While businesses buy software for many reasons, their needs and objectives may be very different. As you consider the choices of software available to you, you will no doubt encounter questions. The next several questions are ones that you should carefully consider before you make your software investment. The answers that we provide are designed to guide your software evaluation process. The remainder of this guide provides detailed information on Oracle's pricing and licensing practices, which will help answer the questions identified here.
What business need does the software address?
While businesses buy software for many reasons, it is critical for you to understand why your company is making this investment. The first step in the procurement process is to determine what business need the software is helping you solve.
For example, imagine your company sells an average of 60,000 exercise videos a day by taking orders through your call center. You just received a telecom report that indicated that the company is experiencing 20,000 dropped calls per day due to capacity issues. Additionally, an internal analysis has generated a report with a demand forecast of 120,000 video units per day. Based on USD 15.00 net profit per video, you realize that you're missing out on a revenue opportunity equal to USD 900,000 per day. Short of building another call center, and hiring more personnel to staff it, along with the hardware, software and other infrastructure requirements and the time it takes, you start reviewing your company's options. You realize you have two opportunities to sell more videos. The first is increasing the efficiency of your order management process. Previously, you had not invested in this area and have very limited automated processes. You determine that an order management software product will increase a rep's order taking efficiency by 25% per day. You also determine that if you had a Web site that enabled customers to purchase your videos online, you'd capture the overflow orders not taken through the call center. You realize these improvements will also keep your competitors at bay, while making it easy for your customers to buy from you.
Your business objective: Facilitate my company's ability to take more orders per day and generate more revenue.
What functions do the products we are buying perform, and does this functionality address our required business objectives?
This is a simple question, but one that is not asked often enough. Based on the example above, if you were to purchase an order management software program without also buying a Web store application, your business problem would only be partially solved. The efficiencies gained with order management would not mitigate the entire call center overflow issue. Therefore, without enabling online purchasing in addition to order management, you would lose the opportunity to capitalize on the forecasted demand opportunity.
How much software do we need to purchase now?
Now that you've decided to buy Oracle software, your next key decision is to determine how much software you need. A rule of thumb is to review an average of three years of data before making this decision. For example, if you're licensing a product that is priced by named users, you'll want to determine the average number of persons in the service department who would use the software. Assume the number of people in Year 1 is 200, in Year 2 is 300, and in Year 3 is 275. This would mean your three-year average is 259 users. This gives you a baseline to start, but in no way determines that you should purchase 259 licenses. For the past 2 years, your usage has been between 275 and 300 people, and therefore purchasing licenses for 259 users would leave you under-licensed. While it's not a good idea to purchase more software than you need, you do need to buy enough. Make sure you do an adequate assessment of your company's usage requirements. Remember, a support fee, which consists of product support and update subscription, is based on the total number of licenses purchased.
How do a software provider's support policies affect our current and future licenses?
Typically, when people usually think is about technical support, they think about talking to someone on the phone. They ask, how do I contact you when there's a problem, and who'll be available to help me fix my problem?
The second issue people ask about is update rights. By paying for updates now, what will they get in the future? Today, many supported customers expect to get future versions of the products they originally licensed. For example, supported Oracle6 customers got Oracle7, Oracle8, Oracle8i and now Oracle9i.
Finally, people ask what happens if a product they bought licenses for gets bundled with another product. This can happen for many reasons, including product release efficiencies and other management considerations. With Oracle, as long as customers are current on their support, they will be entitled to the functionality they purchased with the originally licensed product.
Sometimes product bundling will result in a customer needing to undertake a license migration in order to take advantage of the full functionality of the bundled product. Oracle is one of the few companies to provide supported customers with a license credit for the net license fees paid for an original component product toward license fees due for a newly-bundled product.
Who is responsible for understanding our license set and managing to it?
No one can overstate the importance of designating an individual or group who will be responsible for understanding your license agreement and managing to it. The number one compliance issue is over-deployment. This occurs when users who are not licensed for the software are using it. When that happens, a customer has two choices: discontinue the use of the software, or pay the vendor for the software being used without a license and become licensed appropriately. When software is over-deployed, it is uncomfortable for all parties involved. By developing a software management tracking process, many over-deployment situations can be avoided.