- 52%
- Savings
- $13.0M
Same products, same scope.
Takeaways
- Support, not license price, was where most of the value sat
- A proposal with no reliable reference point on the buy side
- No change to the product set
Frequently asked questions
Why are Oracle proposals so hard to evaluate?
List price, discount level, support percentage and bundled entitlements all move independently, and a concession in one place is often recovered in another. Reading a proposal properly means working out what each part is doing before challenging any of it.
Is Oracle support cost negotiable?
Yes. Support is charged as a percentage of the net license fee, so the discount you negotiate on the license carries into every support bill for the life of the estate. The two should be negotiated together.
Can you negotiate Oracle across a private equity portfolio?
Yes. Deal IQ works with sponsors across their portfolio companies, and a relationship spanning several of them changes what a vendor will consider on any single deal.
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