Oracle 11i users baffled by new pricing

Oracle users in the UK have reacted with confusion to the company's decision to change its 11i ebusiness suite licensing structure as from 1 February.

The company claims that the alterations will establish a much more "simple" and "flexible" application pricing scheme, and could bring savings of up to 75 per cent for users.

But Oracle's UK arm is still unsure about how the changes will be implemented, and what impact they will have on customers.

"We are still waiting for the official response from Oracle UK," said Ronan Miles, chairman of the Oracle User Group in the UK.

Oracle chief executive Larry Ellison made the 11i pricing announcement at the company's AppsWorld 2002 show in Amsterdam last week, much to the surprise of his colleagues.

The company will introduce two flat pricing rates for the ebusiness suite. If you are a 'power' or 'professional' user, you will be charged $4,000, giving you access to the entire suite. For the 'casual' or 'self-service' user, it will cost $400.

This pricing model will run in conjunction with the company's existing licensing model, which sees single modules, such as Oracle Financials, priced at just under $4,000.

Confusion is rife within the user community. "What we don't understand is what the difference is between a so-called power user and a casual or ad-hoc user," said Miles. "The devil will be in the detail."

The pricing package is targeted solely at the enterprise user, with a minimum licence fee of $250,000.

Steve Barrie, chief analyst at Bloor Research, is also confused by the announcement and concerned that users will lose out. "We would prefer Oracle to take that $250,000 cap off and make the software a whole lot more accessible," he said.

"My initial view is that this is not a good deal unless you buy the whole suite, but you shouldn't go for the whole suite just because it's priced well. The whole thing is very confusing," he added.

While Miles believes that a price restructuring is long overdue for the application suite, he is concerned by the lack of detail and understanding coming from people at Oracle.

He explained: "The user group has been asking for clarification of pricing for some time. Application pricing has been a complicated beast in the past and Oracle has now made that very simple.

"But the question is, is it too simple? At the very least we would be looking for existing customers to be protected from any additional costs."

Oracle UK was unavailable for comment.